80 FR 61142 - Cost Standards and Procedures; Property Acquisition and Management Manual

LEGAL SERVICES CORPORATION

Federal Register Volume 80, Issue 196 (October 9, 2015)

The Legal Services Corporation (LSC or the Corporation) is issuing this advance notice of proposed rulemaking (ANPRM) to request comment on the Corporation's considerations for revising 45 CFR part 1630 and the Property Acquisition and Management Manual (PAMM). The Corporation has chosen to address both part 1630 and the PAMM in a single rulemaking due to the level of similarity and overlap between them, particularly with regard to the provisions governing real and personal property acquisition and prior approval procedures. This ANPRM seeks input and recommendations on how to address most effectively those provisions of part 1630 and the PAMM that impact LSC's ability to promote clarity, efficiency, and accountability in its grant-making and grants oversight practices.

[Federal Register Volume 80, Number 196 (Friday, October 9, 2015)]
[Proposed Rules]
[Pages 61142-61146]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-25735]


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LEGAL SERVICES CORPORATION

45 CFR Part 1630


Cost Standards and Procedures; Property Acquisition and 
Management Manual

AGENCY: Legal Services Corporation.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: The Legal Services Corporation (LSC or the Corporation) is 
issuing this advance notice of proposed rulemaking (ANPRM) to request 
comment on the Corporation's considerations for revising 45 CFR part 
1630 and the Property Acquisition and Management Manual (PAMM). The 
Corporation has chosen to address both part 1630 and the PAMM in a 
single rulemaking due to the level of similarity and overlap between 
them, particularly with regard to the provisions governing real and 
personal property acquisition and prior approval procedures. This ANPRM 
seeks input and recommendations on how to address most effectively 
those provisions of part 1630 and the PAMM that impact LSC's ability to 
promote clarity, efficiency, and accountability in its grant-making and 
grants oversight practices.

DATES: Comments must be submitted by December 8, 2015.

ADDRESSES: You may submit comments by any of the following methods:
    Email: [email protected]. Include ``Part 1630/PAMM Rulemaking'' 
in the subject line of the message.
    Fax: (202) 337-6519.
    Mail: Stefanie K. Davis, Assistant General Counsel, Legal Services 
Corporation, 3333 K Street NW., Washington, DC 20007, ATTN: Part 1630/
PAMM Rulemaking.
    Hand Delivery/Courier: Stefanie K. Davis, Assistant General 
Counsel, Legal Services Corporation, 3333 K Street NW., Washington, DC 
20007, ATTN: Part 1630/PAMM Rulemaking.
    Instructions: Electronic submissions are preferred via email with 
attachments in Acrobat PDF format. Written comments sent via any method 
not described in this notice or received after the end of the comment 
period may not be considered by LSC.

FOR FURTHER INFORMATION CONTACT: Stefanie K. Davis, Assistant General 
Counsel, Legal Services Corporation, 3333 K Street NW., Washington, DC 
20007, (202) 295-1563 (phone), (202) 337-6519 (fax), [email protected].

SUPPLEMENTARY INFORMATION: 

I. Regulatory Background of Part 1630 and the PAMM

    The purpose of 45 CFR part 1630 is ``to provide uniform standards 
for allowability of costs and to provide a comprehensive, fair, timely, 
and flexible process for the resolution of questioned costs.'' 45 CFR 
1630.1. LSC last revised Part 1630 in 1997, when it published a final 
rule intended to ``bring the Corporation's cost standards and 
procedures into conformance with applicable provisions of the Inspector 
General Act, the Corporation's appropriations action, and relevant 
Office of Management and Budget (OMB) Circulars.'' 62 FR 68219, Dec. 
31, 1997. Although the OMB Circulars are not binding on LSC because it 
is not a federal agency, LSC adopted certain provisions from relevant 
OMB Circulars pertaining to non-profit grants, audits, and cost 
principles into the final rule for part 1630. Id. at 68219-20 (citing 
OMB Circulars A-50, A-110, A-122, and A-133).
    LSC published the PAMM in 2001 ``to provide recipients with a 
single complete and consolidated set of policies and procedures related 
to property acquisition, use and disposal.'' 66 FR 47688, Sept. 13, 
2001. Prior to the PAMM's issuance, such policies and procedures were 
``incomplete, outdated and dispersed among several different LSC 
documents.'' Id. The PAMM contains policies and procedures that govern 
both real and non-expendable personal property, but, with the exception 
of contract services for capital improvements, the PAMM does not apply 
to expendable personal property or to contracts for services. Id. at 
47695. The PAMM's policies and procedures were developed with guidance 
from the Federal Acquisition Regulations, the Federal Property 
Management Regulations, and OMB Circular A-110. Id. at 47688. The PAMM 
also incorporates several references to provisions of part 1630 
pertaining to costs requiring LSC prior approvals and the proper 
allocation of derivative income. Id. at 47696-98 (containing references 
to 45 CFR 1630.5(b)(2-4), 1630.5(c), and 1630.12, respectively).

