81 FR 78360 - Definitions for DoD Grant and Agreement Regulations in Subchapters A Through F

DEPARTMENT OF DEFENSE
Office of the Secretary

Federal Register Volume 81, Issue 215 (November 7, 2016)

Page Range		78360-78369
FR Document		2016-25698

This Notice of Proposed Rulemaking (NPRM) is the fifth of a sequence of six NPRMs in this section of this issue of the Federal Register that propose updates to the DoD Grant and Agreement Regulations (DoDGARs). In this NPRM, DoD is proposing definitions of terms that are common to most portions of those regulations, as well as a central location for the definitions.

Federal Register, Volume 81 Issue 215 (Monday, November 7, 2016)

[Federal Register Volume 81, Number 215 (Monday, November 7, 2016)]
[Proposed Rules]
[Pages 78360-78369]
From the Federal Register Online [www.thefederalregister.org]
[FR Doc No: 2016-25698]

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DEPARTMENT OF DEFENSE

Office of the Secretary

2 CFR Part 1108

[DOD-2016-OS-0051]
RIN 0790-AJ46

Definitions for DoD Grant and Agreement Regulations in
Subchapters A Through F

AGENCY: Office of the Secretary, Department of Defense (DoD).

ACTION: Proposed rule.

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SUMMARY: This Notice of Proposed Rulemaking (NPRM) is the fifth of a
sequence of six NPRMs in this section of this issue of the Federal
Register that propose updates to the DoD Grant and Agreement
Regulations (DoDGARs). In this NPRM, DoD is proposing definitions of
terms that are common to most portions of those regulations, as well as
a central location for the definitions.

DATES: To ensure that they can be considered in developing the final
rule, comments must be received at either the Web site or mailing
address indicated below by February 6, 2017.

ADDRESSES: You may submit comments identified by docket number, or by
Regulatory Information Number (RIN) and title, by either of the
following methods:
The Web site: http://www.regulations.gov. Follow the instructions
at that site for submitting comments.
Mail: Department of Defense, Deputy Chief Management Officer,
Directorate for Oversight and Compliance, 4800 Mark Center Drive, ATTN:
Box 24, Alexandria, VA 22350-1700.
Instructions: All submissions must include the agency name and
docket number or RIN for this Federal Register document. The general
policy for comments and other submissions from the public is to make
the submissions available for public viewing on the Internet at http://www.regulations.gov without change (i.e., as they are received,
including any personal identifiers or contact information).

FOR FURTHER INFORMATION CONTACT: Wade Wargo, Basic Research Office,
telephone 571-372-2941.

SUPPLEMENTARY INFORMATION:

I. Executive Summary

A. Purpose of the Regulatory Action

1. The Need for the Regulatory Action and How the Action Meets That
Need
The Department of Defense Grant and Agreement Regulations (DoDGARs)
need to be updated, in part due to the issuance of new Office of
Management and Budget guidance to Federal agencies on administrative
requirements, cost principles, and audit requirements that apply to
Federal grants, cooperative agreements, and other assistance
instruments (2 CFR part 200). The DoDGARs part proposed by this NPRM is
an important part of the update in that it contains the definitions of
terms used throughout most portions of the DoDGARs.
2. Legal Authorities for the Regulatory Action
There are two statutory authorities for this NPRM:
10 U.S.C. 113, which establishes the Secretary of Defense
as the head of the Department of Defense; and
5 U.S.C. 301, which authorizes the head of an Executive
department to prescribe regulations for the governance of that
department and the performance of its business.

B. Summary of the Major Provisions of the Regulatory Action

This NPRM proposes a new part, 2 CFR part 1108, as the central
location for definitions of terms that are needed in order to make the
DoDGARs as clear as possible for DoD awarding and administering
officials, recipients, auditors, and others who may need to use them.
The following subsection B.1 of this Supplementary Information section
explains why the proposed part 1108 does not include definitions of
some terms. Subsections B.2 through B.8 provide additional information
about selected definitions that are included in the proposed part.
1. Terms Defined in Other Issuances That the DoDGARs Adopt by Reference
The proposed part 1108 does not reiterate the definition of a term
that is defined in a statute, regulation, Governmentwide guidance
document, or other issuance that the DoDGARs adopt by reference unless
the DoDGARs also directly use that term and its definition is important
to the interpretation of the regulations. Sections 1108.2 and 1108.3 of
the proposed part 1108 provide more explanation and examples of
issuances the DoDGARs adopt by reference, including national policy
requirements, the cost principles and single audit

[[Page 78361]]

requirements in Subparts E and F of 2 CFR part 200, and the cost
principles in the Federal Acquisition Regulation (48 CFR part 31).
2. Terms for Funding Instruments and Associated Business Relationships
The proposed part 1108 includes definitions of some terms intended
to help clarify the distinctions between types of funding instruments
that DoD Components and recipients may use, as well as the business
relationships for which those instruments appropriately are used. The
part also has an appendix with additional background information on
assistance and acquisition, which are different purposes for which DoD
Components enter into transactions such as grants, cooperative
agreements, and procurement contracts. Among the terms addressed in the
definitions and appendix are:
``Acquire'' and the related terms ``acquisition'' and
``acquisition cost.'' The definition of ``acquire'' in section 1108.10
of the proposed part clarifies the very important distinction between a
DoD Component's action at the primary tier and transactions by
recipients and subrecipients at lower tiers. It also clarifies that the
ways in which a recipient or subrecipient may acquire property under a
DoD Component's award include construction, fabrication, or development
of the property, as well as donation of the property to the project or
program under the award. The definition of ``acquisition cost''
similarly clarifies what the term includes in conjunction with
equipment that a recipient or subrecipient constructs or fabricates
under an award, which parallels the wording in the definition of
``acquisition cost'' in 2 CFR part 200 concerning software that a
recipient or subrecipient develops under an award.
``Procurement contract,'' as distinct from ``procurement
transaction'' or ``contract.'' The proposed part defines the term
``procurement contract'' specifically to mean a DoD Component's
acquisition transaction because a few portions of the DoDGARs refer to
DoD Component's procurement contracts (e.g., in addressing the
appropriate use of a grant or cooperative agreement, rather than a
procurement contract). The part then defines the different term
``procurement transaction'' or ``contract'' to mean the funding
instrument a recipient or subrecipient uses to buy goods or services it
needs to carry out the program under its award or subaward. This
distinction is important because the DoD Component's use of acquisition
transactions is governed by the Federal Grant and Cooperative Agreement
Act (31 U.S.C., chapter 63), while a recipient's or subrecipient's
acquisition transactions are not subject to that statute.
``Cost-type contract,'' ``cost-type subaward,'' and
``fixed-amount subaward,'' which are terms for types of transactions
into which a recipient or subrecipient would enter with an entity at
the next lower tier. These terms are used in the administrative
requirements portion of the general terms and conditions, which are in
DoDGARs parts proposed in the third of the sequence of six NPRMs in
this section of this issue of the Federal Register.
3. Terms To Distinguish DoD Entities, Officials, and Programs
There are a number of terms defined in the proposed part 1108 that
are needed in order for the regulations to be able to specify different
requirements for:
DoD offices and officials with distinct responsibilities.
``Agreements officer,'' for example, is a term associated with
officials authorized to award Technology Investment Agreements, as
distinct from officials authorized to award or do post-award
administration for grants and cooperative agreements. For the same
reason, the proposed part 1108 defines ``DoD Components,'' ``award
administration office,'' and ``contracting activity'' as organizational
entities; ``agreements officer,'' ``contracting officer,'' and ``grants
officer'' as categories of DoD officials; and ``Technology Investment
Agreement'' as a type of funding instrument.''
One or more subcategories of ``research and development
(R&D),'' a term defined in the OMB guidance in 2 CFR part 200. To make
the distinctions, the proposed part 1108 separately defines ``basic
research,'' ``applied research,'' ``advanced research,'' ``research,''
and ``development.''
4. The Terms ``Principal Investigator'' and ``Co-Principal
Investigator''
The proposed part 1108 includes definitions of ``principal
investigator'' and ``co-principal investigator'' that are based on work
done by an interagency group under the National Science and Technology
Council and published in the Federal Register (72 FR 54257, September
24, 2007). The term ``principal investigator'' is used in multiple
DoDGARs parts. The definition of the term ``co-principal investigator''
not only helps to complete the concept of ``principal investigator''
but also will be needed for a portion of the DoDGARs that DoD will
propose for comment in the future.
5. The Term ``Approved Budget''
The definition of the term ``approved budget'' is included in the
proposed part 1108 as the DoD implementation of the term ``budget''
defined in the OMB guidance in 2 CFR part 200. The definition in the
OMB guidance indicates that an agency may, at its option, include the
non-Federal share of project costs in the budget for a project. The
definition in the proposed part 1108 clarifies that the ``approved
budget'' for a DoD award includes any cost sharing or matching that the
award requires.
6. The Term ``Exempt Property''
The proposed part 1108 defines the term ``exempt property'' to mean
tangible personal property acquired under a DoD award for which a DoD
Component has, and elects to use, statutory authority to vest title to
the property in the recipient either unconditionally or subject to
fewer conditions than usually apply.
7. The Term ``Small Award''
The proposed part 1108 includes a definition of the term ``small
award'' to mean an award or subaward with a total value that does not
exceed the simplified acquisition threshold. The term is defined
because the proposed DoDGARs part 1126 (2 CFR part 1126, which is
proposed in the third of the sequence of six NPRMs in this section of
this issue of the Federal Register) authorizes DoD Components to
include fewer requirements in ``small awards.''
8. The Term ``Unique Entity Identifier''
The proposed part 1108 includes a definition of the term ``unique
entity identifier.'' One purpose of the definition is to clarify that
the identifier currently is the Dun and Bradstreet Data Universal
Numbering System, or DUNS, number.

