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FHWA Order 4410.1

Order
Subject
Grant and Cooperative Agreement Policies and Procedures
Classification Code Date Office of Primary Interest
4410.1 February 28, 1994  

Par.

  1. Purpose

  2. Cancellation

  3. Responsibilities

  4. References

  5. Applicability

  6. Exceptions

  7. Background

  8. Policy

  9. Definitions

  10. Selecting the Award Instrument

  11. Competition

  12. Processing Assistance Agreements

  13. Unsolicited Applications for Assistance Awards

  14. Invitations for Applications

  15. Evaluation of Applications

  16. Discussions with Selected Applicant(s)

  17. The Assistance Agreement

  18. Administration of Assistance Agreements

  19. Administrative Rules

  1. PURPOSE. To describe the appropriate use of grants and cooperative agreements and provide instructions for preparing, approving and monitoring these instruments.

  2. CANCELLATION. The following Federal Highway Administration (FHWA) issuance is hereby canceled:

    FHWA Executive Director memorandum, New FHWA Grant Authority,dated February 24, 1992.

  3. RESPONSIBILITIES. The Director of the Office of Contracts and Procurement, with the advice of the Office of Chief Counsel, shall provide guidance to program offices to ensure compliance with this directive.

  4. REFERENCES

    1. Federal Grant and Cooperative Agreement Act (GCA) of 1977, as amended, section 6300, et seq., of Title 31, United States Code (U.S.C.).

    2. Department of Transportation (DOT) Uniform Administrative Requirements for Grants and Cooperative Agreements as contained in Part 18 of Title 49 of the Code of Federal Regulations (CFR).

    3. DOT Order 4000.8A, Use of Contracts, Grants and Cooperative Agreements, dated August 17, 1982.

    4. See the attachment to this Order for other applicable administrative rules.

  5. APPLICABILITY. This Order applies to all grants and cooperative agreements awarded by the FHWA except as set forth in paragraph 6.

  6. EXCEPTIONS. This Order does not apply to the following:

    1. Assistance to State governments under the Federal-aid highway program; however, the administrative requirements of 49 CFR Part 18 and OMB Circular 110 apply to these programs, except to the extent required by statute or as authorized by the Office of Management and Budget (OMB).

    2. Assistance programs for which authority to make awards has been delegated to FHWA officials other than the Associate Administrator for Administration or his or her designee; however, the administrative requirements of 49 CFR Part 18 and OMB Circular 110 apply to these programs, except to the extent required by statute or as authorized by the Office of Management and Budget (OMB).

    3. Intra-agency agreements with other DOT administrations or Interagency agreements with other Federal agencies.

    4. Cooperative research and development agreements authorized by the Stevenson-Wydler Technology Innovation Act of 1980, as amended (15 U.S.C. 3710a).

  7. BACKGROUND. The GCA directs agencies to enter into and use procurement contracts, grants, or cooperative agreements as defined in the GCA. The purpose of the GCA and OMB implementing guidance is to ensure consistency and uniformity in the use of these instruments.

  8. POLICY. It is the policy of FHWA to:

    1. make uniform and proper use of grant and cooperative agreement relationships and award instruments;

    2. maintain minimum administrative requirements for recipients of grants or cooperative agreements consistent with the applicable OMB Circulars, Departmental regulations, and the nature of the specific agreements;

    3. perform oversight and management of grant and cooperative agreement relationships and instruments in compliance with the GCA, OMB Circulars and Departmental requirements; and

    4. encourage competition in the selection of recipients of grant and cooperative agreement awards, as appropriate.

  9. DEFINITIONS. For purposes of this Order, the following terms shall have the meaning set forth in this directive.

    1. Procurement Contract - the legal instrument used to reflect a relationship between the Federal Government and a party when the principal purpose of the transaction is the acquisition by purchase, lease or barter of property or services for the direct benefit or use of the Federal Government, including situations in which the property or services are in turn provided to a third party.

    2. Assistance Agreement - the legal instrument used to reflect a relationship between the Federal Government and a State, local government, or other recipient when the principal purpose is the transfer of money, property or anything of value to the other party to the agreement in order to assist in accomplishing a public purpose of support or stimulation authorized by a Federal law. These instruments include:

        (1) Grants - assistance agreements in which substantial involvement between FHWA and the recipient is not anticipated.