II. Impetus for This Rulemaking

    Part 1630 and the PAMM have not been revised since 1997 and 2001, 
respectively. Since that time, procurement practices and cost 
allocation principles applicable to awards of federal funds have 
changed significantly. For instance, in 2013, OMB revised and 
consolidated several Circulars into a single Uniform Guidance. 78 FR 
78589, Dec. 26, 2013; 2 CFR part 200. OMB consolidated and simplified 
its guidance to ``reduce administrative burden for non-Federal entities 
receiving Federal awards while reducing the risk of waste, fraud and 
abuse.'' 78 FR 78590, Dec. 26, 2013.
    LSC has determined that it should undertake regulatory action at 
this time for three reasons. The first reason is to account, where 
appropriate for LSC, for corresponding changes in Federal grants 
policy. The second reason is to address the difficulties that LSC and 
its grantees experience in applying ambiguous provisions of Part 1630 
and the PAMM. Finally, LSC believes rulemaking is appropriate at this 
time to address the limitations that certain provisions of both 
documents place on the

[[Page 61143]]

Corporation's ability to ensure clarity, efficiency, and accountability 
in its grant-making and grants oversight practices.
    LSC has identified several aspects of part 1630 and the PAMM that 
reduce efficiency, create confusion, and fail to ensure accountability 
in the use of LSC funds. For example, part 1630 and the PAMM both 
require recipients to seek prior approval for certain purchases of real 
and non-expendable personal property. 45 CFR 1630.5 (describing costs 
requiring prior approval), 1630.6 (establishing the timetable and bases 
for granting prior approval); PAMM sections 3(d), 4(d). LSC has 
determined that the text of its prior approval provisions does not 
accurately reflect the intent of its drafters or the current practice 
of the Corporation and its grantees. Clarifying when recipients must 
seek prior approval of purchases will align the text of these 
provisions with current practice and eliminate uncertainty about their 
application. This revision would also be consistent with LSC's original 
purpose in issuing the PAMM ``to provide recipients with a single 
complete and consolidated set of policies and procedures related to 
property acquisition, use and disposal.'' 66 FR 47688, Sept. 13, 2001.
    LSC's Office of Inspector General (OIG) and LSC management have 
also recommended that the Corporation consider revising 45 CFR 
1630.7(b). Section 1630.7(b) provides that LSC shall provide written 
notice to a grantee of LSC's decision to disallow certain costs if LSC 
determines that there is a basis to disallow the costs and not more 
than five years has passed since the grantee incurred the costs. OIG 
and Management have expressed concern that the lack of specificity 
regarding the point at which LSC has sufficient basis to disallow costs 
and to notify a recipient of LSC's intent to disallow costs impedes 
LSC's ability to recover misspent funds.
    In July 2014, the Operations and Regulations Committee (Committee) 
of LSC's Board of Directors (Board) approved Management's proposed 
2014-2015 rulemaking agenda, which included revising part 1630 and the 
PAMM as a priority item. On July 16, 2015, Management presented the 
Committee with a Justification Memorandum recommending publication of 
an ANPRM to seek public comment on possible revisions to Part 1630 and 
the PAMM. Management stated that collecting input from the regulated 
community through an ANPRM would significantly aid LSC in determining 
the scope of this rulemaking and in developing a more accurate 
understanding of the potential costs and benefits that certain 
revisions may entail. On July 18, 2015, the LSC Board authorized 
rulemaking and approved the preparation of an ANPRM to revise Part 1630 
and the PAMM.
    On October 4, 2015, the Committee voted to publish this ANPRM in 
the Federal Register for notice and comment.

III. Discussion of Revisions Under Consideration

    LSC requests comment on the following proposals and specific 
questions. When submitting responses to specific questions, please 
refer to each question by number.

