Federal Assistance Manual Chapter 1-430

CHAPTER 1-430 TRANSFERRING WORK AND PROVIDING FINANCIAL ASSISTANCE TO THIRD PARTIES UNDER OSM FEDERAL ASSISTANCE PROGRAMS

• 1-430-00 Purpose
  
• 1-430-05 Background
  
• 1-430-10 Approval Principles

1-430-00 PURPOSE

This chapter contains principles to be followed by OSM in exercising its prior approval authority before recipients and subrecipients transfer work or provide financial assistance to third parties under OSM Federal assistance programs. The specific purpose is to ensure that OSM requires the recipient to perform a substantive role in carrying out project or grant activities and not act as astraw party. These principles apply to the approval given by OSM for a project plan in an application. Reference P.L. 95-224 and the Grants Management Common Rule, 43 CFR 12, Subpart C.

1-430-05 BACKGROUND

OSM requires recipients and subrecipients of grants and cooperative agreements to obtain prior approval for transferring to a third party, by contracting or other means, the actual performance of substantive programmatic work. It also requires them to obtain approval before providing financial assistance to a third party by subgranting or other means. In either case, recipients must obtain the prior approval of OSM, and subrecipients must obtain the prior approval of the party awarding the subgrant. If the transfer of financial assistance is not included in the approved project plan at time of award, the approval must be obtained through a formal amendment to the current grant.

1-430-10 APPROVAL PRINCIPLES

1. OSM may authorize a recipient to transfer substantive programmatic work or to award financial assistance only if, despite the transfer or financial assistance, the recipient will perform at least one of the following roles:
   1. Principal performer of project activities;

   2. Primary beneficiary of Federal financial assistance; or

   3. Overall administrator of a program in which third parties perform activities or receive financial assistance.

2. Generally, each application or request involving the transfer of work or the award of financial assistance shall be reviewed on its own merits as to whether approval would violate the rule in paragraph 1-430-10A. However, if the transfer of financial assistance falls into one of the following classes, OSM may assume that approval would not violate the rule:
   1. The procurement of construction services under a construction grant or cooperative agreement or under the construction portion of a grantor cooperative agreement for both construction and nonconstruction. Construction, as used here, means also alteration or renovation of real property.

   2. Subgranting or contracting for projects by a recipient under a grant or cooperative agreement awarded under a statute or regulation explicitly intending that the primary responsibility of each recipient shall be to select projects for support and to award and administer grants, contracts or cooperative agreements for those projects.

   3. The transfer of activities and funds to a collaborating or cooperating organization in a grant or cooperative agreement awarded under a statute or regulation explicitly intending such collaboration or cooperation.

   4. The transfer of activities and funds to a college, university, hospital, or government entity from a closely affiliated but separately incorporated organization having for a primary purpose the receipt and administration of gifts, grants, cooperative agreements and contracts. An example is the transfer of funds to a State university from its affiliated research foundation.

3. OSM may limit the kinds of third parties eligible to perform the work or receive the financial assistance. However, OSM may not itself choose a party and directly or indirectly require the recipient to transfer the work or award the assistance to the party. The choice of a specific party must be the recipient's.

4. If a procurement contract is used to transfer programmatic to a third party, OSM may not require the recipient to submit the contract documents for prior approval.

FEDERAL ASSISTANCE MANUAL
January 2, 1998