        (2) Cooperative Agreements - assistance agreements in which substantial involvement between FHWA and the recipient is anticipated.

    3. Recipient - the recipient of Federal funds awarded under an assistance agreement.

  10. SELECTING THE AWARD INSTRUMENT. In selecting the proper award instrument for a particular transaction, three factors must be considered: the legislative authority, the principal purpose of the transaction, and the degree of Federal involvement.

    1. Legislative Authority. The legislative authority determines the types of instruments that may be used. The agency has authority to award procurement contracts in all of its programs. The authority to award assistance agreements is not as broad. To award assistance instruments, the agency must have statutory authority. This authority may be found in the program legislation or an appropriation act. The recipient, relationship, and effort proposed for award must be consistent with this legislative authority. While the GCA provides a basis for examining whether an arrangement should be a contract, grant or cooperative agreement, it does not expand agencies' authority to award grants and cooperative agreements. The following are examples of legislative authority:

        (1) "The Secretary of Transportation may carry out this section either independently or in cooperation with other Federal departments, agencies, and instrumentalities or by making grants to, and entering into contracts and cooperative agreements with, the National Academy of Sciences, the American Association of State Highway and Transportation Officials, or any State agency, authority, association, institution, corporation (profit or nonprofit), organization, or person." (23 U.S.C. 307(a)(1)(B).)

        (2) "The Secretary of Transportation shall make grants to States to carry out a project to demonstrate methods of establishing an information system which will link the motor carrier safety information network system of the Department of Transportation and similar State systems with the motor vehicle registration and licensing systems of the States." (49 U.S.C. App. 2306(b).)

        (3) "The Secretary of Transportation shall make grants to the University of Idaho, Moscow, Idaho, for planning, design and construction of a building in which the research and development activities of the National Center for Advanced Transportation Technology may be conducted." (49 U.S.C. App. 1607c(b)(10).)

    2. Principal Purpose. Once it is determined that both a procurement contract and an assistance agreement are authorized, the principal purpose of the transaction will determine which instrument is appropriate. A procurement contract is proper when the principal purpose of the relationship is to acquire something for the direct benefit or use of the Federal Government or for the Federal Government to provide to a third party. An assistance agreement, on the other hand, is appropriate when the principal purpose of the relationship is to transfer money, property, or anything of value to the other party to the agreement to accomplish a public purpose of support or stimulation. Assistance agreements should be used when there is an important Federal purpose to be served and there are also local or other non-Federal concerns that should share in shaping the project. They should be encouraged to supply drive, imagination, creativity, and modification to local circumstances. The best way to illustrate this distinction is by example:

        (1) Procurement Contracts are to be used when acquiring the following:

          (a) supplies to meet the day-to-day operating requirements of FHWA offices;

          (b) evaluation (including research of an evaluative nature) of the performance of government programs, projects or activity initiated by FHWA;

          (c) goods or services for a third party, including those receiving grants or cooperative agreements (for instance, National Highway Institute (NHI) contracts for the development of training courses that are provided to State and local government employees are acquired by procurement contract.);

          (d) surveys, studies and research which provide specific information desired by FHWA for its direct activities;

          (e) consulting or professional services of all kinds if provided to FHWA or on behalf of FHWA to any third party;

          (f) conferences conducted on behalf of the government;

          (g) production of publications or audiovisual materials required primarily in support of the conduct of direct operations of FHWA;

          (h) design or development of items for FHWA use or pursuant to FHWA definition or specifications; and

          (i) generation of management information or other data for internal FHWA use.

        (2) Assistance Agreements are to be used for purposes including, but not limited to:

          (a) awards to universities to support research studies in subject areas consistent with the awarding agency's mission;

          (b) awards to State and local government for construction of public works projects;

          (c) fellowships to students for advanced study or research;

          (d) awards to universities for curriculum development to improve the quality of education in subject areas relevant to the awarding agency's mission; and

          (e) awards to eligible recipients to provide financial support for conferences which have a public benefit but for which the awarding agency does not derive a direct benefit. This would not include conferences to train Federal employees, NHI training courses or meetings to obtain advice of non-Federal experts, such as Federal advisory committee meetings.