A. Revising, Restructuring, and Consolidating Prior Approval Provisions

    To improve organization and clarity, LSC is considering 
restructuring 45 CFR 1630.5, which currently governs three discrete 
topics:

    (1) Recipient requests for advance understanding of whether an 
unusual or special cost is allowable (Sec.  1630.5(a));
    (2) Costs for which prior approval is necessary (Sec.  
1630.5(b)); and
    (3) The duration of a prior approval or advance understanding 
(Sec.  1630.5(c)).

    Section 1630.5(b) further lists four types of costs requiring prior 
approval, three of which apply exclusively to property:

    (1) Pre-award costs and costs incurred after the cessation of 
funding;
    (2) Purchases and leases of personal, non-expendable property if 
the purchase price of any individual item exceeds $10,000;
    (3) Purchases of real property; and
    (4) Capital expenditures exceeding $10,000 to improve real 
property.

    LSC is considering expressly incorporating into the PAMM all of the 
procedures and requirements governing prior approval that are related 
to property. By its own terms, the PAMM represents the consolidation of 
``all of the relevant policies and requirements related to the 
acquisition, use and disposal of real and personal property'' in a 
single document. 66 FR 47688, Sept. 13, 2001. In fact, the PAMM merely 
incorporates some of these policies and requirements by reference and 
excludes others altogether. For example, 45 CFR 1630.5(b)-(c) are 
referenced throughout sections 3 and 4 of the PAMM, which govern 
acquisition procedures for personal and real property. Id. at 47696. 
The PAMM omits 45 CFR 1630.6, which establishes the timetable and basis 
for granting prior approval. Similarly, while some of the provisions of 
Program Letter 98-4, which established the processes for requesting 
prior approval, are incorporated throughout the PAMM, others are 
distinctly absent. Id. at 47689. The omitted provisions include the 
process for requesting approval of pre-award costs and costs incurred 
after the cessation of funding, both of which may involve property.
    Question 1: How should LSC restructure the provisions discussed 
above to best provide clarity to its grantees?
    Question 2: In addition to the provisions discussed above, are 
there any additional provisions from other LSC documents related to 
prior approval that should also be restructured or consolidated?
    Management is also considering revising 45 CFR 1630.5(b)(2) and 
section 3(d) of the PAMM to require prior approval for each transaction 
in which the aggregate cost of all items of personal property purchased 
through the transaction exceeds a specific threshold. Both sections 
currently require recipients to obtain prior approval only for 
acquisition of an ``individual'' item of personal property that has a 
value exceeding $10,000. LSC's Office of Compliance and Enforcement 
(OCE) and OIG, however, have applied 45 CFR 1630.5(c) and section 3(d) 
of the PAMM as requiring prior approval for a single acquisition of 
multiple related items that have an aggregate value exceeding $10,000. 
The proposed revision would, therefore, make the rules consistent with 
LSC and OIG's practice.
    Finally, LSC is considering raising the $10,000 prior-approval 
threshold set by 45 CFR 1630.5(b)(2) and section 3(d) of the PAMM. LSC 
is also considering drafting the rule to allow for adjustment when 
economic circumstances indicate adjustment is appropriate. LSC adopted 
the $10,000 threshold over 20 years ago and did not provide for 
adjustment due to inflation. As a result, recipients must seek prior 
approval for purchases considerably smaller than those for which LSC 
intended to require prior approval at the time it published the PAMM.
    Question 3: Are there any potential concerns or problems that could 
arise from revising the rule to specify that recipients must seek prior 
approval of single acquisitions of multiple items whose aggregate value 
exceeds the prior approval threshold?
    Question 4: Would the proposed approach generally be consistent 
with other funders' requirements for all purchases of nonexpendable 
personal property costing more than the prior-approval threshold?
    Question 5: Should LSC raise the prior approval threshold? If yes, 
what

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amount should LSC set as the threshold? Are there any similar prior 
approval requirements imposed by funders other than the federal 
government that may help LSC make this determination? Should LSC 
automatically adjust the threshold on a scheduled basis to account for 
inflation, or should LSC consider another mechanism to allow for 
adjustment on a discretionary or as-needed basis?

