20 C.F.R. Subpart D—Administrative Standards
Title 20 - Employees' Benefits
This subpart establishes the administrative and financial standards and requirements that apply to funds received under the Act. (a)(1) Pursuant to §627.200 of this part and the Governor/Secretary agreement, each program year there will be executed a grant agreement signed by the Governor or the Governor's designated representative and the Secretary or the Secretary's designated representative (Grant Officer). (2) The grant agreement described in paragraph (a)(1) of this section shall be the basis for Federal obligation of funds for the program year for programs authorized by titles I, II, and III, including any title III discretionary projects awarded to the State, and such other funds as the Secretary may award under the grant. (b) Funding. The Secretary shall allot funds to the States in accordance with sections 162, 202, 252, 262, and 302 of the Act. The Secretary shall obligate such allotments through Notices of Obligation. (c) Pursuant to instructions issued by the Secretary, additional funds may be awarded to States for the purpose of carrying out the administrative activities described in section 202(c)(1)(A) when a State receives an amount under such section that is less than $500,000 (section 453(d)). (d) Termination. Each grant shall terminate when the period of availability for expenditure (funding period), as specified in section 161(b) of the Act, has expired and shall be closed in accordance with §627.485, of this part, Closeout. (a)(1) The Governor shall reallocate title II-A and II-C funds among service delivery areas within the State in accordance with the provisions of section 109(a) of the Act. The amount to be reallocated, if any, shall be based on SDA obligations of the funds allocated separately to each SDA for title II-A or II-C programs. (2) The Governor shall not establish reallocation requirements that are inconsistent with the provisions of section 109(a) of the Act. (b) The Secretary shall reallot title II-A and II-C funds among the States in accordance with the provisions of section 109(b) of the Act. The amounts to be reallotted, if any, shall be based on State obligations of the funds allotted separately to each State for title II-A or II-C programs, excluding funds allotted under section 202(c)(1)(D) and the State's obligation of such funds. (c) Title III funds shall be reallotted by the Secretary in accordance with section 303 of the Act. (a) General. Each recipient and subrecipient shall follow its normal insurance procedures except as otherwise indicated in this section and §627.465, Property Management Standards. (b) DOL assumes no liability with respect to bodily injury, illness, or any other damages or losses, or with respect to any claims arising out of any activity under a JTPA grant or agreement whether concerning persons or property in the recipient's or any subrecipient's organization or that of any third party. (a) General. (1) For purposes of this section, the term procurement means the process which leads to any award of JTPA funds. (2) The Governor, in accordance with the minimum requirements established in this section, shall prescribe and implement procurement standards to ensure fiscal accountability and prevent waste, fraud, and abuse in programs administered under this Act. (3) When procuring property and services, a State shall follow the same policies and procedures it uses for procurements from its non-Federal funds, provided that the State's procurement procedures also comply with the minimum requirements of this section. (4) Each subrecipient shall use its own procurement procedures which reflect applicable State and local laws and regulations, provided that the subrecipient's procurement procedures also comply with the requirements of this section and the standards established by the Governor, pursuant to paragraph (a)(2) of this section. (5) States and subrecipients shall not use funds provided under JTPA to duplicate facilities or services available in the area (with or without reimbursement) from Federal, State, or local sources, unless it is demonstrated that the JTPA-funded alternative services or facilities would be more effective or more likely to achieve performance goals (sections 107(b) and 141(h)). (6) Awards are to be made to responsible organizations possessing the demonstrated ability to perform successfully under the terms and conditions of a proposed subgrant or contract. A determination of demonstrated ability shall be done in accordance with the requirements contained in §627.422 (b) and (d). (b) Competition. (1) Each State and subrecipient shall conduct procurements in a manner which provides full and open competition. Some of the situations considered to be restrictive of competition include, but are not limited to: (i) Placing unreasonable requirements on firms or organizations in order for them to qualify to do business; (ii) Requiring unnecessary experience and excessive bonding; (iii) Noncompetitive pricing practices between firms or organizations or between affiliated companies or organizations; (iv) Noncompetitive awards to consultants that are on retainer contracts; (v) Organizational conflicts of interest; (vi) Specifying only a “brand name” product instead of allowing “an equal” product to be offered and describing the performance of other relevant requirements of the procurement; (vii) Overly restrictive specifications; and (viii) Any arbitrary action in the procurement process. (2) Each State and subrecipient shall have written procedures for procurement transactions. These procedures shall ensure that all solicitations: (i) Incorporate a clear and accurate description of the technical requirements for the material, product, or service to be procured (including quantities). Such description shall not, in competitive procurements, contain features which unduly restrict competition; and (ii) Identify all requirements which the offerors must fulfill and all other factors to be used in evaluating bids or proposals. (3) Each State and subrecipient shall ensure that all prequalified lists of persons, firms, or other organizations which are used in acquiring goods and services are current and include sufficient numbers of qualified sources to ensure maximum open and free competition. (c) Conflict of interest. (1) Each recipient and subrecipient shall maintain a written code of standards of conduct governing the performance of persons engaged in the award and administration of JTPA contracts and subgrants. To the extent permitted by State or local law or regulation, such standards of conduct will provide for penalties, sanctions, or other disciplinary actions for violations of such standards by the awarding agency's officers, employees, or agents, or by awardees or their agents. (2) Staff conflict of interest. Each recipient and subrecipient shall ensure that no individual in a decisionmaking capacity shall engage in any activity, including participation in the selection, award, or administration of a subgrant or contract supported by JTPA funds if a conflict of interest, real or apparent, would be involved. (3) PIC conflict of interest. (i) A PIC member shall not cast a vote, nor participate in any decisionmaking capacity, on the provision of services by such member (or any organization which that member directly represents), nor on any matter which would provide any direct financial benefit to that member. (ii) Neither membership on the PIC nor the receipt of JTPA funds to provide training and related services shall be construed, by itself, to violate provisions of section 141(f) of the Act or §627.420. (4) A conflict of interest under paragraphs (c) (2) and (3) of this section would arise when: (i) The individual, (ii) Any member of the individual's immediate family, (iii) The individual's partner, or (iv) An organization which employs, or is about to employ, any of the above, has a financial or other interest in the firm or organization selected for award. (5) The officers, employees, or agents of the agency and PIC members making the award will neither solicit nor accept gratuities, favors, or anything of monetary value from awardees, potential awardees, or parties to subagreements. States and subrecipients may set minimum rules where the financial interest is not substantial or the gift is an unsolicited item of nominal intrinsic value. (d) Methods of procurement. (1) Each State and subrecipient shall use one of the following methods of procurement, as appropriate for each procurement action: (i) Small purchase procedures—simple and informal procurement methods for securing services, supplies, or other property that do not cost more than $25,000 in the aggregate. Recipients and subrecipients shall not break down one purchase into several purchases merely to be able to use small purchase procedures. The Governor shall establish standards for small purchase procedures to ensure that price or rate quotations will be documented from an adequate number of qualified sources. (ii) Sealed bids (formal advertising)—bids are publicly solicited procurements for which a firm-fixed-price award (lump sum or unit price) or other fixed-price arrangement is awarded to the responsible bidder whose bid, conforming with all the material terms and conditions of the invitation for bids, is the lowest in price. The Governor shall establish standards for sealed bids which include requirements that invitations for bids be publicly advertised, and that bids be solicited from an adequate number of organizations. (iii) Competitive proposals—normally conducted with more than one source submitting an offer and either a fixed-price or cost-reimbursement type award is made. The Governor shall establish standards for competitive proposals which include requirements for the establishment of a documented methodology for technical evaluations and award to the responsible offeror whose proposals are most advantageous to the program with price, technical, and other factors considered. (iv) Noncompetitive proposals (sole source)—procurement through solicitation of a proposal from only one source, the funding of an unsolicited proposal, or when, after solicitation of a number of sources, competition is determined inadequate. Each State and subrecipient shall minimize the use of sole source procurements to the extent practicable, but in every case the use of sole source procurements shall be justified and documented. On-the-job training (OJT) awards (except OJT brokering awards, which shall be selected competitively) and the enrollment of individual participants in classroom training may be sole sourced. For all other awards, procurement by noncompetitive proposals may be used only when the award is infeasible under small purchase procedures, sealed bids, or competitive proposals and one of the following circumstances applies: (A) The item or service is