PART 1128—RECIPIENT FINANCIAL AND PROGRAM MANAGEMENT: GENERAL AWARD TERMS AND CONDITIONS Authority: 5 U.S.C. 301 and 10 U.S.C. 113. Source: 85 FR 51171, Aug. 19, 2020, unless otherwise noted. § 1128.1 Purpose of this part. (a) This part specifies standard wording of general terms and conditions concerning financial and program management, including recipients' financial management systems, payments, cost sharing or matching, program income, budget and program revisions, audits, allowable costs, and periods of availability of funds. (b) It thereby implements OMB guidance in the following portions of 2 CFR part 200, as they apply to general terms and conditions of grants and cooperative agreements: (1) Sections 200.80, 200.209, and 200.302 through 200.309; (2) Sections 200.301 and 200.328, as they relate to associations between financial data and performance accomplishments and reporting; and (3) Subparts E and F. § 1128.2 Applicability of this part. The types of awards and entities to which this part and other parts in this subchapter apply are described in the subchapter overview at 2 CFR 1126.2. § 1128.3 Exceptions from requirements of this part. Exceptions are permitted from the administrative requirements in this part only as described at 2 CFR 1126.3. § 1128.4 Organization of this part. (a) The content of this part is organized into subparts and associated appendices. (1) Each subpart provides direction to DoD Components on how to construct one article of general terms and conditions for grants and cooperative agreements. (2) For each subpart, there is a corresponding appendix with standard wording for terms and conditions of the article addressed by the subpart. Terms and conditions address rights and responsibilities of the Federal Government and recipients. (b) A DoD Component must use the wording provided in each appendix in accordance with the direction in the corresponding subpart. That direction may permit DoD Components to vary from the standard wording in some situations. (c) Table 1 shows which article of general terms and conditions may be found in each of appendices A through G to this part (with the associated direction to DoD Components in Subparts A through G, respectively): Table 1 to Paragraph (c) In . . . You will find terms and conditions specifying recipients' rights and responsibilities related to . . . That would appear in an award within FMS Article . . . Appendix A Financial management system standards I. Appendix B Payments II. Appendix C Allowable costs, period of availability of funds, and fee or profit III. Appendix D Revision of budget and program plans IV. Appendix E Non-Federal audits V. Appendix F Cost sharing or matching VI. Appendix G Program income VII. Subpart A—Financial Management System Standards (FMS Article I) § 1128.100 Purpose of FMS Article I. FMS Article I specifies standards for recipients' financial management systems. It thereby implements OMB guidance in: (a) 2 CFR 200.302, 200.303, and 200.328; and (b) 2 CFR 200.301 and 200.328, as they relate to associations between financial data and performance accomplishments and reporting. § 1128.105 Content of FMS Article I. (a) Requirement. (b) Award terms and conditions General. (2) Exceptions. (i) Reserve Section A of FMS Article I if the DoD Component determines that it is not possible that any States will receive: (A) DoD Component awards using those general terms and conditions; or (B) Subawards from recipients of DoD Component awards using those general terms and conditions. (ii) Reserve paragraph B.6 of FMS Article I if the DoD Component determines that it will not require recipients of awards using those general terms and conditions to relate financial data to performance accomplishments ( e.g., Subpart B—Payments (FMS Article II) § 1128.200 Purpose of FMS Article II. FMS Article II contains requirements related to payments under an award. It thereby implements OMB guidance in 2 CFR 200.305. § 1128.205 Content of FMS Article II. (a) Requirement. (b) Award terms and conditions. § 1128.210 Payment requirements for States. (a) Policy. (1) Subpart A of 31 CFR part 205 contains requirements for payments to States under “major programs,” as defined in that part. The Department of the Treasury negotiates Treasury-State agreements for major programs. Those agreements specify the appropriate timing and amounts of payments. They further specify a State's interest liability if it receives an advance payment too many days before it disburses the funds for program purposes, as well as the Federal Government's interest liability if it reimburses the State too many days after the State disburses the funds. Most DoD awards to States are not under major programs, so Subpart A applies relatively infrequently. (2) Subpart B of 31 CFR part 205 applies to all other DoD grants and cooperative agreements to States— i.e., (b) Award terms and conditions General. (2) Exception for awards under major programs. (i) Use appendix B's wording for Section A of FMS Article II in its general terms and conditions; and (ii) In each award subject to Subpart A of 31 CFR part 205, include award-specific terms and conditions that make payments to the recipient subject to the requirements in Subpart A of 31 CFR part 205 and the applicable Treasury-State agreement, thereby overriding the wording of Section A of FMS Article II. § 1128.215 Payment requirements for institutions of higher education, nonprofit organizations, local governments, and Indian tribes. (a) Policy. (1) Advance payments. (i) Written procedures that minimize the time elapsing between its receipt of funds from the Federal Government and its disbursement of the funds for project or program purposes; and (ii) Financial management systems that meet the standards for fund control and accountability specified in the wording of FMS Article I (see Subpart A and appendix A to this part). (2) Reimbursement. (b) Award terms and conditions General. (i) Must use in general terms and conditions for non-construction awards to authorize recipients to request advance payments; and (ii) May use in general terms and conditions for construction awards if it elects to authorize recipients of those awards to request advance payments. (2) Alternative award terms and conditions. (i) Would