B. Clarifying When LSC Provides Notice of Its Intent To Disallow Costs

    LSC is considering revising 45 CFR 1630.7(b), which currently 
states that LSC may commence a disallowed cost proceeding only if (1) 
it has made a determination of ``a basis for disallowing a questioned 
cost,'' (2) ``not more than five years have elapsed since the recipient 
incurred the cost,'' and (3) the Corporation provides written notice to 
the recipient ``of its intent to disallow the cost. . . . [stating] the 
amount of the cost and the factual and legal basis for disallowing 
it.'' OIG, Management, and the LSC Board have expressed concern that 
the lack of clarity regarding the point at which such notice may be 
provided unnecessarily impedes LSC's ability to recover misspent funds. 
LSC currently interprets the phrase ``determination of a basis for 
disallowing a questioned cost'' to mean the point at which LSC 
determines that a recipient has in fact incurred a questioned cost as 
defined in 45 CFR 1630.2(g).
    Based on its experience with questioned-cost proceedings, LSC 
proposes to revise Sec.  1630.7(b) to state that LSC may issue 
``written notice . . . of its intent to disallow the cost'' at the time 
LSC has enough evidence to support a reasonable belief that the cost is 
unallowable. The notice would not necessarily initiate a questioned 
cost proceeding, but would instead inform the recipient that LSC 
believes a cost could be questioned and will investigate further. LSC 
would subsequently notify the recipient whether LSC intends to initiate 
a questioned cost proceeding.
    LSC proposes to revise Sec.  1630.7(b) for four reasons. First, 
giving notice at the time LSC reasonably believes that it could 
disallow a cost would allow the recipient to ensure that it retains all 
records related to the cost in the event that it needs to respond to a 
notice of questioned costs. Second, notice at an earlier stage of LSC's 
investigation would inform a recipient sooner about problems identified 
by LSC and encourage the recipient to change its practice giving rise 
to the questioned cost, which would potentially save the recipient 
money. Third, changing the rule to provide notice at the time LSC has a 
reasonable basis for a questioned cost proceeding, rather than at the 
time LSC initiates the proceeding, would allow LSC to recover misspent 
funds in cases that require lengthy investigations. The good faith 
notice that LSC has enough evidence to support a reasonable belief that 
the cost is unallowable would establish the five-year period for 
recovery and permit LSC to recover misspent funds if the time for 
investigation exceeds five years from the date the recipient incurred 
the cost. The current rule restricts LSC's recovery regardless of how 
unreasonable or unlawful the questioned cost may be.

    Example: A recipient incurred deferred compensation costs for 
its executive director beginning in February, 2009. LSC had a 
reasonable basis for questioning the costs in 2014, but it took 
until February, 2015 for LSC to complete its investigation, which 
included an on-site visit, requesting and receiving documentation to 
support the costs from the recipient, and reviewing the 
documentation provided. If LSC issued notice of its intent to 
disallow costs associated with the deferred compensation package in 
February, 2015, LSC could not question incurred between February, 
2009 and February, 2010 because those costs would fall outside the 
five-year period in Sec.  1630.7(b).

    Finally, giving notice at an earlier stage in the investigative 
process would be more consistent with the definition of questioned cost 
at 45 CFR 1630.2(g). The definition of questioned cost lists three 
findings that may cause OIG, LSC, the Government Accountability Office 
(formerly the General Accounting Office), or an independent auditor to 
question costs: 1) the recipient may have violated a law, regulation, 
contract, grant, or other agreement governing the use of LSC funds; 2) 
the cost is not supported by adequate documentation; and 3) the cost 
appears unreasonable or unnecessary. Two of these findings involve 
potential, rather than definite, occurrences--a potential violation of 
law, or the apparent unreasonableness or unnecessary incurring of a 
given cost. A recipient ultimately may be able to properly document a 
cost after adequate time and incentive, and thereby avoid returning 
funds to LSC. For these reasons, LSC proposes to revise the notice 
requirement in Sec.  1630.7(b).
    Question 6: Are there any other changes LSC should consider when 
revising Sec.  1630.7(b)? How would the proposed approach affect 
recipients who are subject to a questioned cost proceeding?