C. Costs and Benefits

In providing a central source of definitions of terms used in the
DoDGARs, this NPRM makes the regulations easier to use. It thereby may
slightly reduce both burdens and costs for recipients and
subrecipients, their auditors, DoD awarding and administering
officials, and others who use the DoDGARs.

II. Invitation To Comment

DoD welcomes comments on all aspects of the proposed definitions--
e.g., if any of them could be made clearer or causes any perceived
issues.

[[Page 78362]]

III. Regulatory Analysis

Executive Order 12866, ``Regulatory Planning and Review,'' and
Executive Order 13563, ``Improving Regulation and Regulatory Review''

Executive Order 12866, as supplemented by Executive Order 13563,
directs each Federal agency to: Propose regulations only after
determining that benefits justify costs; tailor regulations to minimize
burdens on society, consistent with achieving regulatory objectives;
maximize net benefits when selecting among regulatory approaches;
specify performance objectives, to the extent feasible, rather than the
behavior or manner of compliance; and seek the views of those likely to
be affected before issuing a notice of proposed rulemaking, where
feasible and appropriate. The Department of Defense has determined that
a central location for definitions of terms within the DoD Grant and
Agreement Regulations will help maximize long-term benefits in relation
to costs and burdens for recipients of DoD grant and cooperative
agreement awards. This rule has been designated a ``significant
regulatory action'' under section 3(f) of Executive Order 12866,
although not an economically significant one. Accordingly, the rule has
been reviewed by OMB.

Unfunded Mandates Reform Act of 1995

Section 202 of the Unfunded Mandates Reform Act of 1995 (Unfunded
Mandates Act) (2 U.S.C. 1532) requires that a Federal agency prepare a
budgetary impact statement before issuing a rule that includes any
Federal mandate that may result in the expenditure in any one year by
State, local, and tribal governments, in the aggregate, or by the
private sector, of $100 million or more in 1995 dollars, updated
annually for inflation. In 2015, that inflation-adjusted amount in
current dollars is approximately $146 million. The Department of
Defense has determined that this proposed regulatory action will not
result in expenditures by State, local, and tribal governments, or by
the private sector, of that amount or more in any one year.

Regulatory Flexibility Act

The Regulatory Flexibility Act requires an agency that is proposing
a rule to provide a regulatory flexibility analysis or to certify that
the rule will not have a significant economic impact on a substantial
number of small entities. The Department of Defense certifies that this
proposed regulatory action will not have a significant economic impact
on substantial number of small entities beyond any impact due to
provisions of it that implement OMB guidance at 2 CFR part 200.

Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
Chapter 35; 5 CFR part 1320, Appendix A.1) (PRA), the Department of
Defense has determined that there are no new collections of information
contained in this proposed regulatory action.

Executive Order 13132, ``Federalism''

Executive Order 13132 establishes certain requirements that an
agency must meet when it proposes a regulation that has Federalism
implications. This proposed regulatory action does not have any
Federalism implications.

List of Subjects in 2 CFR Part 1108

Accounting, Business and industry, Cooperative agreements, Grants
administration, Hospitals, Indians, Nonprofit organizations, Reporting
and recordkeeping requirements, Small business, State and local
governments.

0
Accordingly, under the authority of 5 U.S.C. 301 and 10 U.S.C. 113, 2
CFR chapter XI, subchapter A, is proposed to be amended by adding part
1108 to read as follows:

PART 1108--DEFINITIONS OF TERMS USED IN SUBCHAPTERS A THROUGH F OF
THIS CHAPTER

Subpart A--General
Sec.
1108.1 Purpose of this part.
1108.2 Precedence of definitions of terms in national policy
requirements.
1108.3 Definitions of terms used in the Governmentwide cost
principles or single audit requirements.
1108.4 Definitions of terms that vary depending on context.
Subpart B--Definitions
1108.10 Acquire.
1108.15 Acquisition.
1108.20 Acquisition cost.
1108.25 Administrative offset.
1108.30 Advance payment.
1108.35 Advanced research.
1108.40 Agreements officer.
1108.45 Applied research.
1108.50 Approved budget.
1108.55 Assistance.
1108.60 Award.
1108.65 Award administration office.
1108.70 Basic research.
1108.75 Capital asset.
1108.80 Claim.
1108.85 Cognizant agency for indirect costs.
1108.90 Contract.
1108.95 Contracting activity.
1108.100 Contracting officer.
1108.105 Contractor.
1108.110 Cooperative agreement.
1108.115 Co-principal investigator.
1108.120 Cost allocation plan.
1108.125 Cost sharing or matching.
1108.130 Cost-type contract.
1108.135 Cost-type subaward.
1108.140 Debarment.
1108.145 Debt.
1108.150 Delinquent debt.
1108.155 Development.
1108.160 Direct costs.
1108.165 DoD Components.
1108.170 Equipment.
1108.175 Exempt property.
1108.180 Expenditures.
1108.185 Federal interest.
1108.190 Federal share.
1108.195 Fixed-amount award.
1108.200 Fixed-amount subaward.
1108.205 Foreign organization.
1108.210 Foreign public entity.
1108.215 Grant.
1108.220 Grants officer.
1108.225 Indian tribe.
1108.230 Indirect costs (also known as ``Facilities and
Administrative,'' or F&A, costs).
1108.235 Institution of higher education.
1108.240 Intangible property.
1108.245 Local government.
1108.250 Management decision.
1108.255 Nonprocurement instrument.
1108.260 Nonprofit organization.
1108.265 Obligation.
1108.270 Office of Management and Budget.
1108.275 Outlays.
1108.280 Participant support costs.
1108.285 Period of performance.
1108.290 Personal property.
1108.295 Principal investigator.
1108.300 Procurement contract.
1108.305 Procurement transaction.
1108.310 Program income.
1108.315 Project costs.
1108.320 Property.
1108.325 Real property.
1108.330 Recipient.
1108.335 Research.
1108.340 Simplified acquisition threshold.
1108.345 Small award.
1108.350 State.
1108.355 Subaward.
1108.360 Subrecipient.
1108.365 Supplies.
1108.370 Suspension.
1108.375 Technology investment agreement.
1108.380 Termination.
1108.385 Third-party in-kind contribution.
1108.390 Total value.
1108.395 Unique entity identifier.
1108.400 Unobligated balance.
1108.405 Voluntary (committed or uncommitted) cost sharing.
1108.410 Working capital advance.
Appendix A to Part 1108--Background on assistance, acquisition, and
terms for types of awards

Authority: 5 U.S.C. 301 and 10 U.S.C. 113.

Subpart A--General

Sec. 1108.1 Purpose of this part.

(a) This part provides:

[[Page 78363]]

(1) Definitions of terms used in subchapters A through F of this
chapter; and
(2) Background information as context for understanding terms
related to assistance and acquisition purposes, awards that DoD
Components make at the prime tier, and lower-tier transactions into
which recipients and subrecipients enter when carrying out programs at
lower tiers under DoD prime awards.
(b) This part is, for DoD, the regulatory implementation of OMB
guidance in Subpart A of 2 CFR part 200.

Sec. 1108.2 Precedence of definitions of terms in national policy
requirements.

(a) General. Some portions of the DoD Grant and Agreement
Regulations (DoDGARs) may use a term in relation to compliance with a
national policy requirement in a statute, Executive order, or other
source that defines the term differently than it is defined in Subpart
B of this part. For purposes of that particular national policy
requirement, the definition of a term provided by the source of the
requirement and any regulation specifically implementing it takes
precedence over the definition in Subpart B of this part. Using the
definition of a term that takes precedence for each national policy
requirement is therefore important when determining the applicability
and effect of that requirement on DoD grants and cooperative agreements
subject to the DoDGARs.
(b) Examples. (1) Current portions of the DoDGARs that specifically
implement national policy requirements, as described in paragraph (a)
of this section, are:
(i) A Governmentwide regulation currently codified by DoD at 32 CFR
part 26, which implements the Drug-Free Workplace Act of 1988 as it
applies to grants (41 U.S.C. chapter 81, as amended);
(ii) A Government regulation currently codified by DoD at 32 CFR
part 28, which implements restrictions on lobbying in 31 U.S.C. 1352;
(iii) A DoD regulation at part 1125 of this chapter, which
implements Governmentwide guidance on nonprocurement debarment and
suspension (2 CFR part 180) that has bases both in statute (section
2455 of Pub. L. 103-355, 108 Stat. 3327) and in Executive orders 12549
and 12689; and
(iv) Part 1122 of this chapter, which provides standard wording of
terms and conditions related to a number of national policy
requirements.
(2) To illustrate that a term may be defined differently in
conjunction with specific national policy requirements than it is in
this part, the term ``State'' as defined in the drug-free workplace
requirements (32 CFR part 26) is identical neither to the definition in
the lobbying restrictions (32 CFR part 28) nor to the definition in
Subpart B of this part.