replace appendix B's wording for paragraph B.1 with wording to specify the reimbursement method of payment; (ii) Must include appendix B's wording for paragraphs B.2.b and c, B.4, and B.5, which may be renumbered as appropriate, because those paragraphs apply to reimbursements as well as advance payments; (iii) Should omit appendix B's wording for paragraphs B.2.a, B.3, and B.6 because those paragraphs apply specifically to advance payments; and (iv) Must inform recipients that the DoD payment office generally makes payment within 30 calendar days after receipt of the request for reimbursement by the award administration office, unless the request is reasonably believed to be improper. § 1128.220 Electronic funds transfer and other payment procedural instructions or information. (a) Policy. (b) Award terms and conditions Electronic funds transfer. (2) Other payment procedures or instructions. Subpart C—Allowable Costs, Period of Availability of Funds, and Fee or Profit (FMS Article III) § 1128.300 Purpose of FMS Article III. FMS Article III of the general terms and conditions specifies what costs are allowable as charges to awards and when they are allowable. It also specifies restrictions on payment of fee or profit. It thereby implements OMB guidance in §§ 200.209 and 200.309 and Subpart E of 2 CFR part 200. It also partially implements 2 CFR 200.201(b)(1) and 200.323(c), as those sections apply to the cost principles to be used in relation to subawards and contracts, respectively. § 1128.305 Content of FMS Article III. (a) Requirement. (b) Award terms and conditions. § 1128.310 Cost principles. (a) Policy. (1) Charged to each cost-type: (i) DoD grant or cooperative agreement to a recipient of that entity type; (ii) Subaward to a subrecipient of that entity type at any tier below a DoD grant or cooperative agreement; and (iii) Procurement transaction with a contractor of that entity type awarded by a recipient of a DoD grant or cooperative agreement or a subrecipient that received a subaward at any tier below that grant or cooperative agreement. (2) Considered in establishing the amount of any: (i) Fixed-amount subaward, at any tier under a grant or cooperative agreement, to a subrecipient of that entity type; or (ii) Fixed-price procurement transaction with a contractor of that entity type that is awarded by either a recipient of a DoD grant or cooperative agreement or a subrecipient that received a subaward at any tier below that grant or cooperative agreement. (b) Award terms and conditions General. (2) Exception. § 1128.315 Clarification concerning allowability of publication costs. (a) Requirement. (b) Award terms and conditions General. (2) Exception. § 1128.320 Period of availability of funds. (a) Requirement. (b) Award terms and conditions. § 1128.325 Fee or profit. (a) Requirement. (b) Award terms and conditions. Subpart D—Revision of Budget and Program Plans (FMS Article IV) § 1128.400 Purpose of FMS Article IV. FMS Article IV of the general terms and conditions specifies requirements related to changes in recipients' budget and program plans. It thereby implements OMB guidance in § 200.308 of 2 CFR part 200 and partially implements § 200.209 and Subpart E of that part. § 1128.405 Content of FMS Article IV. (a) Requirement. (b) Award terms and conditions. § 1128.410 Approved budget. (a) OMB guidance. (b) DoD implementation. (c) Award terms and conditions. § 1128.415 Prior approvals for non-construction activities. (a) OMB guidance. (b) DoD implementation of the guidance. i.e., (c) Scope or objective, cost sharing or matching, and additional Federal funds. (1) For a change in scope or objective of the project or program, as described in 2 CFR 200.308(c)(1)(i). (2) For any change in the cost sharing or matching included in the approved budget for which FMS Article VI requires prior approval, as described in OMB guidance at 2 CFR 200.308(c)(1)(vii). (3) If the need arises for additional Federal funds to complete the project or program, as described in 2 CFR 200.308(c)(1)(viii). (d) Personnel changes, disengagements, or reductions in time. (1) A change in a key person, as described in 2 CFR 200.308(c)(1)(ii). (2) A principal investigator's or project director's disengagement from, or reduction in time devoted to, the project or program, as described in 2 CFR 200.308(c)(1)(iii). (e) Costs requiring prior approval under the cost principles. (1) Any waiver of a cost principles requirement for prior approval by a recipient entity's cognizant agency for indirect costs is appropriately addressed in award-specific terms and conditions, rather than general terms and conditions, because the general terms and conditions must be appropriate for use in awards to multiple recipient entities. (2) A DoD Component may waive requirements in the cost principles for recipients to request prior approval before charging certain costs as direct costs to awards. However, the DoD Component should carefully consider each prior approval requirement individually and decide: (i) Which, if any, to waive; and (ii) Whether to make the waiver of the prior approval requirement contingent on specified conditions ( e.g., (f) Transfers of funds and subawards. (1) Transfers of funds for participant support costs, as described in 2 CFR 200.308(c)(1)(v). (2) Subawarding of work under an award, as described in 2 CFR 200.308(c)(1)(vi). (3) Transfers of funds among direct cost categories, as described in 2 CFR 200.308(e), but the wording in the general terms and conditions must make clear that the prior approval requirement applies only to awards using those terms and conditions if the Federal share of the total value is in excess of the simplified acquisition threshold. As a matter of DoD policy, requiring prior approvals for transfers among direct cost categories generally is not appropriate for the general terms and conditions of grants and cooperative agreements that support research. (g) Pre-award costs, carry forward of unobligated balances, and no-cost extensions. (2) If a DoD Component's general terms and conditions are used for awards that have multiple periods of performance, the DoD Component should authorize recipients to carry forward unobligated balances to subsequent periods of performance, as described in 2 CFR 