available only from a single source; (B) The public exigency or emergency need for the item or service does not permit a delay resulting from competitive solicitation; (C) For SDAs, SSGs and subrecipients, the awarding agency authorizes noncompetitive proposals; for States, the noncompetitive proposal is approved through the State's normal sole source approval process; (D) After solicitation of a number of sources, competition is determined inadequate; (2) Pass Throughs—The procurement rules do not apply to pass throughs of monies from any unit of State or local government (or SDA or SSG administrative entities) to other such units, such as a local educational agency or public housing authority. To qualify as a pass through, the receiving entity must either further pass through the monies to another such entity or procure services in accordance with the procurement rules. (e) Cost or price analysis. (1) Each recipient, in accordance with the minimum requirements established in this section, shall establish standards on the performance of cost or price analysis. (2) Each recipient and subrecipient shall perform a cost or price analysis in connection with every procurement action, including modifications (except for modifications where a determination has been made that they do not have a monetary impact). The method and degree of analysis depends on the facts surrounding the particular procurement and pricing situation. At a minimum, the awarding agency shall make independent estimates before receiving bids or proposals. A cost analysis is necessary when the offeror is required to submit the elements of the estimated cost (e.g., as in the case of subrecipient relationships), when adequate price competition is lacking, and for sole source procurements, including modifications or change orders. A price analysis shall be used when price reasonableness can be established on the basis of a catalog or market price of a commercial product sold in substantial quantities to the general public or based on prices set by law or regulation (including situations involving inadequate price competition and sole source procurements where a price analysis may be used in lieu of a cost analysis). When a cost analysis is necessary and there is inadequate price competition, the offeror shall certify that to the best of its knowledge and belief, the cost data are accurate, complete, and current at the time of agreement on price. Awards or modifications negotiated in reliance on such data should provide the awarding agency a right to a price adjustment to exclude any significant sum by which the price was increased because the awardee had knowingly submitted data that were not accurate, complete, or current as certified. (3) JTPA procurements shall not permit excess program income (for nonprofit and governmental entities) or excess profit (for private for-profit entities). If profit or program income is included in the price, the awarding agency shall negotiate profit or program income as a separate element of the price for each procurement in which there is no price competition and in all cases where cost analysis is performed. To establish a fair and reasonable profit or program income, consideration shall be given to: (i) The complexity of the work to be performed; (ii) The risk borne by the awardee; (iii) The offeror's investment; (iv) The amount of subcontracting/subgranting; (v) The quality of the offeror's record of past performance; (vi) Industry profit rates in the surrounding geographical area for similar work; and (vii) Market conditions in the surrounding geographical area. (4) Each recipient and subrecipient may charge to the agreement only those costs which are consistent with the allowable cost provisions of §627.435 of this part, including the guidelines issued by the Governor, as required at §627.435(i) of this part. (5) The cost plus a percentage of cost method shall not be used. (f) Oversight. (1) Each recipient and subrecipient shall conduct and document oversight to ensure compliance with the procurement standards, in accordance with the requirements of §627.475 of this part, Oversight and monitoring. (2) Each recipient and subrecipient shall maintain an administration system which ensures that vendors and subrecipients perform in accordance with the terms, conditions, and specifications of their awards. (g) Transactions between units of government. (1) Except as provided in paragraph (g)(2) of this section, procurement transactions between units of State or local governments, or any other entities organized principally as the administrative entity for service delivery areas or substate areas, shall be conducted on a cost reimbursable basis. Cost plus type awards are not allowable. (2) In the case of procurement transactions with schools that are a part of these entities, such as State universities and secondary schools, when tuition charges or entrance fees are not more than the educational institution's catalogue price, necessary to receive specific training, charged to the general public to receive the same training, and for training of participants, the tuition and/ or entrance fee does not have to be broken out by items of cost. (h) Award provisions. Each recipient and subrecipient agreement shall: (1) Clearly specify deliverables and the basis for payment; and (2) In the case of awards to subrecipients, contain clauses that provide for: (i) Compliance with the JTPA regulations; (ii) Assurance of nondiscrimination and equal opportunity as found in 29 CFR 34.20, Assurance required; duration of obligation; covenants. (3) In the case of awards to vendors, contain clauses that provide for: (i) Access by the recipient, the subrecipient, the Department of Labor, the Comptroller General of the United States, or any of their duly authorized representatives to any books, documents, papers, and records (including computer records) of the contractor or subcontractor which are directly pertinent to charges to the program, in order to conduct audits and examinations and to make excerpts, transcripts, and photocopies; this right also includes timely and reasonable access to contractor's and subcontractor's personnel for the purpose of interviews and discussions related to such documents; (4) In the case of awards to both subrecipients and vendors, contain clauses that provide for: (i) Administrative, contractual, or legal remedies in instances where contractors/subgrantees violate or breach agreement terms, which shall provide for such sanctions and penalties as may be appropriate; (ii) Notice of 29 CFR 97.34 requirements pertaining to copyrights (agreements which involve the use of copyrighted materials or the development of copyrightable materials); (iii) Notice of requirements pertaining to rights to data. Specifically, the awarding agency and the Department of Labor shall have unlimited rights to any data first produced or delivered under the agreement (agreements which involve the use/development of computer programs/ applications, or the maintenance of databases or other computer data processing program, including the inputing of data); (iv) Termination for cause and for convenience by the awarding agency, including the manner by which the termination will be effected and the basis for settlement; (v) Notice of awarding agency requirements and regulations pertaining to reporting; (vi) Audit rights and requirements; (vii) Payment conditions and delivery terms; (viii) Process and authority for agreement changes; and (ix) Provision against assignment; (5) The Governor may establish additional clauses, as deemed appropriate, for State and subrecipient procurements. (i) Disputes. (1) The Governor shall ensure that the recipient and each subrecipient have protest procedures to handle and resolve disputes relating to their procurements. A protester shall exhaust all administrative remedies with the subrecipient before pursuing a protest at a higher level. (2) Violations of law will be handled in accordance with the requirements contained in §627.500(c). (j) Each recipient and subrecipient shall maintain records sufficient to detail the significant history of a procurement. These records shall include, but are not necessarily limited to, the following: rationale for the method of procurement, selection of agreement type, awardee selection or rejection, and the basis for the agreement price. (a) Service providers selected under titles I, II, and III of the Act shall be selected in accordance with the provisions of section 107 of the Act, except that section 107(d) shall not apply to training under title III. (b) Consistent with the requirements of this section, the Governor shall establish standards to be followed by recipients and subrecipients in making determinations of demonstrated performance, prior to the award of all agreements under titles I, II, and III of the Act. These standards shall comply with the requirements of this section, §627.420, of this part, Procurement, and section 164(a)(3) of the Act. The standards shall require that determinations of demonstrated performance will be in writing, and completed prior to the award of an agreement. (c) Each recipient and subrecipient, to the extent practicable, shall select service providers on a competitive basis, in accordance with the standards established in §627.420(b) of this part, Procurement. When a State, SDA, SSG, or administrative entity determines that services other than intake and eligibility determination will be provided by its own staff, a determination shall be made of the demonstrated performance of the entity to provide the services. This determination: Shall be in writing; shall take into consideration the matters listed in paragraph (d) of this section; and may, if appropriate, be documented and described in the Job Training Plan, GCSSP, or EDWAA plan. (d) Awards are to be made to organizations possessing the demonstrated ability to perform successfully under the terms and conditions of a proposed subgrant or contract. Where comparable proposals have been received from an offeror which has demonstrated performance and a high-risk recipient/subrecipient, and a determination has been made that both proposals are fundable, the award should be made to the offeror which has demonstrated performance, unless other factors dictate a contrary result. Determinations of demonstrated performance shall be in writing, and take into consideration such matters as whether the organization has: (1) Adequate financial resources or the ability to obtain them; (2) The ability to meet the program design specifications at a reasonable cost, as well as the ability to meet performance goals; (3) A satisfactory record of past performance (in job training, basic skills training, or related activities), including demonstrated quality of training; reasonable drop-out rates from past programs; where applicable, the ability to provide or arrange for