Section

[Code of Federal Regulations]

[Title 45, Volume 1]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 45CFR74.22]

[Page 216-217]

TITLE 45--PUBLIC WELFARE

SUBTITLE A--DEPARTMENT OF HEALTH AND HUMAN SERVICES

PART 74_UNIFORM ADMINISTRATIVE REQUIREMENTS FOR AWARDS AND SUBAWARDS TO INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, OTHER NONPROFIT ORGANIZATIONS, AND

COMMERCIAL ORGANIZATIONS--Table of Contents

Subpart C_Post-Award Requirements

Sec. 74.22 Payment.

(a) Unless inconsistent with statutory program purposes, payment

methods shall minimize the time elapsing between the transfer of funds

from the U.S. Treasury and the issuance or redemption of checks,

warrants, or payment by other means by the recipients. Payment methods

of State agencies or instrumentalities shall be consistent with

Treasury-State CMIA agreements, or the CMIA default procedures codified

at 31 CFR 205.9, to the extent that either applies.

(b)(1) Recipients will be paid in advance, provided they maintain or

demonstrate the willingness to maintain:

(i) Written procedures that minimize the time elapsing between the

transfer of funds and disbursement by the recipient; and

(ii) Financial management systems that meet the standards for fund

control and accountability as established in Sec. 74.21.

(2) Unless inconsistent with statutory program purposes, cash

advances to a recipient organization shall be limited to the minimum

amounts needed and be timed to be in accordance with the actual,

immediate cash requirements of the recipient organization in carrying

out the purpose of the approved program or project. The timing and

amount of cash advances shall be as close as is administratively

feasible to the actual disbursements by the recipient organization for

direct program or project costs and the proportionate share of any

allowable indirect costs.

anticipated cash needs for all awards made by all HHS awarding agencies

to the recipient.

(1) Advance payment mechanisms include electronic funds transfer,

with Treasury checks available on an exception basis.

(2) Advance payment mechanisms are subject to 31 CFR part 205.

(3) Recipients may submit requests for advances and reimbursements

at least monthly when electronic fund transfers are not used.

(d) Requests for Treasury check advance payment shall be submitted

on PMS-270, ``Request for Advance or Reimbursement,'' or other forms as

may be authorized by HHS. This form is not to be used when Treasury

check advance payments are made to the recipient automatically through

the use of a predetermined payment schedule or if precluded by special

HHS-wide instructions for electronic funds transfer.

(e) Reimbursement is the preferred method when the requirements in

paragraph (b) of this section cannot be met. The HHS awarding agency may

also use this method on any construction agreement, or if the major

portion of the construction project is accomplished through private

market financing or Federal loans, and the HHS assistance constitutes a

minor portion of the project.

(1) When the reimbursement method is used, HHS will make payment

within 30 days after receipt of the billing, unless the billing is

improper.

(2) Recipients may submit a request for reimbursement at least

monthly when electronic funds transfers are not used.

(f) If a recipient cannot meet the criteria for advance payments and

the HHS awarding agency has determined that reimbursement is not

feasible because the recipient lacks sufficient working capital, HHS may

provide cash on a working capital advance basis. Under this procedure,

HHS advances cash to the recipient to cover its estimated disbursement

needs for an initial period generally geared to the recipient's

disbursing cycle. Thereafter, HHS reimburses the recipient for its

actual cash disbursements. The working capital advance method of payment

will not be used for recipients unwilling or unable to provide timely

advances to their subrecipient to meet the subrecipient's actual cash

disbursements.

(g) Unless inconsistent with statutory program purposes, to the

extent available, recipients shall disburse funds available from

repayments to and interest earned on a revolving fund, program income,

rebates, refunds, contract settlements, audit recoveries and interest

earned on such funds before requesting additional cash payments.

(h) Unless otherwise required by statute, the HHS awarding agency

will not

[[Page 217]]

withhold payments for proper charges made by recipients at any time

during the project period unless paragraph (h) (1) or (2) of this

section applies:

(1) A recipient has failed to comply with the project objectives,

the terms and conditions of the award, or HHS awarding agency reporting

requirements.

(2) The recipient or subrecipient is delinquent in a debt to the

United States. Under such conditions, the HHS awarding agency may, upon

reasonable notice, inform the recipient that payments shall not be made

for obligations incurred after a specified date until the conditions are

corrected or the indebtedness to the Federal Government is liquidated.

(See 45 CFR part 30).

(i) Standards governing the use of banks and other institutions as

depositories of funds advanced under awards are as follows.

(1) Except for situations described in paragraph (i)(2) of this

section, HHS will not require separate depository accounts for funds

provided to a recipient or establish any eligibility requirements for

depositories for funds provided to a recipient. However, recipients must

be able to account for the receipt, obligation and expenditure of funds.

(2) Advances of Federal funds shall be deposited and maintained in

insured accounts whenever possible.

(j) Consistent with the national goal of expanding the opportunities

for women-owned and minority-owned business enterprises, recipients are

encouraged to use women-owned and minority-owned banks (a bank which is

owned at least 50 percent by women or minority group members).

(k) Recipients shall maintain advances of Federal funds in interest

bearing accounts, unless one of the following conditions apply:

(1) The recipient receives less than $120,000 in Federal awards per

year.

(2) The best reasonably available interest bearing account would not

be expected to earn interest in excess of $250 per year on Federal cash

balances.

(3) The depository would require an average or minimum balance so

high that it would not be feasible within the expected Federal and non-

Federal cash resources.

(l) For those entities where CMIA and its implementing regulations

do not apply (see 31 CFR part 205), interest earned on Federal advances

deposited in interest bearing accounts shall be remitted annually to the

Department of Health and Human Services, Payment Management System, P.O.

Box 6021, Rockville, MD 20852. Recipients with Electronic Funds Transfer

capability should use an electronic medium such as the FEDWIRE Deposit

System. Interest amounts up to $250 per year may be retained by the

recipient for administrative expense. State universities and hospitals

shall comply with CMIA, as it pertains to interest. If an entity subject

to CMIA uses its own funds to pay pre-award costs for discretionary

awards without prior written approval from the HHS awarding agency, it

waives its right to recover the interest under CMIA. (See Sec.

74.25(d)).

(m) PMS-270, Request for Advance or Reimbursement. Recipients shall

use the PMS-270 to request advances or reimbursement for all programs

when electronic funds transfer or predetermined advance methods are not

used. HHS shall not require recipients to submit more than an original

and two copies.

(n) Recipients and subrecipients are not required to use forms PMS-

270 and 272 in connection with subaward payments.

[59 FR 43760, Aug. 25, 1994, as amended at 61 FR 11746, Mar. 22, 1996]