200.308(d)(3), unless there are compelling reasons not to do so. (3) A DoD Component's general terms and conditions may authorize recipients to initiate one-time extensions in the periods of performance of their awards by up to 12 months, subject to the conditions described in 2 CFR 200.308(d)(2), but only if the DoD Component judges that authorizing no-cost extensions for awards using the general terms and conditions will not cause the DoD Component to fail to comply with DoD funding policies ( e.g., (h) Award terms and conditions. (1) In accordance with paragraph (c) of this section, a DoD Component's general terms and conditions for non-construction awards must include the wording that appendix D provides for paragraphs B.1.a and B.1.i of FMS Article IV and, if there will be cost sharing or matching required under any awards using the general terms and conditions, paragraph B.1.g. (2) In accordance with paragraph (d) of this section, a DoD Component's general terms and conditions for research awards must include the wording that appendix D provides for paragraphs B.1.b and B.1.c of FMS Article IV. A DoD Component also may include paragraphs B.1.b and B.1.c in general terms and conditions for other non-construction awards. (3) In accordance with paragraph (e) of this section, a DoD Component's general terms and conditions for non-construction awards must include the wording that appendix D provides for paragraph B.1.d of FMS Article IV unless the DoD Component decides to waive any requirements in the applicable cost principles for recipients to obtain prior approval before including certain types of costs as direct charges to awards. If a DoD Component elects to waive any of those prior approval requirements, it must add wording to paragraph B.1.d to identify the specific types of costs for which recipients need not obtain DoD Component prior approval (thereby leaving in place the other prior approval requirements in the cost principles). (4) In accordance with paragraphs (f) and (g) of this section, a DoD Component's general terms and conditions for non-construction awards may include the wording that appendix D provides for paragraphs B.1.e, B.1.f, and B.1.h (except as noted for research awards in paragraph (f)(3) of this section) and Section C of FMS Article IV. A DoD Component may modify the wording as specified in paragraphs (f) and (g) of this section ( e.g., (5) If no awards using a DoD Component's general terms and conditions will support non-construction activities, the DoD Component may reserve section B.1 of the wording that appendix D provides for FMS Article IV. § 1128.420 Prior approvals for construction activities. (a) OMB guidance. (b) DoD implementation of the guidance. i.e., (c) Award terms and conditions. (1) Must include the wording that appendix D to this part provides for paragraph B.2 of FMS Article IV. (2) May reserve or remove the wording appendix D to this part provides for paragraph B.1 and Section C of FMS Article IV unless some awards using the general terms and conditions will also support non-construction activities (if the DoD Component elects to remove Section C, it should redesignate Section D in the article as Section C). § 1128.425 Additional prior approval for awards that support both non-construction and construction activities. (a) OMB guidance. (b) DoD implementation of the guidance. (c) Award terms and conditions. § 1128.430 Procedures for prior approvals. (a) OMB guidance. (b) DoD implementation of the guidance. (c) Award terms and conditions. (1) Include the wording appendix D to this part provides for paragraph D.1 of FMS Article IV of its general terms and conditions. (2) Insert appropriate wording in lieu of the reserved paragraph D.2 that appendix D to this part includes in FMS Article IV to specify: (i) The format the recipient must use when it requests approval for budget revisions. As described in 2 CFR 200.308(h), the award term may allow the recipient to submit a letter of request or otherwise must specify that the recipient use the same format it used for budget information in its application or proposal. (ii) Any other procedural instructions related to requests for prior approvals for budget or program revisions ( e.g., Subpart E—Non-Federal Audits (FMS Article V) § 1128.500 Purpose of FMS Article V. FMS Article V of the general terms and conditions specifies requirements related to audits required under the Single Audit Act, as amended (31 U.S.C., chapter 75). The article thereby implements for grants and cooperative agreements the OMB guidance in Subpart F of 2 CFR part 200. § 1128.505 Content of FMS Article V. (a) Requirement. (b) Award terms and conditions General. (2) Exception. Subpart F-Cost Sharing or Matching (FMS Article VI) § 1128.600 Purpose of FMS Article VI. FMS Article VI sets forth requirements concerning recipients' cost sharing or matching under awards. It thereby implements OMB guidance in: (a) 2 CFR 200.306 and 200.308(c)(1)(vii); and (b) 2 CFR 200.434, in conjunction with FMS Article III in appendix C to this part. § 1128.605 Content of FMS Article VI. (a) Requirement. (b) Award terms and conditions General. (2) Exception. § 1128.610 General requirement for cost sharing or matching. (a) Requirement. (i) It may find the amount or percentage of cost sharing or matching required under its award in the award cover pages. (ii) The cost sharing or matching amount or percentage identified in the award includes all required (but not voluntary uncommitted) contributions to the project or program by the recipient and its subrecipients, including any that involve third-party contributions or donations to the recipient and subrecipients. (iii) It must obtain the DoD Component's prior approval for any change in the required amount or percentage of cost share or match. (2) At a DoD Component's option, FMS Article VI also may require a recipient to obtain the DoD Component's prior approval if it wishes to substitute alternative cost sharing or matching contributions in lieu of specific contributions included in the approved budget ( e.g., (b) Award terms and conditions. § 1128.615 General criteria for determining allowability as cost sharing or matching. (a) OMB guidance. (b) Award terms and conditions General. (2) Exception. § 