appropriate supportive services as specified in the ISS, including child care; retention in employment; and earning rates of participants; (4) For title II programs, the ability to provide services that can lead to the achievement of competency standards for participants with identified deficiencies; (5) A satisfactory record of integrity, business ethics, and fiscal accountability; (6) The necessary organization, experience, accounting and operational controls; and (7) The technical skills to perform the work. (e) In selecting service providers to deliver services in a service delivery area/substate area, proper consideration shall be given to community-based organizations (section 107(a)). These community-based organizations, including women's organizations with knowledge about or experience in nontraditional training for women, shall be organizations which are recognized in the community in which they are to provide services. Where proposals are evenly rated, and one of these proposals has been submitted by a CBO, the tie breaker may go to the CBO. (f) Appropriate education agencies in the service delivery area/substate area shall be provided the opportunity to provide educational services, unless the administrative entity demonstrates that alternative agency(ies) or organization(s) would be more effective or would have greater potential to enhance the participants' continued educational and career growth (section 107(c)). Where proposals are evenly rated, and one of these proposals has been submitted by an educational institution, the tie breaker shall go to the educational institution. (g) In determining demonstrated performance of institutions/organizations which provide training, such performance measures as retention in training, training completion, job placement, and rates of licensure shall be taken into consideration. (h) Service providers under agreements to conduct projects under section 123(a)(2) shall be selected in accordance with the requirements of this section. (i) The requirements of section 204(d)(2)(B) shall be followed in entering into agreements to provide services for older individuals funded under title II, part A. (j) Additional requirements for selection of service providers by substate grantees are described at section 313(b)(6) of the Act and §631.52 of this chapter. (k) Amounts for service providers. Each SDA/SSG shall ensure that, for all services provided to participants through contracts, grants, or other agreements with a service provider, such contract, grant, or agreement shall include appropriate amounts necessary for administration and supportive services (section 108(b)(5)). (l) When a State, SDA or SSG has a policy of awarding additional points to proposals received from such organizations as minority business enterprises and women-owned businesses, and this policy is generally applicable to its other funds, the State, SDA or SSG may apply this policy to the JTPA funds. (a) A recipient or subrecipient may be considered “high-risk” if an awarding agency determines that the recipient or subrecipient is otherwise responsible, but: (1) Has a history of unsatisfactory performance; (2) Is not financially stable; (3) Has a management system which does not meet the management standards set forth in this part; or (4) Has not conformed to terms and conditions of a previously awarded grant or subgrant. (b) If the awarding agency determines that an award will be made to a “high-risk” recipient or subrecipient, then special funding restrictions that address the “high-risk” status may be included in the award. Funding restrictions may include, but are not limited to: (1) Payment on a reimbursement basis; (2) Requiring additional and/or more detailed financial or performance reports; (3) Additional monitoring; (4) Requiring the recipient or subrecipient to obtain specific technical or management assistance; and/or (5) Establishing additional prior approvals. (c) If an awarding agency decides to impose such funding restrictions, the awarding official will notify the recipient or subrecipient as early as possible, in writing, of: (1) The nature of the funding restrictions; (2) The reason(s) for imposing them; (3) The corrective actions which must be taken before they will be removed and the time allowed for completing the corrective actions; and (4) The method of requesting reconsideration of the restrictions imposed. (a) No recipient or subrecipient shall make any awards or permit any awards at any tier to any party which is debarred or suspended or is otherwise excluded from or ineligible for participation in Federal assistance programs in accordance with the Department of Labor regulations at 29 CFR part 98. (b) Recipients and subrecipients shall comply with the applicable requirements of the Department of Labor regulations at 29 CFR part 98. (a)(1) General. The financial management system and the participant data system of each recipient and subrecipient shall provide federally required records and reports that are uniform in definition, accessible to authorized Federal and State staff, and verifiable for monitoring, reporting, audit, program management, and evaluation purposes (sections 165(a)(1) and (2), and 182). (2) An awarding agency may review the adequacy of the financial management system and participant data system of any recipient/subrecipient as part of a preaward review or at any time subsequent to award. (b) Financial systems. Recipients and subrecipients shall ensure that their own financial systems as well as those of their subrecipients provide fiscal control and accounting procedures that are: (1) In accordance with generally accepted accounting principles applicable in each State including: (i) Information pertaining to subgrant and contract awards, obligations, unobligated balances, assets, liabilities, expenditures, and income; (ii) Effective internal controls to safeguard assets and assure their proper use; (iii) A comparison of actual expenditures with budgeted amounts for each subgrant and contract; (iv) Source documentation to support accounting records; and (v) Proper charging of costs and cost allocation; and (2) Sufficient to: (i) Permit preparation of required reports; (ii) Permit the tracing of funds to a level of expenditure adequate to establish that funds have not been used in violation of the applicable restrictions on the use of such funds; (iii) As required by section 165(g), permit the tracing of program income, potential stand-in costs and other funds that are allowable except for funding limitations, as defined in §627.480(f) of this part, Audits; and (iv) Demonstrate compliance with the matching requirement of section 123(b)(2). (c) Applicant and participant data systems. Each recipient and subrecipient shall ensure that records are maintained: (1) Of each applicant for whom an application has been completed and a formal determination of eligibility or ineligibility made; (2) Of each participant's enrollment in a JTPA-funded program in sufficient detail to demonstrate compliance with the relevant eligibility criteria attending a particular activity and with the restrictions on the provision and duration of services and specific activities imposed by the Act; and (3) Of such participant information as may be necessary to develop and measure the achievement of performance standards established by the Secretary. (a) Except as provided in paragraph (h)(2) of this section, JTPA grant payments shall be made to the Governor in accordance with the Cash Management Improvement Act of 1990 (31 U.S.C. 6501, et seq.), Department of Treasury regulations at 31 CFR part 205, and the State Agreement entered into with the Department of the Treasury. (b) Basic standard. Except as provided in paragraphs (d) and (e) of this section, each recipient and subrecipient shall be paid in advance, provided it demonstrates the willingness and ability to limit advanced funds to the actual immediate disbursement needs in carrying out the JTPA program. (c) Advance payments. To the maximum extent feasible, each subrecipient shall be provided advance payments via electronic funds transfer, following the procedures of the awarding agency. (d) Reimbursement. (1) Reimbursement is the preferred method when the requirements in paragraph (b) of this section are not met. (i) Each recipient shall submit requests for reimbursement in accordance with the provisions at 31 CFR part 205. (ii) Each subrecipient shall submit requests for reimbursement in accordance with requirements established by the awarding agency. (2) Each subrecipient shall be paid as promptly as possible after receipt of a proper request for reimbursement. (e) Working capital advance payments. If a subrecipient cannot meet the criteria for advance payments described in paragraph (b) of this section, and the awarding agency has determined that reimbursement is not feasible because the subrecipient lacks sufficient working capital, the awarding agency may provide cash on a working capital advance payment basis. Under this procedure, the awarding agency shall advance cash to the subrecipient to cover its estimated disbursement needs for an initial period, generally geared to the subrecipient's disbursing cycle. In no event may such an advance exceed 20 percent of the award amount. Thereafter, the awarding agency shall reimburse the subrecipient for its actual cash disbursements. The working capital advance method of payment shall not be used by recipients or subrecipients if the reason for using such method is the unwillingness or inability of the recipient or subrecipient to provide timely advances to the subrecipient to meet the subrecipient's actual cash disbursements. (f) Effect of program income, refunds, and audit recoveries on payment. Each recipient and subrecipient shall disburse cash received as a result of program income, rebates, refunds, contract settlements, audit recoveries, and interest earned on such funds before requesting additional cash payments. (g) Cash depositories. (1) Consistent with the national goal of expanding the opportunities for minority business enterprises, each recipient and subrecipient is encouraged to use minority-owned banks (a bank which is at least 50 percent owned by minority group members). Additional information may be obtained from the Minority Business Development Agency, Department of Commerce, Washington, DC 20230. (2) A recipient or subrecipient shall not be required to maintain a separate bank account but shall separately account for Federal funds on deposit. (h) Interest earned on advances. (1) An interest liability shall accrue on advance payments between Federal agencies and State governments, as provided by the Cash Management Improvement Act (31 U.S.C. 6501, et seq.) and implementing regulations at 31 CFR part 205. (2) Each recipient and subrecipient shall account for interest earned on advances of Federal funds as program income, as provided