    3. Degree of Federal Involvement. The degree of Federal involvement in the proposed transaction will determine which type of assistance agreement is more appropriate, a grant or a cooperative agreement. A grant is appropriate when the Federal agency does not intend to be substantially involved in the project. A cooperative agreement is appropriate when the Federal agency intends to be substantially involved in the funded activities. The following discussion illustrates this distinction.

        (1) Grant. Involvement considered appropriate for a grant includes:

          (a) approval of recipient plans prior to award;

          (b) general administrative requirements, such as those included in OMB Circular A-110 and

            49 CFR Part 18;

          (c) site visits, performance reporting, financial reporting and audits to ensure that the objectives, terms and conditions of the grant are met;

          (d) correction of deficiencies in project or financial performance under the terms of the grant;

          (e) general statutory requirements understood in advance of the award such as civil rights, environmental protection and provisions for the handicapped;

          (f) review of performance after completion; and

          (g) FHWA technical assistance or guidance provided (1) at the request of the recipient, or (2) without the requirement for the recipient to follow or (3) as a requirement for the recipient to follow but understood as a term or condition of the award prior to the initiation of performance.

        (2) Cooperative Agreement. In addition to the involvement discussed above for grants, examples of substantial involvement indicating a cooperative agreement include:

          (a) FHWA and recipient collaboration in the performance of the assisted activities;

          (b) close FHWA monitoring or operational involvement during performance over and above normal exercise of Federal responsibilities to ensure compliance with general statutory and regulatory requirements; and

          (c) significant FHWA involvement in recipient decisions with respect to scope of services offered, organizational structure, staffing, mode of operation, and other management processes.

    4. Official Responsible for Selecting Instrument. The Director, Office of Contracts and Procurement (OCP), or designee, shall make the final determination of the proper award instrument using the criteria discussed above. Program officials may wish to obtain an advance determination by OCP so as to avoid expending efforts inappropriately.

  11. COMPETITION

    1. Competition Requirement. Section 2(b)(3) of the GCA states that one of its purposes is to "encourage competition, where deemed appropriate, in the award of grants and cooperative agreements." DOT Order 4000.8A requires maximum competition practicable in awarding grants or cooperative agreements whenever program legislation permits discretion in selecting recipients. DOT Order 4000.8A does not require competition for awards to units of State and local government. Accordingly, competition shall be conducted for selection of an assistance recipient, other than a State or local government, except when a sole source is statutorily authorized or meets the criteria listed in subparagraph 11b.

    2. Criteria for Justifying Award Without Competition. In order for an assistance award to be made without competition, statutory authority to make an assistance award must be established and the award must satisfy one or more of the following criteria:

        (1) Unsolicited proposal - The proposed award is the result of an unsolicited assistance application which represents a unique or innovative idea, method, or approach which is not the subject of a current or planned contract or assistance award;

        (2) Continuation - The activity to be funded is necessary to the satisfactory completion of, or is a continuation or renewal of, an activity presently being funded by FHWA or another Federal agency, and for which competition would have a significant adverse effect on the continuity or completion of the activity;

        (3) Legislative intent - The language in the applicable legislation or legislative history restricts award to a particular recipient or identifies specific program or public objectives which can be most successfully accomplished by only one recipient; or

        (4) Capabilities - The applicant demonstrates a unique capability to perform the activity successfully, based upon unique equipment, proprietary data, technical expertise, location or other such unique qualifications.

    3. Documentation Requirements. Whenever competition will not be conducted in connection with an award, OCP shall prepare a justification. The justification shall fully explain the reasons why competition is not practicable, including a statement of which criteria in Paragraph 11b justifies the action and why. The justification shall also include a discussion of the program legislation or legislative history, technical capabilities of the proposed recipient, and cost-sharing contribution offered by the proposed recipient, as applicable.