1128.620 Allowability of unrecovered indirect costs as cost sharing or matching. (a) OMB guidance. (b) DoD implementation. (c) Award terms and conditions. § 1128.625 Allowability of program income as cost sharing or matching. (a) OMB guidance. (b) Award terms and conditions General. (i) The cost sharing or matching alternative described in paragraph (b)(1)(iii) of § 1128.720; or (ii) A combination alternative, as described in paragraph (b)(1)(iv) of § 1128.720, that includes use of at least some program income as cost sharing or matching. (2) Exception. § 1128.630 Valuation of services or property contributed or donated by recipients or subrecipients. (a) OMB guidance. (1) That values for recipients' and subrecipients' contributions of services or property toward cost sharing or matching must be established in accordance with the cost principles in Subpart E of 2 CFR part 200; and (2) Types of projects or programs under which recipients' or subrecipients' donations of buildings or land are allowable as cost sharing or matching, with the prior approval of the Federal awarding agency, and how the donations are to be valued in those cases. (b) DoD implementation. (1) Cost principles to be used for valuation. (ii) Consistent with the cost principles, what generally should be charged to awards for real property and equipment is depreciation rather than allowing a recipient's or subrecipient's donation of the property ( i.e., (2) Donations of property to projects or programs under awards. (A) Capital expenditures to acquire those types of capital assets are allowable as direct charges to awards; and (B) The costs therefore satisfy the allowability criterion in 2 CFR 200.306(b)(4) and can qualify as cost sharing or matching if they meet the other criteria listed in 2 CFR 200.306(b). (ii) However, when there are alternative ways for recipients to meet requirements for cost sharing or matching, DoD Components should not approve donations of capital assets to projects or programs under awards. Inclusion of the full value of a donated asset as project costs in the approved budget of an award is analogous to inclusion of the acquisition cost for an asset that is purchased under the award. Through the donation, the Federal Government acquires an interest in the donated asset that must be resolved at time of disposition of the asset, which is best avoided if possible. (iii) Whenever a DoD Component permits a recipient to donate a capital asset to a project or program under an award, the DoD Component should inform the cognizant Federal agency that negotiates the indirect cost rate for that recipient. Doing so enables the cognizant agency to take the donation into account when it establishes the recipient's indirect cost rate, given that the recipient may not include depreciation for the donated asset as indirect costs that enter into the computation of that rate. (c) Award terms and conditions General. (2) Exception. § 1128.635 Valuation of third-party in-kind contributions. (a) OMB guidance. (b) Award terms and conditions General. (2) Exception. Subpart G-Program Income (FMS Article VII) § 1128.700 Purpose of FMS Article VII. FMS Article VII of the general terms and conditions specifies requirements for program income that recipients earn. The article thereby implements OMB guidance in 2 CFR 200.80 and 200.307. § 1128.705 Content of FMS Article VII. (a) Requirement. (b) Award terms and conditions. § 1128.710 What program income includes. (a) OMB guidance. (1) Rebates, credits, discounts, and interest earned on any of them; and (2) Taxes, special assessments, levies, fines and other similar revenue raised by a governmental recipient. (b) DoD implementation. (c) Award terms and conditions General. (2) Exceptions. (i) Rebates, credits, discounts, and interest earned on them, a DoD Component would reserve paragraph A.3.c and insert the wording of that paragraph as a new paragraph at the end of section A.2, thereby adding them to the list of items included as program income subject to FMS Article VII. (ii) Taxes, special assessments, levies, fines and other similar revenue raised by a governmental recipient, a DoD Component would reserve paragraph A.3.d and insert that wording as a new paragraph at the end of section A.2, thereby adding them to the list of items included as program income subject to FMS Article VII. § 1128.715 Recipient obligations for license fees and royalties. (a) Policy. (b) Award terms and conditions General. (2) Exception. § 1128.720 Program income use. (a) OMB guidance. (b) DoD implementation. (1) The terms and conditions may specify one of the following ways for recipients to use program income: (i) Addition. (ii) Deduction. (iii) Cost sharing or matching. (iv) Combination. (2) For research awards, absent compelling reasons to do otherwise for a specific set of general terms and conditions, a DoD Component must specify the addition alternative described in paragraph (b)(1)(i) of this section. (3) For general terms and conditions of other awards, a Component may specify any of the alternatives described in paragraph (a) of this section. However, the cost sharing or matching alternative is best used as part of a combination alternative, as described in paragraph (b)(1)(iv) of this section, unless the DoD Component knows at the time awards are made how much program income recipients will earn in relation to the amounts of their required cost sharing or matching. (c) Award terms and conditions. Default—addition alternative. (i) Research awards; and (ii) Other awards for which it elects to specify the addition alternative for use of program income. (2) Deduction alternative. (i) Substituting the following wording for the wording of paragraph E.1: “1. You must use any program income that you earn during the period of performance under this award as a deduction from the total approved budget of this award. The program income must be used for the purposes and in accordance with the terms and conditions of the award.” (ii) Including an additional paragraph E.4, such as the following, to inform recipients how the award will change if program income is deducted: “If you report program income on the Federal Financial Report (SF-425), we will recalculate the Federal share of the budget and the non-Federal share if there is one. We also will modify the award to reflect the recalculated share or shares and the amount of program income you must spend on the project, which is the difference between the originally approved and recalculated budget amounts.” (3) Cost-sharing or matching alternative. (4) A combination of alternatives. § 1128.725 Program income after the period of performance. (a) OMB guidance. (b) DoD implementation. (c) Award terms and conditions. Appendix A to Part 1128—Terms and Conditions for FMS Article I, “Financial Management System Standards” Unless any part of this appendix is reserved, as provided in § 1128.105, a DoD Component's general terms and conditions must include the following wording for FMS Article I. FMS Article I. Financial Management System Standards. (DECEMBER 2014) Section A. System standard for States. 