C. Revising the Requirements for Using LSC Funds for Federal Matching 
Purposes

    LSC is considering eliminating the requirement in 45 CFR 
1630.3(a)(8) that recipients obtain written consent from a federal 
agency before using LSC funds to match a grant awarded by that agency. 
Under this paragraph, recipients may use LSC funds to satisfy the 
matching requirement of a federally funded program only if ``the agency 
whose funds are being matched determines in writing that Corporation 
funds may be used for federal matching purposes[.]'' 45 CFR 
1630.3(a)(8). The preamble to the 1986 final rule for part 1630 
describes this section as ``a standard federal provision to ensure that 
[matching funds for federal grants] must be raised from a source other 
than the federal treasury and taxpayer.'' 51 FR 29076, 29077, Aug. 13, 
1986. Section 1005 of the Legal Services Corporation Act states that, 
``[e]xcept as otherwise specifically provided in [the Act],'' LSC is 
not ``considered a department, agency, or instrumentality, of the 
Federal Government.'' 42 U.S.C. 2996d(e)(1). Therefore, LSC funds are 
not ``federal funds'' for matching purposes, even though they are 
appropriated by Congress, and they could be used to match a federal 
grant award.
    LSC understands that grantees find the requirement in Sec.  
1630.3(a)(8) burdensome because awarding agencies do not normally 
confirm in writing that the proposed source of a funding applicant's 
non-federal match is a permissible source. Even if the agency would 
allow the match, Sec.  1630.3(a)(8) currently prohibits the match if 
the agency will not provide written consent. LSC also believes that the 
requirement is not necessary to ensure that grantees using LSC funds to 
match a federal grant continue using those funds consistent with the 
Corporation's governing statutes and regulations. LSC is considering 
removing the requirement to obtain written consent and replacing it 
with an alternative method of conveying the Corporation's position on 
the use of LSC funds as matching funds. One possible solution would be 
for LSC to issue a program letter explaining why LSC funds are not 
federal funds for matching purposes. LSC recipients could then provide 
that program letter to any awarding agencies that question the non-
federal character of LSC funds.
    Question 7: Based on the experiences of grantees who have applied 
to receive awards from federal agencies with matching requirements, 
would a program letter stating the Corporation's

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position on the use of LSC funds as matching funds be an effective 
alternative to the current requirement of obtaining written consent 
from the awarding agency? Are there any other workable replacements for 
this requirement that LSC should consider in this rulemaking?

D. Revising the PAMM's Requirements for Disposal of Property

    LSC is considering revising sections 6(f) and 7(a) and (d) of the 
PAMM to require recipients and former recipients to provide notice to 
and obtain approval from LSC prior to disposing of personal or real 
property acquired with LSC funds. Section 6(f) requires recipients that 
cease receiving LSC funding to seek LSC's approval prior to disposing 
of personal property. Section 6(c) requires recipients to seek LSC's 
approval to transfer an item of personal property to another nonprofit 
organization serving the poor in the same service area. See PAMM, 
section 6(c)(5). In all other instances, a recipient may dispose of 
personal property purchased in whole or in part with LSC funds without 
seeking LSC's approval.
    Like section 6(f), section 7(c) requires entities that no longer 
receive LSC funding to seek LSC's approval before disposing of real 
property purchased in whole or in part with LSC funds. The provisions 
of the PAMM that do not require approval by LSC are section 7(a), 
governing the disposal of real property during the term of an LSC 
grant, and section 7(d), governing the transfer of real property by an 
entity that ceases to receive LSC funding to a recipient who has merged 
with or succeeded that entity. LSC's recent agreements governing 
grantee purchases of real property, however, generally require 
recipients to give LSC 30 days' notice of a pending sale or to seek 
LSC's approval of the sale 30 days prior to the completion of the sale. 
These conditions apply whether the sale occurs during the term of the 
LSC grant or after a grantee ceases to receive funding.
    Under the Uniform Guidance, a recipient of Federal funds must 
request disposition instructions from the funding agency any time it 
wants to dispose of real property, equipment, or intangible property 
purchased with the agency's funds. See 2 CFR 200.311(c) (real 
property), 200.313(e) (equipment), and 200.315(a) (intangible 
property). In contrast, LSC requires a recipient to seek LSC's approval 
to dispose of real property or personal property only when the 
recipient ceases to receive LSC funding. Unlike the Uniform Guidance, 
the PAMM allows a recipient to choose the method of disposition and 
seek LSC's approval of that method.
    Question 8: Would revising the provisions discussed above to 
require notice and approval by the Corporation prior to any disposal of 
personal or real property create or remove problems for grantees? 
Should any provision governing a particular type of property disposal 
have its own unique requirements or exceptions?
    Question 9: How would it affect recipients if LSC revised the 
disposal provisions of the PAMM to require grantees to seek disposition 
instructions from LSC?
    Question 10: What is an appropriate length of time for recipients 
to provide LSC with written notice prior to disposing of real property?
    LSC is also considering revising sections 6(f) and 7(c) of the 
PAMM. Pursuant to those sections, when an entity that owns personal or 
real property acquired with LSC funds ceases to receive funding from 
LSC, it may: (1) Transfer the property to another LSC recipient; (2) 
retain the property and pay LSC that percentage of the fair market 
value of the property that represents the percentage of the acquisition 
cost attributable to LSC funds; or (3) sell the real property and 
compensate LSC as described in (2), minus actual and reasonable selling 
and fix-up expenses. In the case of personal property, section 6(f) 
permits a recipient to transfer the property to another nonprofit 
organization serving the poor in the same service area and pay LSC that 
percentage of the property's current fair market value that is equal to 
that percentage of the acquisition cost attributable to LSC funds. 
Although these provisions are consistent with the Uniform Guidance, LSC 
requests comments from grantees and others about whether it is 
appropriate for LSC to seek compensation.
    Question 11: Should LSC continue to require former recipients to 
compensate LSC when the recipients dispose of personal or real property 
purchased with LSC funds? If so, what are some of the problems facing 
grantees with regard to the current requirements? How could LSC 
effectively address such problems in a way that is consistent with the 
goal of ensuring efficiency and accountability in grant-making and 
grants oversight practices?