Sec. 1108.3 Definitions of terms used in the Governmentwide cost
principles or single audit requirements.

(a) This part includes the definition of a term used in the
following issuances only if the DoDGARs uses that term directly:
(1) The Single Audit Act requirements for audits of recipients and
subrecipients that are in subpart F of OMB guidance in 2 CFR part 200;
(2) The Governmentwide cost principles for institutions of higher
education, nonprofit entities, States, local governments, and Indian
tribes that are contained in subpart E of OMB guidance in 2 CFR part
200; and
(3) The cost principles for for profit entities at subpart 31.2 of
the Federal Acquisition Regulation (FAR) at 48 CFR part 31, as
supplemented by provisions of the Defense Federal Acquisition
Regulation Supplement at subpart 231.2 of 48 CFR part 231.
(b) For any terms not covered by paragraph (a), a user of the
DoDGARs should consult definitions in:
(1) Subpart A of the OMB guidance in 2 CFR part 200 for terms used
in Subparts E and F of that part; and
(2) FAR part 2 (48 CFR part 2) for terms used in the cost
principles at 48 CFR part 31.

Sec. 1108.4 Definitions of terms that vary depending on context.

DoDGARs definitions of some terms related to types of awards (e.g.,
``contract'') and purposes for which they are used (e.g.,
``procurement'' or ``acquisition'') may vary, depending on the context.
Appendix A to this part provides additional information about those
terms and their definitions.

Subpart B--Definitions

Sec. 1108.10 Acquire.

Acquire means to:
(a) When the term is used in connection with a DoD Component action
at the prime tier, obtain property or services by purchase, lease, or
barter for the direct benefit or use of the United States Government.
(b) When the term is used in connection with a recipient action or
a subrecipient action at a tier under a DoD Component's award:
(1) Purchase services;
(2) Obtain property under the award by:
(i) Purchase;
(ii) Construction;
(iii) Fabrication;
(iv) Development;
(v) The recipient or subrecipient entity's donation of the property
to the project or program under the award to meet cost sharing or
matching requirements (i.e., including within the entity's share of the
award's project costs the value of the remaining life of the property
or its fair market value, rather than charging depreciation); or
(vi) Otherwise.

Sec. 1108.15 Acquisition.

Acquisition means the process of acquiring as described in:
(a) Paragraph (a) of Sec. 1108.10 when used in connection with DoD
Component actions at the prime tier.
(b) Paragraph (b) of Sec. 1108.10 when used in connection with
recipient or subrecipient actions at lower tiers under a DoD
Component's award.

Sec. 1108.20 Acquisition cost.

Acquisition cost means the cost of an asset to a recipient or
subrecipient, including the cost to ready the asset for its intended
use.
(a) For example, when used in conjunction with:
(1) The purchase of equipment, the term means the net invoice price
of the equipment, including the cost of any modifications, attachments,
accessories, or auxiliary apparatus necessary to make it usable for the
purpose for which it is acquired.
(2) Equipment that a recipient or subrecipient constructs or
fabricates--or software that it develops--under an award, the term
includes, when capitalized in accordance with generally accepted
accounting principles (GAAP):
(i) The construction and fabrication costs of that equipment; and
(ii) The development costs of that software.
(b) Ancillary charges, such as taxes, duty, protective in-transit
insurance, freight, and installation may be included in, or excluded
from, the acquisition cost in accordance with the recipient's or
subrecipient's regular accounting practices.

Sec. 1108.25 Administrative offset.

Administrative offset means an action whereby money payable by the
United States Government to, or held by the Government for, a recipient
is withheld to satisfy a delinquent debt the recipient owes the
Government.

[[Page 78364]]

Sec. 1108.30 Advance payment.

Advance payment means a payment that DoD or a recipient or
subrecipient makes by any appropriate payment mechanism, including a
predetermined payment schedule, before the recipient or subrecipient
disburses the funds for project or program purposes.

Sec. 1108.35 Advanced research.

Advanced research means advanced technology development that
creates new technology or demonstrates the viability of applying
existing technology to new products and processes in a general way.
Advanced research is most closely analogous to precompetitive
technology development in the commercial sector (i.e., early phases of
research and development on which commercial competitors are willing to
collaborate, because the work is not so coupled to specific products
and processes that the results of the work must be proprietary). It
does not include development of military systems and hardware where
specific requirements have been defined. It is typically funded in
Advanced Technology Development (Budget Activity 3) programs within
DoD's Research, Development, Test and Evaluation (RDT&E)
appropriations.

Sec. 1108.40 Agreements officer.

Agreements officer means a DoD official with the authority to enter
into, administer, and/or terminate Technology Investment Agreements.

Sec. 1108.45 Applied research.

Applied research means efforts that attempt to determine and
exploit the potential of scientific discoveries or improvements in
technology, such as new materials, devices, methods and processes. It
typically is funded in Applied Research (Budget Activity 2) programs
within DoD's Research, Development, Test and Evaluation (RDT&E)
appropriations. Applied research often follows basic research but may
not be fully distinguishable from the related basic research. The term
does not include efforts whose principal aim is the design,
development, or testing of specific products, systems or processes to
be considered for sale or acquisition, efforts that are within the
definition of ``development.''

Sec. 1108.50 Approved budget.

Approved budget means, in conjunction with a DoD Component award to
a recipient, the most recent version of the budget the recipient
submitted and the DoD Component approved (either at the time of the
initial award or subsequently), to summarize planned expenditures for
the project or program under the award. It includes:
(a) All Federal funding made available to the recipient under the
award to use for project or program purposes.
(b) Any cost sharing or matching that the recipient is required to
provide under the award.
(c) Any options that have been exercised but not any options that
have not yet been exercised.

Sec. 1108.55 Assistance.

Assistance means the transfer of a thing of value to a recipient to
carry out a public purpose of support or stimulation authorized by a
law of the United States (see 31 U.S.C. 6101(3)). Grants, cooperative
agreements, and technology investment agreements are examples of legal
instruments that DoD Components use to provide assistance.

Sec. 1108.60 Award.

Award means a grant, cooperative agreement, technology investment
agreement, or other nonprocurement instrument subject to one or more
parts of the DoDGARs. Within each part of the regulations, the term
includes only the types of instruments subject to that part.

Sec. 1108.65 Award administration office.

Award administration office means a DoD Component office that
performs assigned post-award functions related to the administration of
grants, cooperative agreements, technology investment agreements, or
other nonprocurement instruments subject to one or more parts of the
DoDGARs.

Sec. 1108.70 Basic research.

Basic research means efforts directed toward increasing knowledge
and understanding in science and engineering, rather than the practical
application of that knowledge and understanding. It typically is funded
within Basic Research (Budget Activity 1) programs within DoD's
Research, Development, Test and Evaluation (RDT&E) appropriations. For
the purposes of the DoDGARs, basic research includes:
(a) Research-related, science and engineering education and
training, including graduate fellowships and research traineeships; and
(b) Research instrumentation and other activities designed to
enhance the infrastructure for science and engineering research.

Sec. 1108.75 Capital asset.

Capital asset means a tangible or intangible asset used in
operations having a useful life of more than one year which is
capitalized in accordance with GAAP. Capital assets include:
(a) Land, buildings (facilities), equipment, and intellectual
property (including software) whether acquired by purchase,
construction, manufacture, lease-purchase, exchange, or through capital
leases; and
(b) Additions, improvements, modifications, replacements,
rearrangements, reinstallations, renovations or alterations to capital
assets that materially increase their value or useful life (not
ordinary repairs and maintenance).

Sec. 1108.80 Claim.

Claim means a written demand or written assertion by one of the
parties to an award seeking as a matter of right, the payment of money
in a sum certain, the adjustment or interpretation of award terms, or
other relief arising under or relating to the award. A routine request
for payment that is not in dispute when submitted is not a claim. The
submission may be converted to a claim by written notice to the grants
officer if it is disputed either as to liability or amount, or is not
acted upon in a reasonable time.

Sec. 1108.85 Cognizant agency for indirect costs.

Cognizant agency for indirect costs means the Federal agency
responsible for reviewing, negotiating, and approving cost allocation
plans and indirect cost proposals on behalf of all Federal agencies.
The cognizant agency for indirect costs for a particular entity may be
different than the cognizant agency for audit. The cognizant agency for
indirect costs:
(a) For an institution of higher education, nonprofit organization,
State, or local government is assigned as described in the appendices
to OMB guidance in 2 CFR part 200. See 2 CFR 200.19 for specific
citations to those appendices.
(b) For a for-profit entity, normally will be the agency with the
largest dollar amount of pertinent business, as described in the
Federal Acquisition Regulation at 48 CFR 42.003.