1. Applicable State laws; and 2. To the extent they comply with the requirements of Section B of this Article, your procedures for expending and accounting for your own State funds. Section B. System standards for all recipients. 1. Inclusion, in your accounts, of the following information about each DoD grant or cooperative agreement that you receive: a. That you received the award from DoD; b. The number and title listed in the Catalog of Federal Domestic Assistance for the DoD program under which the award was made; c. The DoD award number; and d. The year (your fiscal year) in which you received the award. 2. Accurate, current, and complete disclosure of the financial results of the award needed to comply with financial and programmatic reporting requirements that are specified in REP Articles I and II of these general terms and conditions, as supplemented by any award-specific terms and conditions of this award concerning reporting requirements. If you are asked at any time under this award to report financial information on an accrual basis, you: a. Need not establish an accrual accounting system if you maintain your records on a different basis; and b. May develop the accrual data based on an analysis of the data you have on hand. 3. Records that identify adequately the sources of funds for all activities funded by DoD awards, including any required cost sharing or matching, and the application of those funds. This includes funding authorizations; your obligations and expenditures of the funds; unobligated balances; property and other assets under the award; program income; and interest. 4. Effective control over, and accountability for, all funds, property, and other assets under this award. You must adequately safeguard all assets and ensure they are used solely for authorized purposes (see Section C of this article for additional requirements concerning internal controls). 5. Comparison of expenditures under this award for project or program purposes with amounts in the approved budget for those purposes. 6. The ability to relate financial data to performance accomplishments under this award if you are required to do so by the programmatic reporting requirements in REP Article I of these general terms and conditions, as supplemented by any award-specific terms and conditions of this award concerning reporting requirements. 7. Written procedures: a. To implement requirements specified in FMS Article II, “Payments;” b. For determining the allowability of costs, which for this award are determined in accordance with FMS Article III, “Allowable costs, period of availability of funds, and fee or profit,” of these general terms and conditions, as supplemented by any award-specific terms and conditions of this award that relate to allowability of costs. Section C. Internal controls. e.g., Appendix B to Part 1128—Terms and Conditions for FMS Article II, “Payments” Unless a DoD Component adds, deletes, or modifies wording, as permitted by §§ 1128.210 through 1128.220, a DoD Component's general terms and conditions must include the following wording for FMS Article II. FMS Article II. Payments. (DECEMBER 2014) Section A. Awards to States. 1. Payment method, timing, and amounts. You must: a. Minimize the time between your receipt of a payment under this award and your disbursement of those funds for program purposes. b. Limit the amount of each advance payment request to the minimum amount you need to meet your actual, immediate cash requirements for carrying out the program or project. c. Submit each advance payment request approximately 10 days before you anticipate disbursing the requested amount for program purposes, so that your receipt of the funds will be as close in time as is administratively feasible to your actual cash outlay for direct project costs and the proportionate share of any allowable indirect costs. 2. Interest. Section B. Awards to institutions of higher education, nonprofit organizations, local governments, and Indian tribes. 1. Payment method. 2. Amounts requested. a. Limit the amount of any advance payment request to the minimum amount needed to meet your actual, immediate cash requirements for carrying out the purpose of the approved program or project, including direct project costs and a proportionate share of any allowable indirect costs. b. Exclude from any payment request amounts you are withholding from payments to contractors to assure satisfactory completion of the work. You may request those amounts when you make the payments to the contractors or to escrow accounts established to ensure satisfactory completion of the work. c. Exclude from any payment request amounts from any of the following sources that are available to you for program purposes under this award: program income, including repayments to a revolving fund; rebates; refunds; contract settlements; audit recoveries; and interest earned on any of those funds. You must disburse those funds for program purposes before requesting additional funds from us. 3. Timing of requests. 4. Frequency of requests. 