E. Revising Definitions in the PAMM for Clarity and Consistency With 
Current Practices

    LSC is considering revising the PAMM's definitions of ``acquisition 
costs for real property'' and ``capital improvement,'' which are 
incomplete and produce inconsistencies throughout the PAMM. Section 
2(a) of the PAMM defines ``acquisition costs for real property'' as 
``the initial down payment and principle [sic] and interest on debt 
secured to finance the acquisition of the property. . . .'' Section 
2(c) of the PAMM defines ``capital improvement'' as ``an expenditure of 
an amount of LSC funds exceeding $10,000 to improve real property 
through construction or the purchase of immovable items which become an 
integral part of real property.'' The fact that the definitions of 
neither ``acquisition costs for real property'' nor ``capital 
improvement'' expressly cover renovations causes several problematic 
inconsistencies. For example, section 4(c) of the PAMM requires ``an 
analysis of the average annual cost of the acquisition, including the 
costs of a down payment, interest and principal payments on debt 
acquired to finance the acquisition, closing costs, renovation costs, 
and the costs of utilities, maintenance, and taxes, where applicable.'' 
Section (d)(7)(i) of the PAMM similarly requires recipients to estimate 
the ``total cost of the acquisition, including renovations, moving, and 
closing costs'' when seeking prior approval to purchase real property. 
As a result, a renovation cost in excess of $10,000 may be considered 
as an acquisition cost, despite also constituting a ``capital 
improvement.'' Section 7(f) of the PAMM further requires that 
recipients follow separate procedures when using LSC funds to make 
``capital improvements.''
    Question 12: How should LSC revise the definitions of ``acquisition 
costs for real property'' and ``capital improvements'' in order to 
address the inconsistencies described in the above proposal? Should the 
definitions differentiate between renovations done as part of the 
acquisition process and renovations done on real property already owned 
by the grantee?
    LSC is also considering revising the PAMM's definition of 
``personal property'' to clarify that it includes data, software, and 
other types of intellectual property. Just as federal procurement 
practices have changed substantially since the PAMM's publication in 
2001, there have also been significant developments in intellectual 
property and the methods by which both private and public organizations 
incorporate it into their grant-making and procurement processes. The 
definition of ``personal property'' in section 2(f) of the PAMM 
currently includes both ``tangible'' and ``intangible'' property, with 
the specific examples of ``copyrights or patents'' listed under the 
latter. However, the definition does not

[[Page 61146]]

expressly include ``intellectual property'' as a category of intangible 
property, nor does it include items such as data and software that are 
often considered to be intellectual and/or personal property. The only 
other provision of the PAMM governing a type of intellectual property 
is section 5(g), which provides that recipients may copyright work that 
is obtained or developed with LSC funds as long as the Corporation 
``reserves a royalty-free, nonexclusive, and irrevocable license to 
reproduce, publish, or otherwise use'' such copyrighted work.
    Question 13: Should LSC revise the PAMM's definition of ``personal 
property'' to include intellectual property? Should LSC create a new 
provision that governs exclusively rights in intellectual property 
created using LSC grant funding? Should general rights in data produced 
under LSC grants be addressed separately from any new provisions 
governing the acquisition of intellectual property?
    Question 14: Do other funders impose rights-in-data requirements 
that LSC should be aware of when revising the PAMM, such as the 
retention of a royalty-free, nonexclusive license to reproduce, 
publish, or otherwise use products developed by the recipient using 
those funds? If so, what are those requirements?