Sec. 1108.90 Contract.

Contract means a procurement transaction, as that term is defined
in this subpart. A contract is a transaction into which a recipient or
subrecipient enters. It is therefore distinct from the term
``procurement contract,'' which is a transaction that a DoD Component
awards at the prime tier.

Sec. 1108.95 Contracting activity.

Contracting activity means an activity to which the Head of a DoD
Component has delegated broad authority regarding

[[Page 78365]]

acquisition functions pursuant to 48 CFR 1.601.

Sec. 1108.100 Contracting officer.

Contracting officer means a DoD official with the authority to
enter into, administer, and/or terminate procurement contracts and make
related determinations and findings.

Sec. 1108.105 Contractor.

Contractor means an entity to which a recipient or subrecipient
awards a procurement transaction (also known as a contract).

Sec. 1108.110 Cooperative agreement.

Cooperative agreement means a legal instrument which, consistent
with 31 U.S.C. 6305, is used to enter into the same kind of
relationship as a grant (see definition of ``grant'' in this subpart),
except that substantial involvement is expected between the Department
of Defense and the recipient when carrying out the activity
contemplated by the cooperative agreement. The term does not include
``cooperative research and development agreements'' as defined in 15
U.S.C. 3710a.

Sec. 1108.115 Co-principal investigator.

Co-principal investigator means any one of a group of individuals
whom an organization that is carrying out a research project with DoD
support designates as sharing the authority and responsibility for
leading and directing the research intellectually and logistically,
other than the one among the group identified as the primary contact
for scientific, technical, and related budgetary matters (see the
definition of ``principal investigator'').''

Sec. 1108.120 Cost allocation plan.

Cost allocation plan means either a:
(a) Central service cost allocation plan, as defined at 2 CFR 200.9
and described in Appendix V to OMB guidance in 2 CFR part 200; or
(b) Public assistance cost allocation plan as described in Appendix
VI to 2 CFR part 200.

Sec. 1108.125 Cost sharing or matching.

Cost sharing or matching means the portion of project costs not
borne by the Federal Government, unless a Federal statute authorizes
use of any Federal funds for cost sharing or matching.

Sec. 1108.130 Cost-type contract.

Cost-type contract means a procurement transaction awarded by a
recipient or a subrecipient at any tier under a DoD Component's grant
or cooperative agreement that provides for the contractor to be paid on
the basis of the actual, allowable costs it incurs (plus any fee or
profit for which the contract provides).

Sec. 1108.135 Cost-type subaward.

Cost-type subaward means a subaward that:
(a) A recipient or subrecipient makes to another entity at the next
lower tier; and
(b) Provides for payments to the entity that receives the cost-type
subaward based on the actual, allowable costs it incurs in carrying out
the subaward.

Sec. 1108.140 Debarment.

Debarment means an action taken by a Federal agency debarring
official to exclude a person or entity from participating in covered
Federal transactions, in accordance with debarment and suspension
policies and procedures for:
(a) Nonprocurement instruments, which are in OMB guidance at 2 CFR
part 180, as implemented by the DoD at 2 CFR part 1125; or
(b) Procurement contracts, which are in the Federal Acquisition
Regulation at 48 CFR 9.4.

Sec. 1108.145 Debt.

Debt means any amount of money or any property owed to a Federal
agency by any person, organization, or entity except another United
States Federal agency. Debts include any amounts due from insured or
guaranteed loans, fees, leases, rents, royalties, services, sales of
real or personal property, or overpayments, penalties, damages,
interest, fines and forfeitures, and all other claims and similar
sources. For the purposes of this chapter, amounts due a non-
appropriated fund instrumentality are not debts owed the United States.

Sec. 1108.150 Delinquent debt.

Delinquent debt means a debt:
(a) That the debtor fails to pay by the date specified in the
initial written notice from the agency owed the debt, normally within
30 calendar days, unless the debtor makes satisfactory payment
arrangements with the agency by that date; and
(b) With respect to which the debtor has elected not to exercise
any available appeals or has exhausted all agency appeal processes.

Sec. 1108.155 Development.

Development means, when used in the context of ``research and
development,'' the systematic use of scientific and technical knowledge
in the design, development, testing, or evaluation of potential new
products, processes, or services to meet specific performance
requirements or objectives. It includes the functions of design
engineering, prototyping, and engineering testing. It typically is
funded within programs in Budget Activities 4 through 7 of DoD's
Research, Development, Test and Evaluation (RDT&E) appropriations.

Sec. 1108.160 Direct costs.

Direct costs means any costs that are identified specifically with
a particular final cost objective, such as an award, in accordance with
the applicable cost principles.

Sec. 1108.165 DoD Components.

DoD Components means the Office of the Secretary of Defense; the
Military Departments; the National Guard Bureau (NGB); and all Defense
Agencies, DoD Field Activities, and other organizational entities
within the DoD that are authorized to award or administer grants,
cooperative agreements, and other non-procurement instruments subject
to the DoDGARs.

Sec. 1108.170 Equipment.

Equipment means tangible personal property (including information
technology systems) having a useful life of more than one year and a
per-unit acquisition cost which equals or exceeds the lesser of:
(a) $5,000; or
(b) The recipient's or subrecipient's capitalization threshold for
financial statement purposes.

Sec. 1108.175 Exempt property.

(a) Exempt property means tangible personal property acquired in
whole or in part with Federal funds under a DoD Component's awards, for
which the DoD Component:
(1) Has statutory authority to vest title in recipients (or allow
for vesting in subrecipients) without further obligation to the Federal
Government or subject to conditions the DoD Component considers
appropriate; and
(2) Elects to use that authority to do so.
(b) An example of exempt property authority is contained in the
Federal Grant and Cooperative Agreement Act (31 U.S.C. 6306) for
tangible personal property acquired under an award to conduct basic or
applied research by a nonprofit institution of higher education or
nonprofit organization whose primary purpose is conducting scientific
research.

Sec. 1108.180 Expenditures.

Expenditures mean charges made by a recipient or subrecipient to a
project or program under an award.
(a) The charges may be reported on a cash or accrual basis, as long
as the

[[Page 78366]]

methodology is disclosed and is consistently applied.
(b) For reports prepared on a cash basis, expenditures are the sum
of:
(1) Cash disbursements for direct charges for property and
services;
(2) The amount of indirect expense charged;
(3) The value of third-party in-kind contributions applied; and
(4) The amount of cash advance payments and payments made to
subrecipients.
(c) For reports prepared on an accrual basis, expenditures are the
sum of:
(1) Cash disbursements for direct charges for property and
services;
(2) The amount of indirect expense incurred;
(3) The value of third-party in-kind contributions applied; and
(4) The net increase or decrease in the amounts owed by the
recipient or subrecipient for:
(i) Goods and other property received;
(ii) Services performed by employees, contractors, subrecipients,
and other payees; and
(iii) Programs for which no current services or performance are
required, such as annuities, insurance claims, or other benefit
payments.

Sec. 1108.185 Federal interest.

Federal interest means, in relation to real property, equipment, or
supplies acquired or improved under an award or subaward, the dollar
amount that is the product of the:
(a) Federal share of total project costs; and
(b) Current fair market value of the property, improvements, or
both, to the extent the costs of acquiring or improving the property
were included as project costs.

Sec. 1108.190 Federal share.

Federal share means the portion of the project costs under an award
that is paid by Federal funds.

Sec. 1108.195 Fixed-amount award.

Fixed-amount award means a DoD Component grant or cooperative
agreement that provides for the recipient to be paid on the basis of
performance and results, rather than the actual, allowable costs the
recipient incurs.

Sec. 1108.200 Fixed-amount subaward.

Fixed-amount subaward means a subaward:
(a) That a recipient or subrecipient makes to another entity at the
next lower tier; and
(b) Under which the total amount to be paid to the other entity is
based on performance and results, and not on the actual, allowable
costs that entity incurs.

Sec. 1108.205 Foreign organization.

Foreign organization means an entity that is:
(a) A public or private organization that is located in a country
other than the United States and its territories and is subject to the
laws of the country in which it is located, irrespective of the
citizenship of project staff or place of performance;
(b) A private nongovernmental organization located in a country
other than the United States and its territories that solicits and
receives cash contributions from the general public;
(c) A charitable organization located in a country other than the
United States and its territories that is nonprofit and tax exempt
under the laws of its country of domicile and operation, and is not a
university, college, accredited degree-granting institution of
education, private foundation, hospital, organization engaged
exclusively in research or scientific activities, church, synagogue,
mosque or other similar entity organized primarily for religious
purposes; or
(d) An organization located in a country other than the United
States and its territories that is not recognized as a foreign public
entity.

Sec. 1108.210 Foreign public entity.

Foreign public entity means:
(a) A foreign government or foreign governmental entity;
(b) A public international organization, which is an organization
entitled to enjoy privileges, exemptions, and immunities as an
international organization under the International Organizations
Immunities Act (22 U.S.C. 288-288f);
(c) An entity owned (in whole or in part) or controlled by a
foreign government; or
(d) Any other entity consisting wholly or partially of one or more
foreign governments or foreign governmental entities.