at §627.450 of this part, Program income. (a) General. To be allowable, a cost shall be necessary and reasonable for the proper and efficient administration of the program, be allocable to the program, and, except as provided herein, not be a general expense required to carry out the overall responsibilities of the Governor or a governmental subrecipient. Costs charged to the program shall be accorded consistent treatment through application of generally accepted accounting principles appropriate to the JTPA program, as determined by the Governor. (b) Whether a cost is charged as a direct cost or as an indirect cost shall be determined in accordance with the descriptions of direct and indirect costs contained in the OMB Circulars identified in DOL's regulations at 29 CFR 97.22(b). (c) Costs allocable to another Federal grant, JTPA program, or cost category may not be shifted to a JTPA grant, subgrant, program, or cost category to overcome fund deficiencies, avoid restrictions imposed by law or grant agreements, or for other reasons. (d) Applicable credits such as rebates, discounts, refunds, and overpayment adjustments, as well as interest earned on any of them, shall be credited as a reduction of costs if received during the same funding period that the cost was initially charged. Credits received after the funding period shall be returned to the Department as provided for at §627.490(b). (e) The following costs are not allowable charges to the JTPA program: (1) Costs of fines and penalties resulting from violations of, or failure to comply with, Federal, State, or local laws and regulations; (2) Back pay, unless it represents additional pay for JTPA services performed for which the individual was underpaid; (3) Entertainment costs; (4) Bad debts expense; (5) Insurance policies offering protection against debts established by the Federal Government; (6) Contributions to a contingency reserve or any similar provision for unforeseen events; (7) Costs prohibited by 29 CFR part 93 (Lobbying Restrictions) or costs of any salaries or expenses related to any activity designed to influence legislation or appropriations pending before the Congress of the United States; and (8) Costs of activities prohibited in §627.205, Public service employment prohibition; §627.210, Nondiscrimination and nonsectarian activities; §627.215, Relocation; §627.225, Employment generating activities; and §627.230, Displacement, of this part. (f)(1) The cost of legal expenses required in the administration of grant programs is allowable. Legal expenses include the expenses incurred by the JTPA system in the establishment and maintenance of a grievance system, including the costs of hearings and appeals, and related expenses such as lawyers' fees. Legal expenses does not include costs resulting from, and after, the grievance process such as fines and penalties, which are not allowable, and settlement costs, which are allowable to the extent that such costs included in the settlement would have been allowable if charged to the JTPA program at the time they were incurred. (2) Legal services furnished by the chief legal officer of a State or local government or staff solely for the purpose of discharging general responsibilities as a legal officer are unallowable. (3) Legal expenses for the prosecution of claims against the Federal Government, including appeals to an Administrative Law Judge, are unallowable. (g) Costs of travel and incidental expenses incurred by volunteers are allowable provided such costs are incurred for activities that are generally consistent with section 204(c)(6) of the Act. (h) Contributions to a reserve for a self-insurance program, to the extent that the type and extent of coverage and the rates and premiums would have been allowed had insurance been purchased to cover the risks, are allowable. (i) The Governor shall prescribe and implement guidelines on allowable costs for SDA, SSG, and statewide programs that are consistent with the cost principles and allowable costs provisions of paragraphs (a) through (h) of this section and that include, at a minimum, provisions that specify the extent to which the following cost items are allowable or unallowable JTPA costs and, if allowable, guidelines on conditions or the extent of allowability, documentation requirements, and any prior approval requirements applicable to such cost items: (1) Compensation for personal services of staff, including wages, salaries, supplementary compensation, and fringe benefits; (2) Costs incurred by the SJTCC, HRIC, PIC's, and other advisory councils or committees; (3) Advertising costs; (4) Depreciation and/or use allowances; (5) Printing and reproduction costs; (6) Interest expense; (7) Expenditures for transportation and travel; (8) Payments to OJT employers, training institutions, and other vendors; (9) Fees or profits; (10) Insurance costs, including insurance coverage for injuries suffered by participants who are not covered by existing workers' compensation, and personal liability insurance for PIC members; (11) Acquisitions of capital assets; (12) Building space costs, including rent, repairs, and alterations; (13) Pre-agreement costs; (14) Fund-raising activities; (15) Professional services, including organizational management studies conducted by outside individuals or firms; and (16) Taxes. (a) Allowable costs for programs under title II and title III shall be charged (allocated) to a particular cost objective/category to the extent that benefits are received by such cost objective/category. Joint and similar types of costs may be charged initially to a cost pool used for the accumulation of such costs pending distribution in due course to the ultimate benefitting cost objective/category. The classification of costs for programs under title III of the Act are set forth at §631.13 of this chapter, Classification of costs at State and substate levels. (b) For State-administered programs under Title II, the State is required to plan, control, and charge expenditures against the following cost objectives/categories: (1) Titles II-A and II-C (combined)—capacity building and technical assistance (sections 202(c)(1)(B) and 262(c)(1)(B) of the Act to carry out activities pursuant to sections 202(c)(3)(A) and 262(c)(3)(A) of the Act); (2) Titles II-A and II-C (combined)—8 percent coordination (sections 202(c)(1)(C) and 262(c)(1)(C) of the Act to carry out activities pursuant to section 123(d)(2)(A) of the Act); (3) Titles II-A and II-C (combined)—8 percent services/direct training (sections 202(c)(1)(C) and 262(c)(1)(C) of the Act to carry out activities pursuant to section 123(d)(2)(B) of the Act); (4) Titles II-A and II-C (combined)—8 percent services/training-related and supportive services (sections 202(c)(1)(C) and 262(c)(1)(C) of the Act to carry out activities pursuant to section 123(d)(2)(B) of the Act); (5) Titles II-A and II-C (combined)—8 percent services/administration (sections 202(c)(1)(C) and 262(c)(1)(C) of the Act to carry out activities pursuant to section 123(d)(2)(B) of the Act); (6) Titles II-A and II-C (combined)—8 percent services to disadvantaged (section 202(c)(1)(C) and 262(c)(1)(C) of the Act to carry out activities pursuant to section 123(d)(2)(C) of the Act); (7) Title II-A—older individuals/direct training (section 202(c)(1)(D) of the Act to carry out activities pursuant to section 204(d) of the Act); (8) Title II-A—older individuals/training-related and supportive services (section 202(c)(1)(D) of the Act to carry out activities pursuant to section 204(d) of the Act); (9) Title II-A—older individuals/administration (section 202(c)(1)(D) of the Act to carry out activities pursuant to section 204(d) of the Act); and (10) Title II—administration (sections 202(c)(1)(A) and 262(c)(1)(A) of the Act to carry out activities pursuant to Title II of the Act, including Title II-B). (c)(1) SDA grant recipients and their subrecipients shall plan, control, and charge expenditures, excluding incentive funds received pursuant to sections 202(c)(1)(B) and 262(c)(1)(B) of the Act, against the following cost objectives/categories: (i) Title II-A—direct training services; (ii) Title II-C—direct training services; (iii) Title II-A—training-related and supportive services; (iv) Title II-C—training-related and supportive services; (v) Title II-B—training and supportive services; (vi) Title II-A—administration; (vii) Title II-B—administration; and (viii) Title II-C—administration. (2) Incentive funds received pursuant to sections 202(c)(1)(B) and 262(c)(1)(B) of the Act, may be combined and accounted for in total, without regard to cost categories or cost limitations. (d) States and subrecipients shall use the following definitions in assigning costs to the cost categories contained in paragraphs (b) and (c) of this section: (1) Direct training services—title II-A. Costs for direct training services that may be charged to the title II-A program are: (i) The personnel and non-personnel costs directly related to providing those services to participants specified in section 204(b)(1) of the Act and which can be specifically identified with one or more of those services. Generally, such costs are limited to: (A) Salaries, fringe benefits, equipment, supplies, space, staff training, transportation, and other related costs of personnel directly engaged in providing training; and (B) Salaries, fringe benefits, and related non-personnel costs of program component supervisors and/or coordinators as well as clerical staff, provided such staff work exclusively on activities or functions specified in section 204(b)(1) of the Act or allocations of such costs are made based on actual time worked or other equitable cost allocation methods; (ii) Books, instructional materials, and other teaching aids used by or for participants; (iii) Equipment and materials used in providing training to participants; (iv) Classroom space and utility costs; (v) Costs of insurance coverage of participants as specified at §627.315(b) of this part, Benefits and Working Conditions; (vi) Payments to vendors for goods or services procured for the use or benefit of program participants for direct training services, including: (A) Payments for commercially available training packages purchased competitively pursuant to section 141(d)(3) of the Act; (B) Tuition charges, entrance fees, and other usual and customary fees of an educational institution when such tuition charges, entrance fees, or other fees are not more than the educational institution's catalogue price, necessary to receive specific training, charged to the general public to receive the same training, and are for training of participants; and (C) Payments to OJT employers, but not brokering contractors. Costs incurred under brokering arrangements shall be allocated to all of the benefitting cost categories, and (vii) Payments to JTPA participants that represent hours spent in