5. Withholding of payments. a. We suspend either payments or the award, or disallow otherwise allowable costs, as a remedy under OAR Article III due to your material failure to comply with Federal statutes, regulations, or the terms and conditions of this award. If we suspend payments and not the award, we will release withheld payments upon your subsequent compliance. If we suspend the award, then amounts of payments are subject to adjustment in accordance with the terms and conditions of OAR Article III. b. You are delinquent in a debt to the United States as defined in OMB Circular A-129, “Policies for Federal Credit Programs and Non-Tax Receivables,” in which case we may, after reasonable notice, inform you that we will not make any further payments for costs you incurred after a specified date until you correct the conditions or liquidate the indebtedness to the Federal Government. c. The award-specific terms and conditions of this award include additional requirements that provide for withholding of payments based on conditions identified during our pre-award risk evaluation, in which case you should have been notified about the nature of those conditions and the actions needed to remove the additional requirements. 6. Depository requirements. a. There are no eligibility requirements for depositories you use for funds you receive under this award. b. You are not required to deposit funds you receive under this award in a depository account separate from accounts in which you deposit other funds. However, FMS Article I requires that you be able to account for the receipt, obligation, and expenditure of all funds under this award. c. You must deposit any advance payments of funds you receive under this award in insured accounts whenever possible and, unless any of the following apply, you must deposit them in interest-bearing accounts: i. You receive a total of less than $120,000 per year under Federal grants and cooperative agreements. ii. You would not expect the best reasonably available interest-bearing account to earn interest in excess of $500 per year on your cash balances of advance payments under Federal grants and cooperative agreements. iii. The best reasonably available interest-bearing account would require you to maintain an average or minimum balance higher than it would be feasible for you to do within your expected Federal and non-Federal cash balances. iv. A foreign government or banking system precludes your use of interest-bearing accounts. d. You may retain for administrative expenses up to $500 per year of interest that you earn in the aggregate on advance payments you receive under this award and other Federal grants and cooperative agreements. You must remit annually the rest of the interest to the Department of Health and Human Services, Payment Management System, using the procedures set forth in OMB guidance in 2 CFR 200.305(b)(9). Section C. Electronic funds transfer and other payment procedural instructions or information. 1. Electronic funds transfer. 2. [Reserved] Appendix C to Part 1128—Terms and Conditions for FMS Article III, “Allowable Costs, Period of Availability of Funds, and Fee or Profit” Unless a DoD Component reserves sections or paragraphs of this article, as permitted by §§ 1128.310 through 1128.325, a DoD Component's general terms and conditions must include the following wording for FMS Article III. FMS Article III. Allowable Costs, Period of Availability of Funds, and Fee or Profit (December 2014) Section A. Allowable costs. 1. General case. a. An institution of higher education b. A hospital c. A nonprofit organization other than a hospital or institution of higher education d. A State, local government, or Indian tribe e. A for-profit entity (other than a hospital) or a nonprofit organization listed in appendix VIII to 2 CFR part 200: i. The allowability of costs must be determined in accordance with: (A) The cost principles for commercial organizations in the Federal Acquisition Regulation (FAR) at Subpart 31.2 of 48 CFR part 31, as supplemented by provisions of the Defense Federal Acquisition Regulation Supplement (DFARS) at Subpart 231.2 of 48 CFR part 231; and (B) For a for-profit entity, the additional provisions on allowability of audit costs, in 32 CFR 34.16(f). ii. The indirect cost rate to use in that determination is: (A) The for-profit entity's federally negotiated indirect cost rate if it has one. (B) Subject to negotiation between you and the for-profit entity if it does not have a federally negotiated indirect cost rate. The rate that you negotiate may provide for reimbursement only of costs that are allowable in accordance with the cost principles specified in paragraph A.1.e.i of this article. 2. Exception. Section B. Clarifications concerning charges for professional journal publications. 1. Costs of publishing in professional journals are allowable under 2 CFR 200.461(b) only if they are consistently applied across the organization. An organization may not charge costs of journal publications as direct costs to this award if it charges any of the same type of costs for other journal publications as indirect costs. 2. “Costs of publication or sharing of research results” in 2 CFR 200.461(b)(3) are the “charges for professional journal publications” described in 2 CFR 200.461(b) and subject to the conditions of 2 CFR 200.461(b)(1) and (2). Section C. Period of availability of funds. 1. Allowable costs incurred during the period of performance specified in this award, including any subsequent amendments to it; 2. Any pre-award costs that you are authorized (by either the terms and conditions of FMS Article IV or the DoD awarding official) to incur prior to the start of the period of performance, at your own risk, for purposes of the project or program under this award; and 3. Costs of publishing in professional journals incurred after the period of performance, as permitted under 2 CFR 200.461(b)(3), if: a. We receive the request for payment for such costs no later than the date on which REP Article II requires you to submit the final financial report to us (or, if we grant your request for an extension of the due date, that later date on which the report is due); and b. Your reported expenditures on the final financial report include the amount you disbursed for those costs. Section D. Fee or profit. 1. You may not receive any fee or profit under this award. 2. You may not use funds available to you under this award to pay fee or profit to an entity of any type to which you make a subaward. 