    4. Approval Requirements

        (1) Whenever competition will not be conducted in connection with an award to a recipient other than a unit of State or local government, DOT Order 4000.8A requires the justification to be approved in accordance with the levels set forth in Section 1206.304 of the Transportation Acquisition Regulations (TAR). The TAR approval levels are as follows:

          (a) Proposed awards between $25,000 and $100,000 shall be approved by the contracting officer;

          (b) Proposed awards over $100,000 but not exceeding $1 million shall be approved by the FHWA Competition Advocate (Associate Administrator for Administration);

          (c) Proposed awards over $1 million but not exceeding $10 million shall be approved by the FHWA Competition Advocate (Associate Administrator for Administration) and the FHWA Administrator or Deputy Administrator; and

          (d) Proposed awards over $10 million must be approved by the FHWA Competition Advocate (Associate Administrator for Administration); the Federal Highway Administrator or Deputy Administrator; and the Senior Procurement Executive (Director of the Office of Acquisition and Grant Management, Office of the Secretary) or the Assistant Secretary for Administration.

        (2) The approvals shall be obtained in hierarchical order. For example, the justification for a $12 million award to a non-profit entity shall be approved in the following order: contracting officer, FHWA Competition Advocate, Deputy Federal Highway Administrator or Administrator, and Senior Procurement Executive (the Director, Office of Acquisition and Grant Management) or the Assistant Secretary for Administration.

  12. PROCESSING ASSISTANCE AGREEMENTS. To initiate a grant or cooperative agreement, the program office must submit Form FHWA 1513, Acquisition Plan, to OCP. On that form, cite the legislative authority for the assistance award and indicate that a grant or cooperative agreement (rather than a procurement contract) is requested. At the same time, or as soon thereafter as practicable, submit a Form DOT 4200.1, Procurement Request Form. This form signifies that there is a need and, if appropriate, certifies that funds are available. The Procurement Request Form must be completed by the program office and submitted to OCP along with the following information/documents.

    1. Documentation of factors supporting the use of an assistance agreement;

    2. Justification for a sole source award, if applicable;

    3. Statement of purpose (background and objectives) and general project requirements;

    4. Applicant eligibility, including any cost-sharing considerations, and application requirements, including format and content;

    5. Evaluation factors, if the award is to be competitive;

    6. Award selection factors, as well as any applicable funding priorities which would affect selection, if competitive;

    7. Estimated funding level on a per project basis and the approximate number of awards which will be made;

    8. Reporting requirements; and

    9. Any special provisions that may be applicable, such as Government-furnished property, patents, rights in technical data and computer software, and publication costs and rights.

  13. UNSOLICITED APPLICATIONS FOR ASSISTANCE AWARDS. Although it is FHWA policy to solicit applications for assistance awards where possible, FHWA also values obtaining innovative ideas, methods and approaches offered through unsolicited applications. Unsolicited assistance applications shall be forwarded to OCP for handling.

  14. INVITATIONS FOR APPLICATIONS. The OCP will prepare the invitation, usually after the proper award instrument has been determined and the assistance requirement has been administratively approved.

    1. Content of Invitation. Invitations, whether published or not, shall include the following information:

        (1) Statement of purpose (background and objectives) as well as general project requirements.

        (2) Requirements for applicant eligibility, including any cost-sharing considerations.

        (3) Application requirements, including instructions to submit an SF-424, Application for Federal Assistance, and to complete the required assurances and certifications. (Note, however, that the SF-424 is not required for FHWA projects covered by 23 CFR Part 630, subpart B, 23 CFR Part 420, 23 CFR Part 450 and 49 CFR Part 350.)

        (4) If the award is to be competitive, the invitation shall identify the evaluation factors, any applicable funding priorities which would affect selection, the estimated funding level or range of funding on a per project basis, and the approximate number of awards that will be made.

        (5) The terms, conditions, reporting requirements and special provisions of the proposed award.

        (6) The closing date for submission of applications and information on how late applications will be handled.

        (7) Instructions to applicants to identify those portions of their application which they want to limit to FHWA use or for which they want to restrict disclosure by FHWA.

        (8) Statement that applications must comply, if applicable, with the requirements of Executive Order 12372, "Intergovernmental Review of Federal Programs," and Section 204 of the Demonstration Cities and Metropolitan Development Act.

