[Code of Federal Regulations]
[Title 20, Volume 2]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 20CFR437.21]

[Page 1160-1161]
 
                      TITLE 20--EMPLOYEES' BENEFITS
 
               CHAPTER III--SOCIAL SECURITY ADMINISTRATION
 
PART 437_UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND COOPERATIVE 
AGREEMENTS TO STATE AND LOCAL GOVERNMENTS--Table of Contents
 
                    Subpart C_Post-Award Requirements
 
Sec. 437.21  Payment.

    (a) Scope. This section prescribes the basic standard and the 
methods under which SSA will make payments to grantees, and grantees 
will make payments to subgrantees and contractors.
    (b) Basic standard. Methods and procedures for payment must minimize 
the time elapsing between the transfer of funds and disbursement by the 
grantee or subgrantee, in accordance with Treasury regulations at 31 CFR 
part 205.
    (c) Advances. Grantees and subgrantees will be paid in advance, 
provided they maintain or demonstrate the willingness and ability to 
maintain procedures to minimize the time elapsing between the transfer 
of the funds and their disbursement by the grantee or subgrantee.
    (d) Reimbursement. Reimbursement is the preferred method when the 
requirements in paragraph (c) of this section are not met. Grantees and 
subgrantees may also be paid by reimbursement for any construction 
grant. Except as otherwise specified in regulation, SSA

[[Page 1161]]

may not use the percentage of completion method to pay construction 
grants. The grantee or subgrantee may use that method to pay its 
construction contractor, and if it does, SSA's payments to the grantee 
or subgrantee will be based on the grantee's or subgrantee's actual rate 
of disbursement.
    (e) Working capital advances. If a grantee cannot meet the criteria 
for advance payments described in paragraph (c) of this section, and SSA 
determines that reimbursement is not feasible because the grantee lacks 
sufficient working capital, SSA may provide cash or a working capital 
advance basis. Under this procedure, SSA will advance cash to the 
grantee to cover its estimated disbursement needs for an initial period 
generally geared to the grantee's disbursing cycle. Thereafter, SSA will 
reimburse the grantee for its actual cash disbursements. The working 
capital advance method of payment may not be used by grantees or 
subgrantees if the reason for using such method is the unwillingness or 
inability of the grantee to provide timely advances to the subgrantee to 
meet the subgrantee's actual cash disbursements.
    (f) Effect of program income, refunds, and audit recoveries on 
payment. (1) Grantees and subgrantees must disburse repayments to and 
interest earned on a revolving fund before requesting additional cash 
payments for the same activity.
    (2) Except as provided in paragraph (f)(1) of this section, grantees 
and subgrantees must disburse program income, rebates, refunds, contract 
settlements, audit recoveries and interest earned on such funds before 
requesting additional cash payments.
    (g) Withholding payments. (1) Unless otherwise required by Federal 
statute, SSA will not withhold payments for proper charges incurred by 
grantees or subgrantees unless--
    (i) The grantee or subgrantee fails to comply with grant award 
conditions or
    (ii) The grantee or subgrantee is indebted to the United States.
    (2) Cash withheld for failure to comply with grant award condition, 
but without suspension of the grant, will be released to the grantee 
upon subsequent compliance. When a grant is suspended, payment 
adjustments will be made in accordance with Sec. 437.43(c).
    (3) SSA will not make payment to grantees for amounts that are 
withheld by grantees or subgrantees from payment to contractors to 
assure satisfactory completion of work. SSA will make payments when the 
grantees or subgrantees actually disburse the withheld funds to the 
contractors or to escrow accounts established to assure satisfactory 
completion of work.
    (h) Cash depositories. (1) Consistent with the national goal of 
expanding the opportunities for minority business enterprises, grantees 
and subgrantees are encouraged to use minority banks (a bank which is 
owned at least 50 percent by minority group members). A list of minority 
owned banks can be obtained from the Minority Business Development 
Agency, Department of Commerce, Washington, DC 20230.
    (2) A grantee or subgrantee must maintain a separate bank account 
only when required by Federal-State agreement.
    (i) Interest earned on advances. Except for interest earned on 
advances of funds exempt under the Intergovernmental Cooperation Act (31 
U.S.C. 6501 et seq.) and the Indian Self-Determination Act (23 U.S.C. 
450), grantees and subgrantees must promptly, but at least quarterly, 
remit interest earned on advances to the Federal agency. The grantee or 
subgrantee may keep interest amounts up to $100 per year for 
administrative expenses.