3. You may pay fee or profit to an entity with which you enter into a procurement transaction to purchase goods or general support services for your use in carrying out the project or program under the award. Appendix D to Part 1128—Terms and Conditions for FMS Article IV, “Revision of Budget and Program Plans” Unless a DoD Component reserves a section or paragraph or adds or modifies wording, as permitted by §§ 1128.410 through 1128.430, a DoD Component's general terms and conditions must include the following wording for FMS Article IV. FMS Article IV. Revision of Budget and Program Plans (DECEMBER 2014) Section A. Approved budget. 1. Is the most recent version of the budget that you submitted, and we approved (either at the time of the initial award or a more recent amendment), to summarize planned expenditures for project or program purposes. 2. Includes all Federal funding that we make available to you under this award to use for project or program purposes and any cost sharing or matching that you are required to provide under this award for those same purposes. Section B. Revisions requiring prior approval. 1. Non-construction activities. a. A change in the scope or objective of the project or program under this award, even if there is no associated budget revision that requires our prior approval. b. A change in a key person identified in the award cover pages. c. The approved principal investigator's or project director's disengagement from the project for more than three months, or a 25 percent reduction in his or her time devoted to the project. d. The inclusion of direct costs that require prior approval in accordance with the applicable cost principles, as identified in FMS Article III. e. The transfer to other categories of expense of funds included in the approved budget for participant support costs, as defined at 2 CFR 200.75. f. A subaward to another entity under which it will perform a portion of the substantive project or program under the award, if it was not included in the approved budget. This does not apply to your contracts for acquisition of supplies, equipment, or general support services you need to carry out the project or program. g. Any change in the cost sharing or matching you provide under the award, as included in the approved budget, for which FMS Article VI requires prior approval. h. A transfer of funds among direct cost categories or programs, functions, and activities, if the Federal share of the total value for your award exceeds the simplified acquisition threshold and the cumulative amount of the transfers exceeds or is expected to exceed 10 percent of the approved budget. i. The need arises for additional Federal funds to complete the project or program. 2. Construction activities. a. A change in the scope or objective of the project or program under this award, even if there is no associated budget revision that requires our prior approval. b. The need arises for additional Federal funds to complete the project or program. c. The inclusion of direct costs that require prior approval in accordance with the applicable cost principles, as identified in FMS Article III. 3. Funding transfers between construction and non-construction activities. Section C. Pre-award costs, carry forward of unobligated balances, and one-time no-cost extensions. 1. Charge to this award after you receive it pre-award costs that you incurred, at your own risk, up to 90 calendar days before the start date of the period of performance, as long as they are costs that would be allowable charges to the project or program under the terms and conditions of FMS Article III if they were incurred during the period of performance. 2. Carry forward an unobligated balance to a subsequent period of performance under this award. 3. Initiate a one-time extension of the period of performance by up to 12 months, as long as: a. You notify us in writing with the supporting reasons and revised end date of the period of performance at least 10 calendar days before the current end date. b. The extension does not require any additional Federal funding. c. The extension does not involve any change in the scope or objectives of the project or program. Section D. Procedures. 1. We will review each request you submit for prior approval for a budget or program change and, within 30 calendar days of our receipt of your request, we will respond to you in writing to either: a. Notify you whether your request is approved; or b. Inform you that we still are considering the request, in which case we will let you know when you may expect our decision. 2. [Reserved] Appendix E to Part 1128—Terms and Conditions for FMS Article V, “Non-Federal Audits” Unless a DoD Component reserves Section B, as permitted by § 1128.605, a DoD Component's general terms and conditions must use the following wording for FMS Article V. FMS Article V. Non-Federal Audits (DECEMBER 2014) Section A. Requirements for entities subject to the Single Audit Act. Section B. Requirements for for-profit entities. e.g., Appendix F to Part 1128—Terms and Conditions for FMS Article VI, “Cost Sharing or Matching” Unless a DoD Component reserves FMS Article VI in its entirety, reserves one or more paragraphs within sections of the article, or includes added or alternate wording, as permitted by §§ 1128.610 through 1128.635, a DoD Component's general terms and conditions must use the following wording for FMS Article VI. FMS Article VI. Cost Sharing or Matching (DECEMBER 2014) Section A. Required cost sharing or matching 1. If any cost sharing or matching is required under this award, the total amount or percentage required is shown in the award cover pages and included in the approved budget. That cost sharing or matching includes all: a. Cash contributions to the project or program either made by or through (if made by a third party) you and any subrecipients. b. Third-party in-kind contributions to the project or program. 2. You must obtain our prior approval if you wish to: a. Change the amount or percentage of cost sharing or matching required under this award. b. [Reserved] Section B. Allowability as cost sharing or matching. 1. You (or the subrecipient, if it is a subrecipient contribution) maintain records from which one may verify that the contribution was made to the project or program and, if it is a third-party in-kind contribution, its value. 