Sec. 1108.215 Grant.

Grant means a legal instrument which, consistent with 31 U.S.C.
6304, is used to enter into a relationship:
(a) Of which the principal purpose is to transfer a thing of value
to the recipient to carry out a public purpose of support or
stimulation authorized by a law of the United States, rather than to
acquire property or services for the DoD's direct benefit or use.
(b) In which substantial involvement is not expected between the
Department of Defense and the recipient when carrying out the activity
contemplated by the grant.

Sec. 1108.220 Grants officer.

Grants officer means a DoD official with the authority to enter
into, administer, and/or terminate grants or cooperative agreements.

Sec. 1108.225 Indian tribe.

Indian tribe means any Indian tribe, band, nation, or other
organized group or community, including any Alaska Native village or
regional or village corporation as defined in or established pursuant
to the Alaska Native Claims Settlement Act (43 U.S.C. Chapter 33),
which is recognized as eligible for the special programs and services
provided by the United States to Indians because of their status as
Indians (25 U.S.C. 450b(e)). See the annually published Bureau of
Indian Affairs list of Indian Entities Recognized and Eligible to
Receive Services.

Sec. 1108.230 Indirect costs (also known as ``Facilities and
Administrative,'' or F&A, costs).

Indirect costs means those costs incurred for a common or joint
purpose benefitting more than one cost objective, and not readily
assignable to the cost objectives specifically benefitted, without
effort disproportionate to the results achieved.

Sec. 1108.235 Institution of higher education.

Institution of higher education has the meaning specified at 20
U.S.C. 1001.

Sec. 1108.240 Intangible property.

Intangible property means:
(a) Property having no physical existence, such as trademarks,
copyrights, patents and patent applications; and
(b) Property such as loans, notes and other debt instruments, lease
agreements, stock and other instruments of property ownership, whether
the property is considered tangible or intangible.

Sec. 1108.245 Local government.

Local government means any unit of government within a State,
including a:
(a) County;
(b) Borough;
(c) Municipality;
(d) City;
(e) Town;
(f) Township;
(g) Parish;
(h) Local public authority, including any public housing agency
under the United States Housing Act of 1937;
(i) Special district;
(j) School district;

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(k) Intrastate district;
(l) Council of governments, whether or not incorporated as a
nonprofit corporation under State law; and
(m) Any other agency or instrumentality of a multi-, regional, or
intra-state or local government.

Sec. 1108.250 Management decision.

Management decision means a written decision issued to an audited
entity by a DoD Component, another Federal agency that has audit or
indirect cost cognizance or oversight responsibilities for the audited
entity, or a recipient or subrecipient from which the audited entity
received an award or subaward. The DoD Component, cognizant or
oversight agency, recipient, or subrecipient issues the management
decision to specify the corrective actions that are necessary after
evaluating the audit findings and the audited entity's corrective
action plan.

Sec. 1108.255 Nonprocurement instrument.

Nonprocurement instrument means a legal instrument other than a
procurement contract that a DoD Component may award. Examples include
an instrument of financial assistance, such as a grant or cooperative
agreement, or an instrument of technical assistance, which provides
services in lieu of money.

Sec. 1108.260 Nonprofit organization.

Nonprofit organization means any corporation, trust, association,
cooperative, or other organization, not including an institution of
higher education, that:
(a) Is operated primarily for scientific, educational, service,
charitable, or similar purposes in the public interest;
(b) Is not organized primarily for profit; and
(c) Uses net proceeds to maintain, improve, or expand the
operations of the organization.

Sec. 1108.265 Obligation.

Obligation means:
(a) When used in conjunction with a DoD Component's action, a
legally binding agreement that will result in outlays, either
immediately or in the future. Examples of actions through which a DoD
Component incurs an obligation include the signature of a grant,
cooperative agreement, or technology investment agreement authorizing
the recipient to use funds under the award.
(b) When used in conjunction with a recipient's or subrecipient's
use of funds under an award or subaward, an order placed for property
and services, a contract or subaward made, or a similar transaction
during a given period that requires payment during the same or a future
period.

Sec. 1108.270 Office of Management and Budget.

Office of Management and Budget means the Executive Office of the
President, United States Office of Management and Budget.

Sec. 1108.275 Outlays.

Outlays means ``expenditures,'' as defined in this subpart.

Sec. 1108.280 Participant support costs.

Participant support costs means direct costs for items such as
stipends or subsistence allowances, travel allowances, and registration
fees paid to or on behalf of participants or trainees (but not
employees) in connection with conferences, or training projects.

Sec. 1108.285 Period of performance.

Period of performance means the time during which a recipient or
subrecipient may incur new obligations to carry out the work authorized
under an award or subaward, respectively.

Sec. 1108.290 Personal property.

Personal property means property other than real property. It may
be tangible, having physical existence, or intangible, such as
copyrights, patents, and securities.

Sec. 1108.295 Principal investigator.

Principal investigator means either:
(a) The single individual whom an organization that is carrying out
a research project with DoD support designates as having an appropriate
level of authority and responsibility for leading and directing the
research intellectually and logistically, which includes the proper
conduct of the research, the appropriate use of funds, and
administrative requirements such as the submission of scientific
progress reports to the DoD program office; or
(b) If the organization designates more than one individual as
sharing that authority and responsibility, the individual within that
group identified by the organization as the one with whom the DoD
Component's program manager generally should communicate as the primary
contact for scientific, technical, and related budgetary matters
concerning the project (others within the group are ``co-principal
investigators,'' as defined in this subpart).

Sec. 1108.300 Procurement contract.

Procurement contract means a legal instrument which, consistent
with 31 U.S.C. 6303, reflects a relationship between the Federal
Government and a State, a local government, or other recipient when the
principal purpose of the instrument is to acquire property or services
for the direct benefit or use of the Federal Government. A procurement
contract is a prime tier transaction and therefore distinct from a
recipient's or subrecipient's ``procurement transaction'' or
``contract'' as defined in this subpart.

Sec. 1108.305 Procurement transaction.

Procurement transaction means a legal instrument by which a
recipient or subrecipient purchases property or services it needs to
carry out the project or program under its prime award or subaward,
respectively. A procurement transaction is distinct both from
``subaward'' and ``procurement contract,'' as those terms are defined
in this subpart.

Sec. 1108.310 Program income.

Program income means gross income earned by a recipient or
subrecipient that is directly generated by a supported activity or
earned as a result of an award or subaward (during the period of
performance unless the award or subaward specifies continuing
requirements concerning disposition of program income after the end of
that period).
(a) Program income includes, but is not limited to, income from:
(1) Fees for services performed;
(2) The use or rental of real or personal property for which the
recipient or subrecipient is accountable under the award or subaward
(whether acquired under the award or subaward, or other Federal awards
from which accountability for the property was transferred);
(3) The sale of commodities or items fabricated under the award or
subaward;
(4) License fees and royalties on patents and copyrights; and
(5) Payments of principal and interest on loans made with award or
subaward funds.
(b) Program income does not include:
(1) Interest earned on advances of Federal funds;
(2) Proceeds from the sale of real property or equipment under the
award; or
(3) Unless otherwise specified in Federal statute or regulation, or
the terms and conditions of the award or subaward:
(i) Rebates, credits, discounts, and interest earned on any of
them; or
(ii) Governmental revenues, taxes, special assessments, levies,
fines, and similar revenues raised by the recipient or subrecipient.

[[Page 78368]]

Sec. 1108.315 Project costs.

Project costs means the total of:
(a) Allowable costs incurred under an award by the recipient,
including costs of any subawards and contracts under the award; and
(b) Cost sharing or matching contributions that are required under
the award, which includes voluntary committed (but not voluntary
uncommitted) contributions and the value of any third-party in-kind
contributions.

Sec. 1108.320 Property.

Property means real property and personal property (equipment,
supplies, intangible property, and debt instruments), unless stated
otherwise.

Sec. 1108.325 Real property.

Real property means land, including land improvements, structures
and appurtenances thereto, but excluding moveable machinery and
equipment.

Sec. 1108.330 Recipient.

Recipient means an entity that receives an award directly from a
DoD Component. The term does not include subrecipients.

Sec. 1108.335 Research.

Research means basic, applied, and advanced research.

Sec. 1108.340 Simplified acquisition threshold.

Simplified acquisition threshold means the dollar amount set by the
Federal Acquisition Regulation at 48 CFR Subpart 2.1, which is adjusted
periodically for inflation in accordance with 41 U.S.C. 1908.

Sec. 1108.345 Small award.

Small award means a DoD grant or cooperative agreement or a
subaward with a total value over the life of the award that does not
exceed the simplified acquisition threshold.

Sec. 1108.350 State.

State means any State of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands,
Guam, American Samoa, the Commonwealth of the Northern Mariana Islands,
and any agency or instrumentality thereof exclusive of local
governments.

Sec. 1108.355 Subaward.

Subaward means a legal instrument by which a recipient or
subrecipient at any tier below a DoD Component prime award, transfers--
for performance by an entity at the next lower tier--a portion of the
substantive program for which the DoD Component's prime award provided
financial assistance.

