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GPD
Part 3.02: Post-Award - Matching
and Cost Sharing
HHS
Transmittal 99.05 (7/29/99)
Part
3 Post-Award
Section
02 Matching and Cost Sharing
A. Principles
- Purpose.
This Grants Policy Directive (GPD) specifies HHS policies related to
the use and administration of matching and costsharing under HHS grants.
This GPD supplements the regulatory coverage of 45 CFR 74.23 and 92.24.
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Scope. The policies contained in this GPD apply to all discretionary
and mandatory grant programs and awards.
B. Use of Terms
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Although the individual terms "matching" and "cost sharing" have somewhat
different historical derivations as indicated below, for purposes of
this GPD and the Department's regulations at 45 CFR 74.23 and 92.24,
the terms will be used as a single term, i.e., "matching or cost sharing."
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"Matching" is generally used to refer to a statutorily specified
percentage of program or project costs that must be contributed by a
grantee in order to be eligible for Federal funding. This requirement
may either be stated as a specified or minimum non-Federal percentage
of total allowable costs or a maximum Federal percentage of participation
in such costs.
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"Cost sharing," prior to FY 1986, generally meant the statutory
requirement for HHS grantees to share in the costs of grant-supported
research. "Cost sharing" is now used to refer to any situation in which
the grantee shares in the costs of a project other than as statutorily
required "matching."
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Use of the single term "matching or cost sharing" is intended to simplify
the content and clarity of this GPD. The context of the GPD provision
will provide any distinguishing features that are pertinent to application
of a policy, e.g., if a maximum Federal matching or cost sharing percentage
is specified in statute, HHS discretion is more limited than if a matching
or cost sharing amount has been established through negotiation.
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For purposes of this GPD and 45 CFR Parts 74 and 92, the term "recipient
contributions" refers to costs borne by the grantee, either through
cash outlay or the provision of services. "In-kind contributions" means
the value of goods and/or services donated by third parties. Grantees
are not considered as providing "in-kind contributions."
C. Policy
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A requirement for a grantee to provide matching funds or share in the
costs of a project, the percentage or amount of matching or cost sharing,
and any limitations or exclusions will be based on the program's authorizing
statute, program regulations, or a fully documented administrative rationale.
HHS does not have a general policy requiring matching or cost sharing
or specifying a minimum percentage or amount.
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OPDIVs will ensure that any requirement for matching or cost sharing
is fully implemented and administered in accordance with the requirements
of the authorizing statute, program regulations, 45 CFR Part 74 or 92,
and this GPD.
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The costs borne by the matching or cost sharing and in-kind contributions
are subject to the rules governing allowability in 45 CFR 74.23 or 92.24,
including allowability under the applicable cost principles and conformance
with other terms and conditions of the award that govern the expenditure
of Federal funds.
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Pre-award Considerations.
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For non-statutory matching or cost sharing requirements under discretionary
grants, OPDIVs must comply with the following:
(1) The requirement must be specified in a publicly available document,
e.g., program regulations or program announcement, available to all
potential applicants. (See GPD 2.03)
(2) The description of the requirement must indicate whether: (a)
it is a fixed percentage or a minimum percentage, whether it applies
to each budget period or to the project period as a whole (see C.5.a.
below), and the extent to which it is negotiable; (b) the form or
extent of matching or cost sharing proposed will be used as an evaluation
criterion; (c) there are any restrictions or limitations on the applicant/grantee
meeting the required share through cash and/or in-kind contributions;
and (d) there is a need for any pre-award documentation to establish
the applicant's ability to provide the matching or cost sharing proposed.
(3) For awards under a new program or program initiative reflected
in a program announcement or other solicitation, the head of the program
office must document the programmatic rationale for requiring matching
or cost sharing. Matching or cost sharing may not be required through
administrative action solely as a means of offsetting budget reductions.
Programmatic justifications may include:
(a)
Grantees are expected to develop a resource or capability as a result
of the grant-supported activity that may result in financial benefits
after the completion of the grant. This would include the construction
of a facility or development of a process with commercial value. This
would not generally be the case for basic research.
(b) Grant support is only one of a number of known potential sources
for the funding of an activity.
(c) The project or activity will have a greater likelihood of success
if the grantee contributes to the costs of the project.:
(4) If matching or cost sharing may be required under some, but not
all projects; e.g., investigator-initiated research, that possibility
must be specified in application material. The explanation must address
when in the review process the potential requirement will be communicated
and how the applicant's willingness or ability to provide matching or
cost sharing will be factored into an award decision.
(5) If matching or cost sharing is not required but is encouraged,
this encouragement must also be stated in a publicly available document,
which indicates the potential effect, if any, of proposing/not proposing
to match or cost share.
(6) If matching or cost sharing is required in a competing continuation
award, consistent with the criteria in paragraph C.4.a.(3) above,
but was not previously required under that award, the program official
should document, for inclusion in the official grant file, the reason
for applying the requirement.
(7) Applicants must be required to fully document, in the grant application,
the specific costs or contributions proposed to meet a matching or
cost sharing requirement, the source of the funding or contribution,
and how the valuation was determined. Matching or cost sharing may
be provided as either direct or indirect costs, consistent with the
applicant's accounting system and any restrictions or limitations
in the applicable cost principles (see GPD 3.01).