F. Revising Procedures and Requirements for Procurements; Including 
Procurements of Services Within the Scope of Part 1630 and the PAMM

    LSC is considering revising the procedures and requirements 
applicable to grantee procurements paid for in whole or in part with 
LSC funds. Unlike the Uniform Guidance and its relevant predecessors, 
OMB Circulars A-87 and A-122, neither part 1630 nor the PAMM describes 
the minimum standards that LSC recipients' procurement policies should 
have. Program Letter 98-4, which established the procedures that 
recipients must use to seek prior approval of certain leases and 
procurements of personal and real property, requires a recipient to 
give LSC minimal information about the process by which the recipient 
selected a contractor, including whether the recipient solicited bids 
or awarded a contract on a sole source basis. The annual grant 
assurances applicable to Basic Field Grant awards do not require 
recipients to certify that they have procurement policies that meet 
prescribed minimum standards. By contrast, recipients of Technology 
Initiative Grant (TIG) awards must comply with the procurement 
requirements set forth in the annual grant assurances applicable to the 
TIG program. As a result, recipients of special grants from LSC are 
subject to more robust procurement requirements than recipients of only 
Basic Field Grants are. LSC believes that revising part 1630 and the 
PAMM to incorporate minimum standards for recipient procurement 
policies is necessary to ensure that recipients have adequate 
procurement policies and that all LSC-funded grant programs are subject 
to the same requirements.
    Question 15: Should LSC model its revised procurement standards on 
the standards contained in the Uniform Guidance? What standards do 
other funders require recipients' procurement policies to meet?
    LSC is also considering including contracts for services within the 
scope of part 1630 and the PAMM. Neither part 1630 nor the PAMM 
currently requires prior approval or specific procurement procedures 
for services contracts, either alone or accompanying a purchase of 
personal property. For example, contracts with information technology 
providers often include both equipment (personal property) and 
services. Recipients currently may separate services from personal 
property in order to demonstrate that the cost of the personal property 
falls below the PAMM's threshold for prior approval, even if the total 
contract cost, including services, exceeds the threshold. Recipients 
may also enter into contracts for services costing significant amounts 
of LSC funds, even though there is no requirement that LSC approve the 
recipient's selection of a contractor and formation of the contract. By 
contrast, TIG recipients must follow procurement procedures, but not 
obtain prior approval, for all procurements of any kind over $5,000.
    Question 16: What procedures and requirements should LSC adopt to 
govern services contracts? How can LSC incorporate such procedures and 
requirements in a way that promotes clarity, efficiency, and 
accountability, while also minimizing any potential burden to grantees?

G. Adopting the PAMM as a Codified Rule

    LSC is considering codifying the PAMM into a rule published in the 
Code of Federal Regulations. Although the PAMM technically is not a 
rule, it has several characteristics in common with legislative rules. 
For example, the PAMM was adopted after notice and an opportunity for 
public comment. LSC also assesses recipients' compliance with the 
provisions of the PAMM. Management believes that the codification of 
the PAMM may further promote and preserve the effectiveness and 
consistency of LSC's property acquisition, use, and disposal policies 
and procedures.
    Question 17: Would codification of the PAMM as a rule create 
potential burdens to grantees or otherwise unduly disrupt grantees' 
current property acquisition and management practices?

H. Other Questions

    Question 18: Are there any significant conflicts between the 
Corporation's requirements in Part 1630 and the PAMM and rules 
implemented by other public and private funders? If so, what steps 
should LSC take to address such conflicts, whether through rulemaking 
or otherwise?
    Question 19: Are there any aspects of Part 1630 and the PAMM not 
identified in this ANPRM that the Corporation should address in this 
rulemaking?

    Dated: October 5, 2015.
Stefanie K. Davis,
Assistant General Counsel.
[FR Doc. 2015-25735 Filed 10-8-15; 8:45 am]
 BILLING CODE 7050-01-P