Sec. 1108.360 Subrecipient.

Subrecipient means an entity that receives a subaward.

Sec. 1108.365 Supplies.

Supplies means all tangible personal property, including a
computing device, acquired under an award that does not meet the
definition of equipment in this subpart.

Sec. 1108.370 Suspension.

Suspension means either:
(a) When used in the context of a specific award or subaward to an
entity, the temporary withdrawal of authority for that entity to
obligate funds under the award or subaward, pending its taking
corrective action or a decision to terminate the award or subaward.
(b) When used in the context of an entity, an action by a DoD
Component's suspending official under 2 CFR part 1125, DoD's regulation
implementing OMB guidance on nonprocurement debarment and suspension in
2 CFR part 180, to immediately exclude the entity from participating in
covered Federal Government transactions, pending completion of an
investigation and any legal or debarment proceedings that ensue.

Sec. 1108.375 Technology investment agreement.

Technology investment agreement means one of a special class of
assistance instruments used to increase involvement of commercial firms
in defense research programs and for other purposes related to
integration of the commercial and defense sectors of the nation's
technology and industrial base. Technology investment agreements
include one kind of cooperative agreement with provisions tailored for
involving commercial firms, as well as one kind of assistance
transaction other than a grant or cooperative agreement. Technology
investment agreements are subject to, and described more fully in, 32
CFR part 37.

Sec. 1108.380 Termination.

Termination means the ending of an award or subaward, in whole or
in part, at any time prior to the planned end of period of performance.

Sec. 1108.385 Third-party in-kind contribution.

Third-party in-kind contribution means the value of a non-cash
contribution (i.e., property or services) that:
(a) A non-Federal third party contributes, without charge, either
to a recipient or subrecipient at any tier under a DoD Component's
award; and
(b) Is identified, and included in the approved budget of the DoD
Component's award, as a contribution being used toward meeting the
award's cost sharing or matching requirements (which includes voluntary
committed, but not voluntary uncommitted, contributions).

Sec. 1108.390 Total value.

Total value of a DoD grant, cooperative agreement, or TIA means the
total amount of costs that are currently expected to be charged to the
award over its life, which includes amounts for:
(a) The Federal share and any non-Federal cost sharing or matching
required under the award; and
(b) Any options, even if not yet exercised, for which the costs
have been established in the award.

Sec. 1108.395 Unique entity identifier.

Unique entity identifier means the identifier required for System
for Award Management registration to uniquely identify entities with
which the Federal Government does business (currently the Dun and
Bradstreet Data Universal Numbering System, or DUNS, number).

Sec. 1108.400 Unobligated balance.

Unobligated balance means the amount of funds under an award or
subaward that the recipient or subrecipient has not obligated. The
amount is computed by subtracting the cumulative amount of the
recipient's or subrecipient's unliquidated obligations and expenditures
of funds from the cumulative amount of funds that it was authorized to
obligate under the award or subaward.

Sec. 1108.405 Voluntary (committed or uncommitted) cost sharing.

(a) Voluntary cost sharing means cost sharing that an entity
pledges voluntarily in its application or proposal (i.e., not due to a
stated cost sharing requirement in the program announcement to which
the entity's application or proposal responds).
(b) Voluntary committed cost sharing means voluntary cost sharing
that a DoD Component accepts through inclusion in the approved budget
for the project or program and as a binding requirement of the terms
and conditions of the award made to the entity in response to its
application or proposal.
(c) Voluntary uncommitted cost sharing means voluntary cost sharing
that does not meet the criteria in paragraph (b) of this section.

Sec. 1108.410 Working capital advance.

Working capital advance means a payment method under which funds
are

[[Page 78369]]

advanced to a recipient or subrecipient to cover its estimated
disbursement needs for a given initial period, after which payment is
made by way of reimbursement.

Appendix A to Part 1108--Background on Assistance, Acquisition, and
Terms for Types of Awards

I. Purpose of This Appendix

This appendix provides background intended to help avoid
confusion about some terms:
A. That are used in this chapter to describe either types of
awards that DoD Components, recipients, and subrecipients make, or
the purposes for which those types of awards are used; and
B. For which this part provides definitions that vary depending
on the context within which the terms are used.

II. Why Definitions of Some Terms are Context-Dependent

A. The DoDGARs contain both:
1. Direction to DoD Components concerning their award of grants
and cooperative agreements at the prime tier; and
2. Terms and conditions that DoD Components include in their
grants and cooperative agreements to specify the Government's and
recipients' rights and responsibilities, including post-award
requirements with which recipients' actions must comply.
B. In some cases, the same defined term or two closely related
terms are used in relation to both DoD Component actions at the
prime tier and recipient or subrecipient actions at lower tiers
under DoD Components' awards. But a given defined term may have
meanings that differ at the two tiers. For example, in part because
the Federal Grant and Cooperative Agreement Act applies to DoD
Component actions at the prime tier but not to recipient or
subrecipient actions at lower tiers (see sections III and IV of this
appendix):
1. The terms ``acquire'' and ``acquisition'' do not have
precisely the same meaning in conjunction with actions at the prime
and lower tiers.
2. The meaning of the term ``procurement contract'' used to
describe DoD Component prime-tier actions is not precisely the same
as the meaning of ``procurement transaction'' or ``contract'' used
to describe recipient or subrecipient actions at lower tiers.

III. Background: Distinguishing Prime-Tier Relationships and Awards

A. The Federal Grant and Cooperative Agreement Act (31 U.S.C.
chapter 63) specifies that the type of award a DoD Component is to
use when making a prime award to a recipient is based on the nature
of the relationship between the DoD Component and the recipient that
the prime award reflects.
B. Specifically, except where another statute authorizes DoD to
do otherwise, 31 U.S.C. chapter 63 specifies use of:
1. A procurement contract as the instrument reflecting a
relationship between a DoD Component and a recipient when the
principal purpose of the relationship is to acquire property or
services for the direct benefit or use of the Federal Government.
2. A grant or cooperative agreement as the instrument reflecting
a relationship between those two parties when the principal purpose
of the relationship is to carry out a public purpose of support or
stimulation authorized by Federal statute.
C. The terms ``acquisition'' and ``assistance'' are defined in
this part to correspond to the principal purposes described in
paragraphs III.B.1 and 2 of this section, respectively. Using those
terms, paragraphs III.B.1 and B.2 may be restated to say that grants
and cooperative agreements are assistance instruments that DoD
Components use at the prime tier for assistance purposes, as
distinct from procurement contracts they use at that tier for
acquisition.

IV. Background: Distinguishing Types of Recipients' and Subrecipients'
Awards

A. While the Federal Grant and Cooperative Agreement Act applies
to Federal agencies, it does not govern types of awards that
recipients and subrecipients make, whether or not they are lower-
tier awards under a Federal prime grant or cooperative agreement.
That statute therefore does not require a recipient or subrecipient
to:
1. Consider any award it makes at a lower tier under a Federal
assistance award as a grant or cooperative agreement. Therefore, at
its option, a recipient or subrecipient may consider all of its
lower-tier awards to be ``contracts.''
2. Associate an ``assistance'' relationship, as that term is
defined in this part and used in this chapter, with any lower-tier
transaction that it makes.
B. However, the DoDGARs in this chapter do distinguish between
two classes of lower-tier transactions that recipients and
subrecipients make: Subawards and procurement transactions. The
distinction promotes uniformity in requirements for lower-tier
transactions under DoD grants and cooperative agreements. It is
based on a long-standing distinction in OMB guidance to Federal
agencies, currently at 2 CFR part 200, which DoD implements in this
chapter.
C. The distinction between a subaward and procurement
transaction is based on the primary purpose of that transaction.
1. The transaction is a subaward if a recipient or subrecipient
enters into it with another entity at the next lower tier in order
to transfer--for performance by that lower-tier entity--a portion of
the substantive program for which the prime DoD grant or cooperative
agreement provided financial assistance to the recipient. Because
the Federal Grant and Cooperative Agreement Act does not apply to
the recipient or subrecipient, it may make a subaward as defined in
this part using an instrument that it considers a contract.
2. The transaction is a procurement transaction if the recipient
or subrecipient enters into it in order to purchase goods or
services from the lower-tier entity that the recipient or
subrecipient needs to perform its portion of the substantive program
supported by the prime DoD award.

Dated: October 19, 2016.
Aaron Siegel,
Alternate OSD Federal Register Liaison Officer, Department of Defense.