a direct training activity (e.g., wages, work-based training payments, training payments for combined activities), including work experience, vocational exploration, limited internships, and entry employment. (2) Direct training services—title II-C. Costs for direct training services that may be charged to the title II-C program are the costs identified in paragraph (d)(1) of this section as well as costs directly related to providing those services to participants specified in section 264(c)(1) of the Act and which can be specifically identified with one or more of those services. (3) Training-related and supportive services—title II-A. Costs for training-related and supportive services that may be charged to the title II-A program are: (i) The personnel and non-personnel costs directly related to providing outreach, intake, and eligibility determination, as well as those services to participants specified in section 204(b)(2) of the Act, and which can be specifically identified with one or more of those services. Generally, such costs are limited to: (A) Salaries, fringe benefits, equipment, supplies, space, staff training, transportation, and other related costs of personnel directly engaged in providing training-related and/or supportive services; and (B) Salaries, fringe benefits, and related non-personnel costs of program component supervisors and/or coordinators as well as clerical staff, provided such staff work exclusively on activities or functions specified in section 204(b)(2) of the Act or allocations of such costs are made based on actual time worked or another equitable allocation method. (ii) Needs-based payments, cash incentives and bonuses, other financial assistance and supportive services to participants and applicants, where applicable. (4) Training-related and supportive services—title II-C. Costs for training-related and supportive services that may be charged to the title II-C program are the costs identified in paragraph (d)(3) of this section, as well as costs directly related to providing those services to participants specified in section 264(c)(2) of the Act and which can be specifically identified with one or more of those services. (5) Administration. The costs of administration are those portions of necessary and allowable costs associated with the overall management and administration of the JTPA program and which are not directly related to the provision of services to participants or otherwise allocable to the program cost objectives/categories in paragraphs (b)(1)–(8) or (c)(1) (i)–(v) of this section. These costs can be both personnel and non-personnel and both direct and indirect. Costs of administration shall include: (i) Except as provided in paragraph (e)(1) of this section, costs of salaries, wages, and related costs of the recipient's or subrecipient's staff or PIC staff engaged in: (A) Overall program management, program coordination, and general administrative functions, including the salaries and related costs of the executive director, JTPA director, project director, personnel officer, fiscal officer/bookkeeper, purchasing officer, secretary, payroll/insurance/property clerk and other costs associated with carrying out administrative functions; (B) Preparing program plans, budgets, schedules, and amendments thereto; (C) Monitoring of programs, projects, subrecipients, and related systems and processes; (D) Procurement activities, including the award of specific subgrants, contracts, and purchase orders; (E) Providing State or local officials and the general public with information about the program (public relations); (F) Developing systems and procedures, including management information systems, for assuring compliance with program requirements; (G) Preparing reports and other documents related to the program requirements; (H) Coordinating the resolution of audit findings; (I) Evaluating program results against stated objectives; and (J) Performing such administrative services as general legal services, accounting services, audit services; and managing purchasing, property, payroll, and personnel; (ii) Costs for goods and services required for administration of the program, including such goods and services as rental or purchase of equipment, utilities, office supplies, postage, and rental and maintenance of office space; (iii) The costs of organization-wide management functions; and (iv) Travel costs incurred for official business in carrying out program management or administrative activities, including travel costs incurred by PIC members. (e) Other cost classification guidance. (1) Personnel and related non-personnel costs of the recipient's or subrecipient's staff, including project directors, who perform services or activities that benefit two or more of the cost objectives/categories identified in this section may be allocated to the benefitting cost objectives/categories based on documented distributions of actual time worked or other equitable cost allocation methods. (2) Indirect or overhead costs normally shall be charged to administration, except that specific costs charged to an overhead or indirect cost pool that can be identified directly with a JTPA cost objective/category other than administration may be charged to the JTPA cost objective/category directly benefitted. Documentation of such charges shall be maintained. (3) Where an award to a subrecipient is for a “commercially available off-the-shelf training package,” as defined at §626.5 of this chapter, the subrecipient may charge all costs of such package to the direct training services cost category. (4) Profits, fees, and other revenues earned by a subrecipient that are in excess of actual costs incurred, to the extent allowable and consistent with the guidelines on allowable costs prescribed by the Governor in accordance with §627.435(i). Cost principles and allowable costs, may be allocated to all three cost categories based on the proportionate share of actual costs incurred attributable to each category. (a) State-administered programs—(1) Services for older individuals. Of the funds allocated for any program year for section 202(c)(1)(D) of the Act to carry out activities pursuant to section 204(d) of the Act— (i) Not less than 50 percent shall be expended for the cost of direct training services; and (ii) Not more than 20 percent shall be expended for the cost of administration. (2) State education services. Of the funds allocated for any program year for sections 202(c)(1)(C) and 262(c)(1)(C) of the Act to carry out activities pursuant to section 123(d)(2)(B) of the Act— (i) Not less than 50 percent shall be expended for the cost of direct training services; and (ii) Not more than 20 percent shall be expended for the cost of administration. (3) The limitations specified in paragraph (a)(2) of this section shall apply to the combined total of funds allocated for sections 202(c)(1)(C) and 262(c)(1)(C) of the Act. (b) SDA allocations. (1) In applying the title II-A and II-C cost limitations specified in section 108(b)(4) of the Act, the funds allocated to a service delivery area shall be net of any: (i) Transfers made in accordance with sections 206, 256, and 266 of the Act; and (ii) Reallocations made by the Governor in accordance with section 109(a) of the Act. (2) The limitations specified in paragraph (b)(1) of this section shall apply separately to the funds allocated for title II-A and title II-C programs. (3) The title II-B administrative cost limitation of 15 percent shall be 15 percent of the funds allocated for any program year to a service delivery area, excluding any funds transferred to title II-C in accordance with section 256 of the Act (section 253(a)(3)). (c)(1) The State shall establish a system to regularly assess compliance with the cost limitations including periodic review and corrective action, as necessary. (2) States and service delivery areas shall have the 3-year period of fund availability to comply with the cost limitations in section 108 of the Act and paragraphs (a) and (b) of this section (section 161(b)). (d) Administrative costs incurred by a community-based organization or non-profit service provider shall not be included in the limitation described in section 108(b)(4)(A) of the Act if: (1) Such costs are incurred under an agreement that meets the requirements of section 141(d)(3)(C) (i) and (ii) of the Act; (2) The total administrative expenditures of the service delivery area, including the administrative expenditures of such community-based organizations or non-profit service providers, do not exceed 25 percent of the funds allocated to the service delivery area for the program year of allocation; and (3) The total direct training expenditures of the service delivery area, including the direct training expenditures of such community-based organizations or non-profit service providers, is equal to or exceeds 50 percent of the funds allocated to the service delivery area for the program year less one-half of the percentage by which the total administrative expenditures of the service delivery area exceeds 20 percent. For example, if the total administrative expenditures of the service delivery area is 24 percent, then the total direct training expenditures of the service delivery area must be at least 48 percent. (e) The provisions of this section do not apply to any title III programs. (f) The provisions of this section do not apply to any designated SDA which served as a concentrated employment program grantee for a rural area under the Comprehensive Employment and Training Act (section 108(d)). (a) Definition of program income. (1) Program income means income received by the recipient or subrecipient that is directly generated by a grant or subgrant supported activity, or earned only as a result of the grant or subgrant. Program income includes: (i) Income from fees for services performed and from conferences; (ii) Income from the use or rental of real or personal property acquired with grant or subgrant funds; (iii) Income from the sale of commodities or items fabricated under a grant or subgrant; (iv) Revenues earned by a governmental or non-profit service provider under either a fixed-price or reimbursable award that are in excess of the actual costs incurred in providing the services; and (v) Interest income earned on advances of JTPA funds. (2) Program income does not include: (i) Rebates, credits, discounts, refunds, etc., or interest earned on any of them, which shall be credited in accordance with §627.435(d), Cost principles and allowable costs; (ii) Taxes, special assessments, levies, fines, and other such governmental revenues raised by a recipient or subrecipient; or (iii) Income from royalties and license fees for copyrighted material, patents, patent applications, trademarks, and inventions developed by a recipient or subrecipient. (3) Property. Proceeds from the sale of property shall be handled in