2. The contribution is not counted as cost sharing or matching for any other Federal award. 3. The contribution is: a. Allowable under the cost principles applicable to you (or the subrecipient, if it is a subrecipient contribution) under FMS Article III of these terms and conditions; and b. Allocable to the project or program and reasonable. 4. The Government does not pay for the contribution through another Federal award, unless that award is under a program that has a Federal statute authorizing application of that program's Federal funds to other Federal programs' cost sharing or matching requirements. 5. The value of the contribution is not reimbursed by the Federal share of this award as either a direct or indirect cost. 6. The contribution conforms to the other terms and conditions of this award, including the award-specific terms and conditions. Section C. Allowability of unrecovered indirect costs as cost sharing or matching. Section D. Allowability of program income as cost sharing or matching. Section E. Valuation of services or property that you or subrecipients contribute or donate. 1. Usual valuation of services or property that you or subrecipients contribute or donate. i.e., 2. Needed approvals for, and valuation of, property that you or subrecipients donate. a. Types of property that may be donated. i. Buildings or land. ii. Other capital assets. b. Usual valuation of donated property. i. The value of the remaining life of the property recorded in your accounting records at the time of donation, or ii. The current fair market value. c. Approval needed for alternative valuation of property. d. Federal interest in donated property. Section F. Valuation of third-party in-kind contributions. 1. General. i.e., 2. Valuation of third-party services. a. Volunteer services. b. Services of third parties' employees. c. Additional requirement for donations to nonprofit organizations. i. OMB guidance in 2 CFR 200.434(e) also applies and may require the nonprofit organization to allocate a proportionate share of its applicable indirect costs to the donated services. ii. The indirect costs that the nonprofit organization allocates to the donated services in that case must be considered project costs and may be either reimbursed under the award or counted toward required cost sharing or matching, but not both. 3. Valuation of third-party property. a. Supplies donated by third parties. e.g., b. Equipment, buildings, or land donated by third parties. i. The value of third-party donations of equipment, buildings, or land that may be counted toward cost sharing or matching when the third party transferred title to you or a subrecipient depends on the purpose of the award in accordance with the following: (A) If one of the purposes of the award is to assist you or the subrecipient in the acquisition of equipment, buildings, or land, you may count the aggregate fair market value of the donated property toward cost sharing or matching. (B) If the award's purposes instead include only the support of activities that require the use of equipment, buildings, or land, you may only charge depreciation unless you obtain our prior approval to count as cost sharing or matching the fair market value of equipment or other capital assets and fair rental charges for land. ii. The values of the donated property must be determined in accordance with the usual accounting policies of the entity to which the third party transferred title to the property, with the qualifications specified in 2 CFR 200.306(i)(1) and (2) for donated land and buildings and donated equipment, respectively. c. Use of space donated by third parties. d. Equipment loaned by third parties. Appendix G to Part 1128—Terms and Conditions for FMS Article VII, “Program Income” Unless a DoD Component revises the wording of Section A or E or reserves Section D, as permitted by §§ 1128.710 through 1128.725, a DoD Component's general terms and conditions must use the following wording for FMS Article VII. FMS Article VII. Program Income (December 2014) Section A. Definition. 1. Is gross income that: a. You earn that is directly generated by a supported activity or earned as a result of this award; or b. A subrecipient earns as a result of a subaward you make under this award. 2. Includes, but is not limited to, income earned under this award from: a. Fees for services performed; b. The use or rental of real or personal property acquired under any Federal award and currently administered under this award; c. The sale of commodities or items fabricated under this award; d. License fees and royalties on patents and copyrights; and e. Payments of principal and interest on loans made with Federal award funds. 3. Does not include for purposes of this award any: a. Interest earned on advance payments, disposition of which is addressed in FMS Article II; b. Proceeds from the sale of real property, equipment or supplies, which is addressed in PROP Articles III and IV; c. Rebates, credits, discounts, and interest earned on any of them; and d. Governmental revenues, including any taxes, special assessments, levies, fines and similar revenues you raise. Section B. Encouragement to earn program income. Section C. Costs of generating program income. Section D. License fees and royalties. Section E. Use of program income. 1. You must use any program income that you earn during the period of performance under this award to increase the amount of the award (the sum of the Federal share and any cost sharing or matching you are required to provide), thereby increasing the amount budgeted for the project. The program income must be used for the purposes and under the terms and conditions of the award. 2. Your use of the additional funding is subject to the terms and conditions of this award, including: a. FMS Article II concerning your use of balances of program income before you request additional funds from us; and b. FMS Article III concerning allowability of costs for which the funds may be used. 3. You must report on each Federal Financial Report (SF-425) that you submit in accordance with REP Article II the program income that you earn and any that you use during the reporting period covered by that SF-425. Section F. Duration of accountability for program income.