[FR Doc. 2016-25698 Filed 11-4-16; 8:45 am]
BILLING CODE 5001-06-P

78360 Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Proposed Rules

chapter I, subchapter C of title 32, Code DEPARTMENT OF DEFENSE I. Executive Summary
of Federal Regulations, and chapter XI
A. Purpose of the Regulatory Action
of title 2, Code of Federal Regulations. Office of the Secretary
(b) Other terms. See part 1108 of the 1. The Need for the Regulatory Action
DoD Grant and Agreement Regulations 2 CFR Part 1108 and How the Action Meets That Need
for definitions of other terms used in The Department of Defense Grant and
this part. [DOD–2016–OS–0051] Agreement Regulations (DoDGARs)
need to be updated, in part due to the
PARTS 1105–1109—[RESERVED] issuance of new Office of Management
RIN 0790–AJ46
■ 3. Subchapter B to chapter XI, and Budget guidance to Federal
consisting of parts 1110 through 1119, is Definitions for DoD Grant and agencies on administrative
added and reserved to read as follows: Agreement Regulations in requirements, cost principles, and audit
Subchapters A Through F requirements that apply to Federal
Subchapter B—[RESERVED] grants, cooperative agreements, and
AGENCY:Office of the Secretary, other assistance instruments (2 CFR part
PARTS 1110–1119—[RESERVED] 200). The DoDGARs part proposed by
Department of Defense (DoD).
■ 4. Subchapter C to chapter XI, this NPRM is an important part of the
ACTION: Proposed rule. update in that it contains the definitions
consisting of parts 1120 through 1125, is
added to read as follows: of terms used throughout most portions
SUMMARY: This Notice of Proposed of the DoDGARs.
Subchapter C—Award Format and National Rulemaking (NPRM) is the fifth of a
Policy Terms and Conditions for All Grants 2. Legal Authorities for the Regulatory
sequence of six NPRMs in this section
and Cooperative Agreements Action
of this issue of the Federal Register that
propose updates to the DoD Grant and There are two statutory authorities for
PART 1120–1124—[RESERVED] this NPRM:
Agreement Regulations (DoDGARs). In
this NPRM, DoD is proposing • 10 U.S.C. 113, which establishes the
PART 1125—[TRANSFERRED TO Secretary of Defense as the head of the
SUBCHAPTER C] definitions of terms that are common to
Department of Defense; and
most portions of those regulations, as • 5 U.S.C. 301, which authorizes the
■ 5. Part 1125 is transferred to well as a central location for the head of an Executive department to
subchapter C. definitions. prescribe regulations for the governance
■ 6. Subchapter D to chapter XI, of that department and the performance
consisting of parts 1126 through 1140, is DATES: To ensure that they can be
considered in developing the final rule, of its business.
added to read as follows:
comments must be received at either the B. Summary of the Major Provisions of
Subchapter D—Administrative the Regulatory Action
Web site or mailing address indicated
Requirements Terms and Conditions for
Cost-Type Grant and Cooperative below by February 6, 2017. This NPRM proposes a new part, 2
Agreement Awards to Nonprofit and ADDRESSES: You may submit comments CFR part 1108, as the central location
Governmental Entities identified by docket number, or by for definitions of terms that are needed
Regulatory Information Number (RIN) in order to make the DoDGARs as clear
PART 1126–1140—[RESERVED] as possible for DoD awarding and
and title, by either of the following
methods: administering officials, recipients,
■ 7. Subchapter E to chapter XI,
auditors, and others who may need to
consisting of parts 1141 through 1155, is The Web site: http:// use them. The following subsection B.1
added and reserved to read as follows: www.regulations.gov. Follow the of this SUPPLEMENTARY INFORMATION
Subchapter E—[RESERVED] instructions at that site for submitting section explains why the proposed part
comments. 1108 does not include definitions of
PART 1141–1155—[RESERVED] Mail: Department of Defense, Deputy some terms. Subsections B.2 through
■ 8. Subchapter F to chapter XI, Chief Management Officer, Directorate B.8 provide additional information
consisting of parts 1156 through 1170, is for Oversight and Compliance, 4800 about selected definitions that are
added and reserved to read as follows: Mark Center Drive, ATTN: Box 24, included in the proposed part.
Alexandria, VA 22350–1700. 1. Terms Defined in Other Issuances
Subchapter F—[RESERVED]
Instructions: All submissions must That the DoDGARs Adopt by Reference
PART 1156–1170—[RESERVED] include the agency name and docket The proposed part 1108 does not
number or RIN for this Federal Register reiterate the definition of a term that is
■ 9. Subchapter G to chapter XI, document. The general policy for defined in a statute, regulation,
consisting of parts 1171 through 1199, is comments and other submissions from Governmentwide guidance document,
added and reserved to read as follows: the public is to make the submissions or other issuance that the DoDGARs
Subchapter G—[RESERVED] available for public viewing on the adopt by reference unless the DoDGARs
Internet at http://www.regulations.gov
sradovich on DSK3GMQ082PROD with PROPOSALS2

also directly use that term and its
PART 1171–1199—[RESERVED] without change (i.e., as they are definition is important to the
received, including any personal interpretation of the regulations.
Dated: October 19, 2016. identifiers or contact information). Sections 1108.2 and 1108.3 of the
Aaron Siegel, proposed part 1108 provide more
FOR FURTHER INFORMATION CONTACT:
Alternate OSD Federal Register Liaison explanation and examples of issuances
Officer, Department of Defense. Wade Wargo, Basic Research Office,
the DoDGARs adopt by reference,
telephone 571–372–2941.
[FR Doc. 2016–25702 Filed 11–4–16; 8:45 am] including national policy requirements,
BILLING CODE 5001–06–P SUPPLEMENTARY INFORMATION: the cost principles and single audit

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78364 Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Proposed Rules

§ 1108.30 Advance payment. project or program under the award. It (a) Land, buildings (facilities),
Advance payment means a payment includes: equipment, and intellectual property
that DoD or a recipient or subrecipient (a) All Federal funding made available (including software) whether acquired
makes by any appropriate payment to the recipient under the award to use by purchase, construction, manufacture,
mechanism, including a predetermined for project or program purposes. lease-purchase, exchange, or through
payment schedule, before the recipient (b) Any cost sharing or matching that capital leases; and
or subrecipient disburses the funds for the recipient is required to provide (b) Additions, improvements,
project or program purposes. under the award. modifications, replacements,
(c) Any options that have been rearrangements, reinstallations,
§ 1108.35 Advanced research. exercised but not any options that have renovations or alterations to capital
Advanced research means advanced not yet been exercised. assets that materially increase their
technology development that creates value or useful life (not ordinary repairs
§ 1108.55 Assistance.
new technology or demonstrates the and maintenance).
viability of applying existing technology Assistance means the transfer of a
to new products and processes in a thing of value to a recipient to carry out § 1108.80 Claim.
general way. Advanced research is most a public purpose of support or Claim means a written demand or
closely analogous to precompetitive stimulation authorized by a law of the written assertion by one of the parties to
technology development in the United States (see 31 U.S.C. 6101(3)). an award seeking as a matter of right,
commercial sector (i.e., early phases of Grants, cooperative agreements, and the payment of money in a sum certain,
research and development on which technology investment agreements are the adjustment or interpretation of
commercial competitors are willing to examples of legal instruments that DoD award terms, or other relief arising
collaborate, because the work is not so Components use to provide assistance. under or relating to the award. A routine
coupled to specific products and § 1108.60 Award. request for payment that is not in
processes that the results of the work Award means a grant, cooperative dispute when submitted is not a claim.
must be proprietary). It does not include agreement, technology investment The submission may be converted to a
development of military systems and agreement, or other nonprocurement claim by written notice to the grants
hardware where specific requirements instrument subject to one or more parts officer if it is disputed either as to
have been defined. It is typically funded of the DoDGARs. Within each part of the liability or amount, or is not acted upon
in Advanced Technology Development regulations, the term includes only the in a reasonable time.
(Budget Activity 3) programs within types of instruments subject to that part. § 1108.85 Cognizant agency for indirect
DoD’s Research, Development, Test and
costs.
Evaluation (RDT&E) appropriations. § 1108.65 Award administration office.
Award administration office means a Cognizant agency for indirect costs
§ 1108.40 Agreements officer. means the Federal agency responsible
DoD Component office that performs
Agreements officer means a DoD assigned post-award functions related to for reviewing, negotiating, and
official with the authority to enter into, the administration of grants, cooperative approving cost allocation plans and
administer, and/or terminate agreements, technology investment indirect cost proposals on behalf of all
Technology Investment Agreements. agreements, or other nonprocurement Federal agencies. The cognizant agency
instruments subject to one or more parts for indirect costs for a particular entity
§ 1108.45 Applied research. may be different than the cognizant
of the DoDGARs.
Applied research means efforts that agency for audit. The cognizant agency
attempt to determine and exploit the § 1108.70 Basic research. for indirect costs:
potential of scientific discoveries or Basic research means efforts directed (a) For an institution of higher
improvements in technology, such as toward increasing knowledge and education, nonprofit organization, State,
new materials, devices, methods and understanding in science and or local government is assigned as
processes. It typically is funded in engineering, rather than the practical described in the appendices to OMB
Applied Research (Budget Activity 2) application of that knowledge and guidance in 2 CFR part 200. See 2 CFR
programs within DoD’s Research, understanding. It typically is funded 200.19 for specific citations to those
Development, Test and Evaluation within Basic Research (Budget Activity appendices.
(RDT&E) appropriations. Applied 1) programs within DoD’s Research, (b) For a for-profit entity, normally
research often follows basic research but Development, Test and Evaluation will be the agency with the largest
may not be fully distinguishable from (RDT&E) appropriations. For the dollar amount of pertinent business, as
the related basic research. The term purposes of the DoDGARs, basic described in the Federal Acquisition
does not include efforts whose principal research includes: Regulation at 48 CFR 42.003.
aim is the design, development, or (a) Research-related, science and
testing of specific products, systems or engineering education and training, § 1108.90 Contract.
processes to be considered for sale or including graduate fellowships and Contract means a procurement
acquisition, efforts that are within the research traineeships; and transaction, as that term is defined in
definition of ‘‘development.’’ (b) Research instrumentation and this subpart. A contract is a transaction
other activities designed to enhance the into which a recipient or subrecipient
sradovich on DSK3GMQ082PROD with PROPOSALS2