accordance with the requirements of §627.465 of this part, Property management standards. (b) Cost of generating program income. Costs incidental to the generation of program income may be deducted, if not already charged to the grant, from gross income to determine program income. (c) Use of program income. (1)(i) A recipient or subrecipient may retain any program income earned by the recipient or subrecipient only if such income is added to the funds committed to the particular JTPA grant or subgrant and title under which it was earned and such income is used for that title's purposes and under the terms and conditions applicable to the use of the grant funds. (ii) A State may use interest it earns on JTPA funds, deposited by the United States to the State's account, to satisfy the requirement at 31 U.S.C. 6503(c) that the State pay interest on such deposits. (iii) The classification of costs in §§627.440 and 631.13 shall apply to the use of program income. (iv) The administrative cost limitation in §§627.445 and 631.14 shall apply to the use of program income, except that program income used in accordance with paragraph (c)(1)(ii) of this section shall be exempt from the administrative cost limitations. (2) Program income generated under title II may also be used to satisfy the matching requirement of section 123(b) of the Act. (3) Program income shall be used prior to the submission of the final report for the funding period of the program year of funds to which the earnings are attributable. (4) If the subrecipient that earned program income cannot use such income for JTPA purposes, the recipient may permit another entity to use the program income for JTPA purposes. (5) Program income not used in accordance with the requirements of this section shall be remitted to the Department of Labor. (d) Program and other income after the funding period. Rental income and user fees on real and personal property acquired with JTPA funds shall continue to be JTPA program income in subsequent funding periods. There are no Federal requirements governing the disposition of all other income that is earned after the end of the funding period. (a) General. The Governor shall report to DOL pursuant to instructions issued by DOL. Reports shall be submitted no more frequently than quarterly, in accordance with section 165(f) of the Act, and within 45 calendar days after the end of the report period. Additional reporting requirements for title III are set forth at §631.15 of this chapter. (b) A recipient may impose different forms or formats, shorter due dates, and more frequent reporting requirements on subrecipients, however, the recipient is required to meet the reporting requirements imposed on it by DOL. (c) DOL may provide computer outputs to recipients to expedite or contribute to the accuracy of reporting. DOL may accept the required information from recipients in electronically reported format or computer printouts instead of prescribed forms. (d) Financial reports. (1) Financial reports for programs under titles I, II, and III shall be submitted to DOL by each State quarterly and by program year of appropriation. (2) Each recipient shall report program outlays on an accrual basis. If the recipient's accounting records are not normally kept on the accrual basis, the recipient shall develop such accrual information through an analysis of the documentation on hand. (3) A final financial report is required 90 days after the expiration of a funding period (see §627.485 of this part, Closeout). (4) Pursuant to section 104(b)(13) of the Act, the SDA shall annually report to the Governor. Among other items, this report shall include information on the extent to which the SDA has met the goals for the training and training-related placement of women in nontraditional employment. (a) Records, including the records identified in section 165(g) of the Act, shall be retained in accordance with section 165(e) of the Act. In establishing the time period of record retention requirements for records of subrecipients, the State may either: (1) Impose the time limitation requirement of section 165(e) of the Act; or (2) Require that subrecipient records for each funding period be retained for 3 years after the subrecipient submits to the awarding agency its final expenditure report for that funding period. Records for nonexpendable property shall be retained for a period of three years after final disposition of the property. (b) The Governor shall ensure that the records under this section shall be retained beyond the prescribed period if any litigation or audit is begun or if a claim is instituted involving the grant or agreement covered by the records. In these instances, the Governor shall ensure that the records shall be retained until the litigation, audit, or claim has been finally resolved. (c) In the event of the termination of the relationship with a subrecipient, the Governor or SDA or title III SSG shall be responsible for the maintenance and retention of the records of any subrecipient unable to retain them. (d) Record storage. Records shall be retained and stored in a manner which will preserve their integrity and admissibility as evidence in any audit or other proceeding. The burden of production and authentication of the records shall be on the custodian of the records. (e) Federal and awarding agencies' access to records—(1) Records of recipients and subrecipients. The awarding agency, the Department of Labor (including the Department of Labor's Office of Inspector General), and the Comptroller General of the United States, or any of their authorized representatives, have the right of timely and reasonable access to any books, documents, papers, computer records, or other records of recipients and subrecipients that are pertinent to the grant, in order to conduct audits and examinations, and to make excerpts, transcripts, and photocopies of such documents. This right also includes timely and reasonable access to recipient and subrecipient personnel for the purpose of interview and discussion related to such documents. (2) Expiration of right of access. The right of access in this section is not limited to the required retention period but shall last as long as the records are retained. (a) Public access. Except as provided in paragraph (b) of this section, records maintained by recipients or subrecipients pursuant to §627.460 shall be made available to the public upon request, notwithstanding the provisions of State or local law. (b) Exceptions. This requirement does not apply to: (1) Information, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy; or (2) Trade secrets, or commercial or financial information, obtained from a person and privileged or confidential. (c) Fees. For processing of a request for a record under this section, a fee may be charged to the extent sufficient to recover the cost applicable to processing such request (section 165(a)(4)). (a) States and governmental subrecipients. Real property, equipment, supplies, and intangible property acquired or produced after July 1, 1993, by States and governmental subrecipients with JTPA funds shall be governed by the definitions and property requirements in the DOL regulations at 29 CFR part 97, except that prior approval by the Department of Labor to acquire property is waived. (b) Nongovernmental subrecipients. Except as provided in paragraph (c) of this section, real and personal property, including intangible property, acquired or produced after July 1, 1993, by nongovernmental subrecipients with JTPA funds shall be governed by the definitions and property management standards of OMB Circular A–110, as codified by administrative regulations of the Department of Labor in 29 CFR Part 95, except that prior approval by the Department of Labor to acquire property is waived. (c) Special provisions for property acquired under subgrants to commercial organizations—(1) Scope. This paragraph (c) applies to real and personal property other than supplies that are acquired or produced after July 1, 1993, under a JTPA subgrant to a commercial organization. (2) Property acquired by commercial subrecipients. Title to property acquired or produced by a subrecipient that is a commercial organization shall vest in the awarding agency, provided such agency is a governmental entity or nongovernmental organization that is not a commercial organization. Property so acquired or produced shall be considered to be acquired or produced by the awarding agency and paragraph (a) or (b) of this section, as appropriate, shall apply to that property. If the awarding agency is also a commercial organization, title shall vest in the higher level, non-commercial awarding agency that made the subaward to the commercial subrecipient. (3) Approval for acquisition. A subrecipient that is a commercial organization shall not acquire property subject to this section without the prior approval of the awarding agency. (d) Notification to the Secretary of real property acquisitions. Recipients shall notify the Secretary immediately upon acquisition of real property with JTPA funds, including acquisitions by subrecipients. Such notification shall include the location of the real property and the Federal share percentage. (e) Property procured before July 1, 1993. (1) Personal or real property procured with JTPA funds or transferred from programs under the Comprehensive Employment and Training Act must be used for purposes authorized by the Act. Subject to the Secretary's rights to such property, the Governor shall maintain accountability for property in accordance with State procedures and the records retention requirements of §627.460 of this part. (2) The JTPA program must be reimbursed the fair market value of any unneeded property retained by the Governor for use in a non-JTPA program. The proceeds from the sale of any property or transfer of property to a non-JTPA program must be used for purposes authorized under the Act. (a) General. The Secretary shall prescribe performance standards for adult programs under title II-A, for youth programs under title II-C, for dislocated worker programs under title III, and for older worker programs under section 204(d) of the Act. Any performance standards developed for employment competencies shall be based on such factors as entry level skills and other hiring requirements. (b) Pursuant to instructions and time lines issued by the Secretary, the Governor shall: (1) Collect the data necessary to set performance standards pursuant to section 106 of the Act; and (2) Maintain records and submit reports required by sections 106(j)(3), 165(a)(3), (c)(1), and (d) and 121(b)(6) of the Act. (c) Title II performance standards. (1) The Governor shall establish SDA performance standards for title II within the parameters set by the Secretary pursuant to sections 106(b) and (d) of the Act and apply the standards in accordance with section 