    2. Full and Open or Broad Competition. Invitations for competitive assistance applications shall be made in the manner most likely to achieve broad dissemination, e.g., publication in the Federal Register or Commerce Business Daily. In addition, invitations may be published in an appropriate trade publication. Announcements shall be referred by OCP to the appropriate program office for concurrence. Upon concurrence, the invitations shall be forwarded to the publication by OCP. A copy of the published announcement shall be retained in the assistance agreement file.

    3. Limited Competition. Where competition is less than full and open, an invitation shall be sent directly to those sources included in the limited competition or to the approved sole source. A published invitation is not required. Invitations shall be referred by OCP to the appropriate program office for concurrence.

    4. Time to Submit Applications. All invitations for assistance applications, whether published or unpublished, competitive or non-competitive, must allow sufficient time for interested sources to prepare and submit their applications. In general, a minimum of 30 days from the date the announcement is published or the written invitation is sent should be allowed for the receipt of applications. Invitations to State or local governments may need to allow additional time for the submission of applications due to internal coordination and/or approval processing requirements.

  15. EVALUATION OF APPLICATIONS. Applications shall be evaluated by evaluators technically qualified to conduct the review. The evaluation shall be conducted in accordance with the evaluation factors specified in the invitation (technical, management and/or cost factors) and a summary of the evaluation shall be provided to OCP. If necessary, technical and cost discussions will be conducted with the applicants. Unsuccessful applicants shall be notified in writing of their nonselection.

  16. DISCUSSIONS WITH SELECTED APPLICANT(S). The OCP, with assistance from the program office, shall conduct discussions of proposed costs with the selected applicant to assure the following:

    1. Compliance with applicable cost principles, e.g., OMB Circulars A-21, A-87, or A-122.

    2. Realism and reasonableness of costs based upon the proposed effort.

    3. Review and confirmation of proposed cost-sharing contributions.

    4. Appropriateness of the type of agreement (cost vs. fixed price), method of payment or payment schedule, and financial administration details

  17. THE ASSISTANCE AGREEMENT

    1. Authority. Each assistance agreement shall contain a statement of the statutory authority under which the assistance award is being made.

    2. Funding. Each assistance agreement shall include the cost of the agreement and the amount of cost sharing, if any, to be contributed by the recipient.

    3. Statement of Work. Each assistance agreement shall have a statement of work (SOW) describing the scope of the work being funded by the agreement. The SOW may incorporate the applicant's proposal.

    4. General Provisions. Each assistance agreement shall include General Provisions applicable to all FHWA assistance agreements and cite the applicability of the appropriate administrative requirements (i.e., 49 CFR Part 18 or OMB Circular A-110). The OCP, with assistance from the Office of Chief Counsel, shall be responsible for updating these provisions as needed.

    5. Special Provisions. Based on the needs of the particular transaction, an assistance agreement may include certain special provisions, such as conflicts of interest and intellectual property rights.

    6. Signatures. Each assistance agreement shall be signed by the Director, Office of Contracts and Procurement, or designee and by the recipient.

  18. ADMINISTRATION OF ASSISTANCE AGREEMENTS. The OCP shall designate a program office technical representative to assist in monitoring the activities funded by the grant or cooperative agreement. The technical representative is not authorized to change the scope of work or authorize changes to the grant or cooperative agreement which affect the amount of funding, the period of the agreement or other terms or conditions. The awarding official or designee must authorize modifications to the grant or cooperative agreement in writing.

  19. ADMINISTRATIVE RULES. The award and administration of assistance agreements are subject to applicable rules, regulations, and policies issued by the Department of Transportation, the Office of Management and Budget, the General Accounting Office and the U.S. Treasury. See the attachment to this Order for a listing of applicable rules, regulations, and policies.

/S/
Rodney E. Slater
Administrator

Attachment

ATTACHMENT

APPLICABLE RULES, REGULATIONS, AND POLICIES ISSUED BY THE DEPARTMENT OF TRANSPORTATION, THE OFFICE OF MANAGEMENT AND BUDGET, THE GENERAL ACCOUNTING OFFICE AND THE U.S. TREASURY

  1. Title 23 (Highways), Title 31 (Money and Finance: Treasury), and Title 49 (Transportation) of the Code of Federal Regulations. These set forth regulations applicable to assistance awarded by FHWA, the Federal government and DOT, respectively.