(8) All matching or cost sharing, whether required by the HHS awarding
office or voluntarily proposed by an applicant, must be included as
part of the total approved budget both as a percentage and an amount.
The Notice of Grant Award (NGA) should stipulate that the amount is
subject to adjustment based on total allowable costs incurred and
the value of allowable in-kind contributions (see paragraphs C.5.d.
and E.5.b. below concerning adjustments resulting from not meeting
a matching or cost sharing requirement).
Matching or cost sharing through unrecovered indirect costs should
also be noted in the NGA.
(9) Grantees may not use program income as a source of matching or
cost sharing unless explicitly authorized in the NGA.
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Post-award Considerations.
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Consistent with other aspects of post-award administration, awarding
offices should administer matching or cost sharing on the same basis
as the HHS funding provided, i.e., on a budget period-by-budget period
basis for those awards made under the project period system. If administered
in this way, the calculation of the amount of matching or cost sharing
required and the assessment of grantee compliance will be based on the
approved budget and actual allowable costs and in-kind contributions
for each budget period.
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Although, in accordance with good business practices, a grantee should
provide required matching or cost sharing in proportion to its expenditure
of the Federal dollars awarded, grantees are not required to provide
their matching or cost sharing prior to drawing down HHS funds. At a
minimum, the rate of expenditure/in-kind contribution should be consistent
with the nature of the contribution; e.g., if salaries or volunteer
services are contributed, they may be credited throughout the period
as opposed to a one-time expenditure, such as the purchase of a piece
of equipment.
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In determining whether a grantee has met the required matching or cost
sharing, the percentage will be applied to the overall amount of allowable
project costs and in-kind contributions regardless of the individual
category(ies) in which costs/contributions occur.
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If a grantee is not providing matching or cost sharing at an acceptable
rate or is unable to provide required matching or cost sharing, the
awarding office will assess the reasons, review statements and assurances
contained in the application, and determine the flexibility it has,
if any, in modifying the requirement and the extent to which special
conditions or sanctions should be applied.
If a grantee fails to provide some or all of required matching or
cost sharing, the Grants Management Officer will make a downward adjustment
in the Federal award, which could potentially reduce the Federal share
to zero. In addition, the Grants Management Officer may take other
enforcement actions affecting the current and/or future awards.
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If a grantee provides matching or cost sharing that exceeds that required
by the NGA, the excess amount is not subject to the requirements of
45 CFR Part 74 or 92 or this GPD unless used to offset otherwise unallowable
matching or cost sharing amounts.
D. Special Authorities
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Certain statutes allow waivers of matching requirements or allow Federal
funds to serve as a source of matching or cost sharing. The Grants Management
Officer is responsible for determining whether the entity meets the
conditions for waiver and exercising any applicable waiver by including
an appropriate term or condition in the award.
Pursuant to 48 USC 1469a (d), under grants to the governments of American
Samoa, Guam, the Virgin Islands, or the Northern Mariana Islands (other
than those consolidated under other provisions of 48 USC 1469 and
45 CFR 97.16), any required matching (including in-kind contributions)
of less than $200,000 is waived. This waiver applies regardless of
whether the matching requirements under the grant equal or exceed
$200,000. For "open-ended" entitlement grants that are funded on a
quarterly basis, the matching waiver will be applied on an annual
as opposed to a quarterly basis.
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As Federal funds may not generally be used to match other Federal funds,
the GMO is responsible for determining and responding to questions of
whether (1) another program's/agency's funds or assets acquired with
Federal funds may be used to match or cost share funds under the program(s)
under his or her jurisdiction, and (2) the funds or assets acquired
with Federal funds under his or her program(s) may be used to match
or cost share under other Federal programs. The GMO should consult with
the Office of the General Counsel, as appropriate, to determine current
authorities and applicability.
E. Responsibilities
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OPDIV grants management staff are responsible for reviewing proposed
program regulations and/or program announcements to determine compliance
with the policy stated in paragraph C.4. above.
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Grants management staff, as participants in the review of applications
and the negotiation of grant budgets, must ensure that matching or cost
sharing is not introduced at that point in the process as a means of
reducing the potential Federal funding for individual awards.
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Grants management staff are responsible for reviewing costs and contributions
that applicants propose to meet a matching or cost sharing requirement
and for obtaining any necessary documentation from the applicant to
ensure that the costs/contributions are appropriate and available to
the applicant. These proposed costs/in-kind contributions must receive
the same level of review and scrutiny as costs to be borne by Federal
funds.
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Grants management staff are responsible for preparing NGAs that conform
to the requirements of this GPD and sections 74.23 and 92.24.
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Grants management staff are responsible for performing the types of
post-award administration activities specified in paragraph C.5. above
to ensure compliance with a matching or cost sharing requirement, including:
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Monitoring the Financial Status Report (SF-269), Federal Cash Transactions
Report (SF-272) and other documentation, as appropriate, to determine
whether matching or cost sharing is being provided and the rate of expenditure
is appropriate.
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Adjusting award amounts, as necessary, if grantees fail to meet matching
or cost sharing requirements. Adjustments will be based on actual allowable
costs chargeable to the HHS award and the value of allowable in-kind
contributions, if any.
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