202(c)(1)(B) of the Act. (2) The Governor shall establish incentive award policies pursuant to section 106(b)(7) of the Act, except for programs operated under section 204(d) of the Act. Pursuant to section 106(b)(8) of the Act, Governors may not consider standards relating gross program expenditures to performance measures in making such incentive awards. (3) The Governor shall provide technical assistance to SDA's failing to meet performance standards established by the Secretary for a given program year (section 106(j)(2)). (4)(i) If an SDA fails to meet a prescribed number of the Secretary's performance standards for 2 consecutive years, the Governor shall notify the Secretary and the service delivery area of the continued failure and impose a reorganization plan (section 106(j)(4)). (ii) The number of standards deemed to constitute failure shall be specified by the Secretary biennially and shall be based on an appropriate proportion of the total number established by the Secretary for that performance cycle. In determining failure, the specified proportion shall be applied separately to each year of the two year cycle. (iii) A reorganization plan shall not be imposed for a failure to meet performance standards other than those established by the Secretary. (iv) A reorganization plan shall be considered to be imposed when, at a minimum: (A) The problem or deficiency is identified, (B) The problem is communicated to the SDA, and (C) The SDA is provided an initial statement of the actions or steps required and the timeframe within which they are to be initiated. A final statement of required steps and actions is to be issued within 30 days. (d)(1) If the Governor does not impose a reorganization plan, required by paragraph (c)(4) of this section, within 90 days of notifying the Grant Officer of an SDA's continued failure to meet performance standards, the Grant Officer shall develop and impose such a plan (section 106(j)(5)). (2) Before imposing a reorganization plan, the Grant Officer shall notify the Governor and SDA in writing of the intent to impose the plan and provide both parties the opportunity to submit comments within 30 days of receipt of the Grant Officer's notice. (e) An SDA subject to a reorganization plan under paragraphs (c)(4) or (d) of this section may, within 30 days of receiving notice of such action, appeal to the Secretary to revise or rescind the reorganization plan under the procedures set forth at §627.471 of this subpart, Reorganization plan appeals (section 106(j)(6)(A)). (f) Secretarial action to recapture or withhold funds. (1) The Grant Officer shall recapture or withhold an amount not to exceed one-fifth of the State administration set-aside allocated under sections 202(c)(1)(A) and 262(c)(1)(A) of the Act when: (i) The Governor has failed to impose a reorganization plan under paragraph (c)(4) of this section, for the purposes of providing technical assistance under a reorganization plan imposed by the Secretary (section 106(j)(5)(B)); or (ii) The Secretary determines in an appeal provided for at paragraph (e) of this section, and set forth at §627.471 of this subpart, that the Governor has not provided appropriate technical assistance as required at section 106(j)(2) (section 106(j)(6)(B)). (2)(i) A Governor of a State that is subject to recapture or withholding under paragraph (f)(1) of this section may, within 30 days of receipt of such notice, appeal such recapture or withholding to the Secretary. (ii) The Secretary may consider any comments submitted by the Governor and shall make a decision within 45 days after the appeal is received. (g) Title III performance standards. (1) The Governor shall establish SSG performance standards for programs under title III within the parameters set annually by the Secretary pursuant to section 106(c) and (d) of the Act. (2) Any performance standard for programs under title III shall make appropriate allowances for the difference in cost resulting from serving workers receiving needs-related payments authorized under §631.20 of this chapter (section 106(c)(2)). (3) The Secretary annually shall certify compliance, if the program is in compliance, with the title III performance standards established pursuant to paragraph (a) of section 322(a)(4) of the Act. (4) The Governor shall not establish standards for the operation of programs under title III that are inconsistent with the performance standards established by the Secretary under provisions of section 106(c) of the Act (section 311(b)(8)). (5) When an SSG fails to meet performance standards for 2 consecutive years, the Governor may institute procedures pursuant to the Governor's by-pass authority in accordance with §631.38(b) of this chapter or require redesignation of the substate grantee in accordance with §631.35 of this chapter, as appropriate. (a) A reorganization plan imposed by the Governor, as provided for at §§627.470(c)(4) or 627.477(b)(2) of this part, or by the Secretary, as provided for at §627.470(d) of this part, may be appealed directly to the Secretary without prior exhaustion of local remedies. (b)(1) Appeals shall be submitted to the Secretary, U.S. Department of Labor, Washington, DC 20210, ATTENTION: ASET. A copy of the appeal shall be provided simultaneously to the Governor. (2) The Secretary shall not accept an appeal dated later than 30 days after receipt of written notification from the Governor or the Secretary. (3) The appealing party shall explain why it believes the decision to impose the reorganization plan is contrary to the provisions of section 106 of the Act. (4) The Secretary shall accept the appeal and make a decision only with regard to determining whether or not the decision to impose the reorganization plan is inconsistent with section 106 of the Act. The Secretary may consider any comments submitted by the Governor or the SDA, as appropriate. The Secretary shall make a final decision within 60 days after this appeal is received (section 106(j)). (a) The Secretary may monitor all recipients and subrecipients of financial assistance pursuant to section 163 of the Act. (b) The Governor is responsible for oversight of all SDA and SSG activities and State-supported programs. The Governor shall develop and make available for review a State monitoring plan. The plan shall specify the mechanism which: (1) Ensures that established policies to achieve program quality and outcomes meet the objectives of the Act and regulations promulgated thereunder; (2) Enables the Governor to determine if SDA's and SSG's have demonstrated substantial compliance with the requirements for oversight; (3) Determines whether the Job Training Plan shall be disapproved consistent with the criteria contained in section 105(b)(1) of the Act; (4) Regularly examines expenditures against the cost categories and cost limitations specified in the Act and these regulations; (5) Ensures that all areas of SDA and SSG operations are monitored onsite regularly, but not less than once annually; and (6) Provides for corrective action to be imposed if conditions in paragraphs (b)(1)–(4) of this section are not met. (c) The Governor shall issue instructions to SDA's and title III SSG's on the development of a substate monitoring plan. The instructions for development of the monitoring plan, at a minimum, shall address the monitoring scope and frequency, and the Secretary's emphasis and direction. The substate monitoring plan shall be part of the job training plan. (d) The Governor shall establish general standards for PIC oversight responsibilities. The required PIC standards shall be included in the Governor's Coordination and Special Services Plan (GCSSP). (e)(1) The PIC, pursuant to standards established by the Governor, shall establish specific policies for monitoring and oversight of SDA performance which shall be described in the job training plan. (2) The PIC shall exercise independent oversight over activities under the job training plan which shall not be circumscribed by agreements with the appropriate chief elected official(s) of the SDA. (f) The PIC and chief elected official(s) may conduct such oversight as they, individually or jointly, deem necessary or delegate oversight responsibilities to an appropriate entity pursuant to their mutual agreement. (a) Except as provided at paragraph (d) of this section, if, as a result of financial and compliance audits or otherwise, the Governor determines that there is a substantial violation of a specific provision of this Act or the regulations under this Act, and corrective action has not been taken, the Governor shall (1) Issue a notice of intent to revoke approval of all or part of the plan affected; or (2) Impose a reorganization plan, which may include (i) Restructuring the private industry council involved; (ii) Prohibiting the use of designated service providers; (iii) Selecting an alternative entity to administer the program for the service delivery area involved; (iv) Merging the service delivery area into 1 or more other existing service delivery areas; or (v) Other such changes as the Secretary or Governor determines necessary to secure compliance (section 164(b)(1)). (b)(1) The actions taken by the Governor pursuant to paragraph (a)(1) of this section may be appealed to the Secretary as provided at §628.426 of this chapter (section 164(b)(2)(A)). (2) The actions taken by the Governor pursuant to paragraph (a)(2) of this section may be appealed to the Secretary, as provided at §627.471 of this part (section 164(b)(2)(B)). (c) Allegations that the Governor failed to promptly take the actions required under paragraph (a) of this section shall be handled under §627.607 of this part (section 164(b)(3)). (d) This section does not apply to remedial actions for SDA failures to meet performance standards, which are provided for at §627.470 of this part, and do not apply to remedial actions for the failure to comply with procurement standards, which are provided for at §627.703 of this part. (a) Non-Federal Audits—(1) Governments. Each recipient and governmental subrecipient is responsible for complying with the Single Audit Act of 1984 (31 U.S.C. 7501–7) and 29 CFR part 96, the Department of Labor regulations which implement Office of Management and Budget (OMB) Circular A–128, “Audits of State and Local Governments”. (2) Non-governmental organizations. Each non-governmental recipient or subrecipient shall comply with OMB Circular A–133, “Audits of Institutions of Higher Education and Other Nonprofit Institutions”, as implemented by the Department of Labor regulations at 29 CFR part 96. The provisions of this paragraph (a)(2) do not apply to any non-governmental organization that is: (i) A commercial organization; or (ii) A hospital or an institution of higher education for which State or local governments choose to apply OMB Circular A–128. (3) Commercial organizations. A commercial organization which is a