  2. Federal Register. This publication is issued daily to announce proposed and final rulemakings, new programs, and policies of Federal agencies.

  3. Title 48 CFR Part 31. This part contains cost principles that are applicable to for-profit organizations other than hospitals or other organizations named in OMB Circular A-122 (see 49 CFR Section 18.22).

  4. 49 CFR Part 18, Uniform Administrative Requirements for Grants and Cooperative Agreements to State and local Governments. This rule contains Governmentwide fiscal and administrative conditions governing Federal grants and cooperative agreements and subawards to State, local, and Indian tribal governments, as implemented by DOT.

  5. 49 CFR Part 20, Governmentwide Guidance for New Restrictions on Lobbying. This guidance generally prohibits recipients of Federal assistance agreements and procurement contracts (including recipients of subawards), from using appropriated funds for lobbying in connection with a specific assistance agreement or procurement contract. It also requires that each person who requests or receives a Federal assistance agreement or procurement contract (including a subaward) to disclose lobbying undertaken with non-Federal funds.

  6. 49 CFR Part 29, Governmentwide Debarment and Suspension (Nonprocurement) and GovernmentwideRequirements for Drug-free Workplace (Grants). This rule establishes, among the Federal agencies, a uniform system of nonprocurement debarment and suspension and includes requirements for a drug-free workplace.

  7. OMB Circular A-21, Cost Principles for Educational Institutions. This Circular establishes principles for determining costs applicable to grants, procurement contracts, and other agreements with colleges and universities.

  8. OMB Circular A-87, Cost Principles for State and Local Governments. This Circular provides principles for determining the allowable costs of programs administered by State, local, and Indian tribal governments under grants from and procurement contracts with the Federal Government.

  9. OMB Circular A-88, Indirect Cost Rates, Audit and Audit Followup at Educational Institutions. This Circular provides policies for establishing indirect cost rates, auditing, correcting systems deficiencies, and resolving questioned costs in connection with Federal grants, procurement contracts, and other agreements with educational institutions.

  10. OMB Circular A-102, Grants and Cooperative Agreements with State and Local Governments. This Circular establishes consistency and uniformity among Federal agencies in the management of grants and cooperative agreements with State, local, and Indian tribal governments. It provides guidance to Federal agencies on the business aspects of managing grants and cooperative agreements under 49 CFR Part 18.

  11. OMB Circular A-110, Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Nonprofit Organizations. This Circular sets standards for obtaining consistency and uniformity among Federal agencies in the administration of grants to, and other agreements with, public and private institutions of higher education, hospitals, and other nonprofit organizations.

  12. OMB Circular A-122, Cost Principles for Nonprofit Organizations. The principles set forth in this Circular shall be used by all Federal agencies in determining the costs of work performed by nonprofit organizations under grants, cooperative agreements, cost reimbursement procurement contracts, and otherprocurement contracts in which costs are used in pricing, administration, or settlement.

  13. OMB Circular A-128, Audits of State and Local Governments (codified at 49 CFR Part 90). Pursuant to the Single Audit Act of 1984, this Circular establishes audit requirements for State and local governments that receive Federal aid, and defines Federal responsibilities for implementing and monitoring those requirements.

  14. OMB Circular A-133, Audits of Institutions of Higher Education and Other Nonprofit Institutions. This Circular establishes audit requirements and defines Federal responsibilities for implementing and monitoring such requirements for institutions of higher education and other nonprofit institutions receiving Federal awards.

  15. DOT Order 4000.8A (8-17-82), Use of Contracts, Grants and Cooperative Agreements. This Order provides implementing guidance for the GCA, which established government wide criteria for selecting appropriate award instruments.

  16. DOT Order 4600.9C (7-14-88), Grants and Cooperative Agreements with State and Local Governments. This Order prescribes the procedures for implementing OMB Circular A-102 and 49 CFR Part 18.

  17. DOT Order 4600.14, Principles for Determining Costs Applicable to Grants, Contracts, and Other Agreements with Nonprofit Organizations. This Order provides guidance in implementing OMB Circular A-122.

  18. DOT Order 4600.15 (5-16-85), Audits of State and Local Governments (under revision). This Order provides guidance for implementing OMB Circular A-128.
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