§ 1108.50 Approved budget. enters. It is therefore distinct from the
infrastructure for science and
Approved budget means, in engineering research. term ‘‘procurement contract,’’ which is
conjunction with a DoD Component a transaction that a DoD Component
award to a recipient, the most recent § 1108.75 Capital asset. awards at the prime tier.
version of the budget the recipient Capital asset means a tangible or
submitted and the DoD Component intangible asset used in operations § 1108.95 Contracting activity.
approved (either at the time of the having a useful life of more than one Contracting activity means an activity
initial award or subsequently), to year which is capitalized in accordance to which the Head of a DoD Component
summarize planned expenditures for the with GAAP. Capital assets include: has delegated broad authority regarding

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Federal Register / Vol. 81, No. 215 / Monday, November 7, 2016 / Proposed Rules 78369

advanced to a recipient or subrecipient principal purpose of the relationship is to Dated: October 19, 2016.
to cover its estimated disbursement acquire property or services for the direct Aaron Siegel,
needs for a given initial period, after benefit or use of the Federal Government.
Alternate OSD Federal Register Liaison
2. A grant or cooperative agreement as the
which payment is made by way of instrument reflecting a relationship between
Officer, Department of Defense.
reimbursement. those two parties when the principal purpose [FR Doc. 2016–25698 Filed 11–4–16; 8:45 am]
Appendix A to Part 1108—Background of the relationship is to carry out a public BILLING CODE 5001–06–P
purpose of support or stimulation authorized
on Assistance, Acquisition, and Terms by Federal statute.
for Types of Awards C. The terms ‘‘acquisition’’ and
DEPARTMENT OF DEFENSE
I. Purpose of This Appendix ‘‘assistance’’ are defined in this part to
correspond to the principal purposes
This appendix provides background described in paragraphs III.B.1 and 2 of this
Office of the Secretary
intended to help avoid confusion about some section, respectively. Using those terms,
terms: paragraphs III.B.1 and B.2 may be restated to 2 CFR Part 1120
A. That are used in this chapter to describe say that grants and cooperative agreements
either types of awards that DoD Components, [DOD–2016–OS–0052]
are assistance instruments that DoD
recipients, and subrecipients make, or the Components use at the prime tier for RIN 0790–AJ47
purposes for which those types of awards are assistance purposes, as distinct from
used; and procurement contracts they use at that tier for Format for DoD Grant and Cooperative
B. For which this part provides definitions acquisition.
that vary depending on the context within Agreement Awards
which the terms are used. IV. Background: Distinguishing Types of AGENCY: Office of the Secretary,
Recipients’ and Subrecipients’ Awards
II. Why Definitions of Some Terms are Department of Defense (DoD).
Context-Dependent A. While the Federal Grant and
ACTION: Proposed rule.
Cooperative Agreement Act applies to
A. The DoDGARs contain both: Federal agencies, it does not govern types of
1. Direction to DoD Components SUMMARY: This notice of proposed
awards that recipients and subrecipients
concerning their award of grants and make, whether or not they are lower-tier
rulemaking (NPRM) is the second of a
cooperative agreements at the prime tier; and awards under a Federal prime grant or sequence of six NPRM documents in
2. Terms and conditions that DoD cooperative agreement. That statute therefore this issue of the Federal Register that
Components include in their grants and does not require a recipient or subrecipient collectively establish for DoD grants and
cooperative agreements to specify the to: cooperative agreements an updated
Government’s and recipients’ rights and 1. Consider any award it makes at a lower interim implementation of
responsibilities, including post-award tier under a Federal assistance award as a
requirements with which recipients’ actions Governmentwide guidance on
grant or cooperative agreement. Therefore, at administrative requirements, cost
must comply. its option, a recipient or subrecipient may
B. In some cases, the same defined term or consider all of its lower-tier awards to be
principles, and audit requirements for
two closely related terms are used in relation ‘‘contracts.’’ Federal awards and make other needed
to both DoD Component actions at the prime 2. Associate an ‘‘assistance’’ relationship, updates to the DoD Grant and
tier and recipient or subrecipient actions at as that term is defined in this part and used Agreement Regulations (DoDGARs).
lower tiers under DoD Components’ awards. in this chapter, with any lower-tier This NPRM adds a new DoDGARs part
But a given defined term may have meanings transaction that it makes. to establish a standard format for
that differ at the two tiers. For example, in B. However, the DoDGARs in this chapter
part because the Federal Grant and
organizing the content of DoD
do distinguish between two classes of lower- Components’ grant and cooperative
Cooperative Agreement Act applies to DoD tier transactions that recipients and
Component actions at the prime tier but not subrecipients make: Subawards and
agreement awards and modifications to
to recipient or subrecipient actions at lower procurement transactions. The distinction them.
tiers (see sections III and IV of this promotes uniformity in requirements for DATES: To ensure that they can be
appendix): lower-tier transactions under DoD grants and considered in developing the final rule,
1. The terms ‘‘acquire’’ and ‘‘acquisition’’ cooperative agreements. It is based on a long- comments must be received at either the
do not have precisely the same meaning in standing distinction in OMB guidance to Web site or mailing address indicated
conjunction with actions at the prime and Federal agencies, currently at 2 CFR part 200,
lower tiers. below by February 6, 2017.
which DoD implements in this chapter.
2. The meaning of the term ‘‘procurement C. The distinction between a subaward and ADDRESSES: You may submit comments
contract’’ used to describe DoD Component procurement transaction is based on the identified by docket number, or by
prime-tier actions is not precisely the same primary purpose of that transaction. Regulatory Information Number (RIN)
as the meaning of ‘‘procurement transaction’’ 1. The transaction is a subaward if a and title, by either of the following
or ‘‘contract’’ used to describe recipient or recipient or subrecipient enters into it with methods:
subrecipient actions at lower tiers. another entity at the next lower tier in order The Web site: http://
to transfer—for performance by that lower- www.regulations.gov. Follow the
III. Background: Distinguishing Prime-Tier
tier entity—a portion of the substantive
Relationships and Awards
program for which the prime DoD grant or
instructions at that site for submitting
A. The Federal Grant and Cooperative cooperative agreement provided financial comments.
Agreement Act (31 U.S.C. chapter 63) assistance to the recipient. Because the Mail: Department of Defense, Deputy
specifies that the type of award a DoD Federal Grant and Cooperative Agreement Chief Management Officer, Directorate
Component is to use when making a prime Act does not apply to the recipient or for Oversight and Compliance, 4800
sradovich on DSK3GMQ082PROD with PROPOSALS2

award to a recipient is based on the nature subrecipient, it may make a subaward as Mark Center Drive, ATTN: Box 24,
of the relationship between the DoD defined in this part using an instrument that Alexandria, VA 22350–1700.
Component and the recipient that the prime it considers a contract. Instructions: All submissions must
award reflects. 2. The transaction is a procurement include the agency name and docket
B. Specifically, except where another transaction if the recipient or subrecipient
statute authorizes DoD to do otherwise, 31 enters into it in order to purchase goods or
number or RIN for this Federal Register
U.S.C. chapter 63 specifies use of: services from the lower-tier entity that the document. The general policy for
1. A procurement contract as the recipient or subrecipient needs to perform its comments and other submissions from
instrument reflecting a relationship between portion of the substantive program supported the public is to make the submissions
a DoD Component and a recipient when the by the prime DoD award. available for public viewing on the

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Document Created: 2018-02-14 08:21:40
Document Modified: 2018-02-14 08:21:40

Category		Regulatory Information
Collection		Federal Register
sudoc Class		AE 2.7: GS 4.107: AE 2.106:
Publisher		Office of the Federal Register, National Archives and Records Administration
Section		Proposed Rules
Action		Proposed rule.
Dates		To ensure that they can be considered in developing the final rule, comments must be received at either the Web site or mailing
Contact		Wade Wargo, Basic Research Office, telephone 571-372-2941.
FR Citation		81 FR 78360
RIN Number		0790-AJ46
CFR Associated		Accounting; Business and Industry; Cooperative Agreements; Grants Administration; Hospitals; Indians; Nonprofit Organizations; Reporting and Recordkeeping Requirements; Small Business and State and Local Governments

81 FR 78360 - Definitions for DoD Grant and Agreement Regulations in Subchapters A Through F

DEPARTMENT OF DEFENSEOffice of the Secretary

Federal Register Volume 81, Issue 215 (November 7, 2016)

DEPARTMENT OF DEFENSE
Office of the Secretary