recipient or subrecipient and which receives $25,000 or more a year in Federal financial assistance to operate a JTPA program shall have an audit that: (i) Is usually performed annually, but not less frequently than every two years; (ii) Is completed within one year after the end of the period covered by the audit and submitted to the awarding agency within one month after completion; (iii) Is either: (A) An independent financial and compliance audit of Federal funds that includes coverage of the JTPA program within its scope, and is conducted and prepared in accordance with generally accepted government auditing standards; or (B) An organization-wide audit that includes financial and compliance coverage of the JTPA program within its scope. (b) Federal audits. The notice of audits conducted or arranged by the Office of Inspector General or the Comptroller General shall be provided in advance, as required by section 165(b) of the Act. (c) Audit reports. (1) Audit reports of recipient-level entities and other organizations which receive JTPA funds directly from the U.S. Department of Labor shall be submitted to the Office of Inspector General. (2) Audit reports of organizations other than those described in paragraph (c)(1) of this section shall be submitted to the entity which provided the JTPA funds. (d) Each entity that receives JTPA program funds and awards a portion of those funds to one or more subrecipients shall: (1) Ensure that each subrecipient complies with the applicable audit requirements; (2) Resolve all audit findings that impact the JTPA program with its subrecipient and ensure that corrective action for all such findings is instituted within 6 months after receipt of the audit report (where appropriate, corrective action shall include debt collection action for all disallowed costs); and (3) Maintain an audit resolution file documenting the disposition of reported questioned costs and corrective actions taken for all findings. The ETA Grant Officer may request that an audit resolution report, as specified in paragraph (e)(2) of this section, be submitted for such audits or may have the audit resolution reviewed through the compliance review process. (e)(1) Audits of recipient-level entities and other organizations which receive JTPA funds directly from DOL and all audits conducted by or under contract for the Office of Inspector General shall be issued by the OIG to the Employment and Training Administration after acceptance by OIG. (2) After receipt of the audit report, the ETA Grant Officer shall request that the State submit an audit resolution report documenting the disposition of the reported questioned costs, i.e., whether allowed or disallowed, the basis for allowing questioned costs, the method of repayment planned or required, and corrective actions, including debt collection efforts, taken or planned. (f) If the recipient intends to propose the use of “stand-in” costs as substitutes for otherwise unallowable costs, the proposal shall be included with the audit resolution report. To be considered, the proposed “stand-in” costs shall have been reported as uncharged JTPA program costs, included within the scope of the audit, and accounted for in the auditee's financial system, as required by §627.425 of this part, Standards for financial management and participant data systems. To be accepted, stand-in costs shall be from the same title, and program year as the costs which they are proposed to replace, and shall not result in a violation of the applicable cost limitations. (g) After receiving the audit resolution report, the ETA Grant Officer shall review the report, the recipient's disposition, and any liability waiver request submitted in accordance with §627.704 of this part. If the Grant Officer agrees with all aspects of the recipient's disposition of the audit, the Grant Officer shall so notify the recipient. If the Grant Officer disagrees with the recipient's conclusion on specific points in the audit, the Grant Officer shall resolve the audit through the initial and final determination process described in §627.606 of this part. (a) Federal audit resolution. When the OIG issues an audit report to the Employment and Training Administration for resolution, the ETA Grant Officer shall provide a copy of the report to the recipient (if it does not already have the report), along with a request that the recipient submit its audit resolution report as specified in §627.480(e)(2) of this part, unless the Grant Officer chooses to proceed directly against the recipient pursuant to §627.601 of this part. (1) For audits of recipient-level entities and other organizations which receive JTPA funds directly from DOL, the Grant Officer shall request that the audit resolution report be submitted within 60 days from the date that the audit report is issued by the OIG. (2) For audits of subrecipient organizations, the Grant Officer shall provide the recipient with a 180-day period within which to resolve the audit with its subrecipient(s), and shall request that the audit resolution report be submitted at the end of that 180-day period. (b) After receiving the audit resolution report, the ETA Grant Officer shall review the report, the recipient's disposition, any liability waiver request, and any proposed “stand-in” costs. If the Grant Officer agrees with all aspects of the recipient's disposition of the audit, the Grant Officer shall so notify the recipient, constituting final agency action on the audit. If the Grant Officer disagrees with the recipient's conclusion on specific points in the audit, or if the recipient fails to submit its audit resolution report, the Grant Officer shall resolve the audit through the initial and final determination process described in §627.606 of this part. Normally, the Grant Officer's notification of agreement (a concurrence letter) or disagreement (an initial determination) with the recipient's audit resolution report will be provided within 180 days of the Grant Officer's receipt of the report. (c) Non-Federal audit resolution. (1) To ensure timely and appropriate resolution for audits of all subrecipients, including SDA grant recipients and title III SSG's, and to ensure recipient-wide consistency, the Governor shall prescribe standards for audit resolution and debt collection policies and procedures that shall be included in each job training plan in accordance with section 104(b)(12) of the Act. (2) The Governor shall prescribe an appeals procedure for audit resolution disputes which, at a minimum, provides for: (i) The period of time, not less than 15 days nor more than 30 days, after the issuance of the final determination in which an appeal may be filed; (ii) The rules of procedure; (iii) Timely submission of evidence; (iv) The timing of decisions; and (v) Further appeal rights, if any. (a) General. The Grant Officer shall close out each annual JTPA grant agreement within a timely period after the funding period covered by the award has expired. (b) Revisions to the reported expenditures for a program year of funds may be made until 90 days after the time limitation for expenditure of JTPA funds, as set forth in section 161(b) of the Act, has expired. The Grant Officer may extend this deadline if the recipient submits a written request with justification. After that time, the Grant Officer shall consider all reports received as final and no additional revisions may be made. (c) When closing out a JTPA grant, the Grant Officer shall notify the recipient, by certified mail, that, since the time limitation for expenditure of funds covered by the grant award has expired, it is the Department of Labor's intent to close the annual grant as follows: (1) Cost adjustment. Based on receipt of reports in paragraph (b) of this section, the Grant Officer shall make upward or downward adjustments to the allowable costs; and (2) Cash adjustment. DOL shall make prompt payment to the recipient for allowable reimbursable costs; the recipient shall promptly refund to DOL any balance of cash advanced that is in excess of allowable costs for the grant award being closed. (d) The recipient shall have an additional 60 days after the date of the notice described in paragraph (c) of this section in which to provide the Grant Officer with information as to the reason(s) why closeout should not occur. (e) At the end of the 60-day period described in paragraph (d) of this section, the Grant Officer shall notify the recipient that closeout has occurred, unless information provided by the recipient, pursuant to paragraph (d) of this section, indicates otherwise. The closeout of a grant does not affect: (a) The Grant Officer's right to disallow costs and recover funds on the basis of a later audit or other review; (b) The recipient's obligation to return any funds due as a result of later refunds, corrections, subrecipient audit disallowances, or other transactions; (c) Records retention requirements in §627.460 of this part, Requirements for records, and §627.463 of this part, Public access to records; (d) Property management requirements in §627.465 of this part, Property management standards; and (e) Audit and audit resolution requirements in §627.480 of this part, Audits and §627.481 of this part, Audit resolution. (a) Any funds paid to a recipient in excess of the amount to which the recipient is finally determined to be entitled under the terms of the grant constitute a debt to the Federal Government. If not paid within a reasonable period after demand, the Secretary may take any actions permitted by law to recover the funds. (b) The Secretary shall charge interest on an overdue debt in accordance with the Federal Claims Collection Standards (4 CFR ch. II).
Title 20: Employees' Benefits
PART 627—GENERAL PROVISIONS GOVERNING PROGRAMS UNDER TITLES I, II, AND III OF THE ACT
Subpart D—Administrative Standards
§ 627.400 Scope and purpose.
§ 627.405 Grant agreement and funding.
§ 627.410 Reallotment and reallocation.
§ 627.415 Insurance.
§ 627.420 Procurement.
§ 627.422 Selection of service providers.
§ 627.423 Funding restrictions for “high-risk” recipients and subrecipients.
§ 627.424 Prohibition of subawards to debarred and suspended parties.
§ 627.425 Standards for financial management and participant data systems.
§ 627.430 Grant payments.
§ 627.435 Cost principles and allowable costs.
§ 627.440 Classification of costs.
§ 627.445 Limitations on certain costs.
§ 627.450 Program income.
§ 627.455 Reports required.
§ 627.460 Requirements for records.
§ 627.463 Public access to records.
§ 627.465 Property management standards.
§ 627.470 Performance standards.
§ 627.471 Reorganization plan appeals.
§ 627.475 Oversight and monitoring.
§ 627.477 Governor's determination of substantial violation.
§ 627.480 Audits.
§ 627.481 Audit resolution.
§ 627.485 Closeout.
§ 627.490 Later disallowances and adjustments after closeout.
§ 627.495 Collection of amounts due.
