Federal Assistance Manual Chapter 1-102

CHAPTER 1-102 GRANT PAYMENTS: POLICIES AND PROCEDURES

• 1-102-00 General
  
• 1-102-10 Payment Methods
  
• 1-102-20 Payment Policies
  
• 1-102-30 Responsibilities
  
• 1-102-40 DDX Procedures
  
• 1-102-50 Refunding Federal Funds

1-102-00 GENERAL

1. This chapter explains the methods and procedures used by OSM to disburse payments to grant recipients.

2. The acceptance of a grant or cooperative agreement from OSM creates a legal duty on the part of the recipient organization to use the funds made available in accordance with the terms and conditions of the grant or cooperative agreement. OSM has a reversionary interest in the unused balance of payments; and any funds improperly applied, whether received as an advance or reimbursable payment.

1-102-10 PAYMENT METHODS

Grant or cooperative agreement payments are made to recipients via electronic transfer of funds or payment by Treasury check. All grant recipients will use electronic transfer of funds as the method of payment unless otherwise allowed by DFM. The following definitions are applicable to this chapter:

1. DDX (DrawDown Express) is an electronic funds transfer system that utilizes the Department of the Treasury's Automated Clearinghouse payment system to transfer funds from the Federal Reserve to the grantee financial institution. Requests are made directly from grantee via a communications link to OSM, Division of Financial Management (DFM).

2. Electronic Transfer of Funds. An on-line request for funds certified by a designated official of OSM. The transfer is accomplished by electronic means between the recipient, OSM, Treasury, and the recipient's bank. This transfer is irrevocable to the extent that the recipient has obligated funds in good faith thereunder for the execution of its authorized or approved OSM programs or projects.

3. Payment by Treasury Check. Payment, advance or reimbursement, by Treasury check is made to a recipient with a Treasury check upon request from the recipient. Only in unusual circumstances and to recipients with whom OSM does not have a continuing relationship will payment by check be acceptable.

1-102-20 PAYMENT POLICIES

1. Timing of Payments. Regardless of the particular method used, advances to a recipient shall be limited to the minimum amounts needed and shall be timed to be in accord with the actual, immediate cash requirements of the recipient in carrying out the purpose of the approved program or project. The timing and amount of cash advances shall be as close as administratively feasible to actual disbursements for direct program costs and the proportionate share of allowable indirect costs.

2. Withholding Payments. OSM reserves the right, upon written notice, to withhold future payments after a specified date if the recipient:
   1. Fails to comply with the terms and conditions of an OSM grant or cooperative agreement, including the reporting requirements; or

   2. Is indebted to the U.S. Government.

3. Safeguarding Funds. In no case will OSM funds be commingled with the personal funds of, or be used for personal purposes by, any officer, employee or agent of the recipient; nor will any of these funds be deposited in personal bank accounts for disbursement by personal check.

1-102-30 RESPONSIBILITIES

1. Recipients of OSM grants and cooperative agreements have the following responsibilities:
   1. To draw Federal funds only at the time actually needed to make disbursements and to prevent withdrawals from exceeding the amount of the award.

   2. To submit to OSM all financial, performance and other prescribed reports required as a condition of the agreement.

   3. To impose the same standards of timing and amount upon any secondary recipient organizations.

   4. To adjust cash at the closeout of a grant or cooperative agreement by drawing funds to equal approved outlays or refunding to OSM cash that is in excess of approved outlays.

2. The OSM regional/field grants offices have the primary responsibility for monitoring the use of cash drawdowns by the recipients. This responsibility includes the periodic review of recipient organizations' use of funds.

3. The DFM has the following responsibilities:
   1. To operate an electronic funds transfer system.

   2. To provide on-line access to paid drawdowns.

   3. To maintain and provide access to a Grants Detail Report which provides a history of financial transactions for each open grant or cooperative agreement.

   4. To obligate and deobligate OSM grant or cooperative agreement funds, as requested.

   5. To record advances as outlays in OSM accounting records when the financial status reports are received by OSM.

   6. To reconcile cash with Treasury on a monthly basis.

1-102-40 DRAWDOWN EXPRESS PROCEDURES

1. Unless otherwise allowed by DFM, all recipients will draw funds through DDX. It is the responsibility of the recipient to maintain all necessary hardware to access the DDX system. OSM will provide the communications software.

2. There is no minimum for a request, except that the total amount of the request must be a positive amount. Amounts due OSM on grants may be made on DDX by indication of a negative draw, but positive draws on other grants or projects must also be made at the same time to keep the total request positive.

3. Each recipient must have on file with DFM a current ACH Vendor Express Form (see Appendix 113). A new form must be submitted whenever the financial institution or grantee information changes. Payment cannot be made unless this form has been received by DFM.

4. Each recipient is allowed up to two DDX Operators, designated through the form in Appendix 113. To change the authorizing agent, send a letter to DFM; include the agency name and address, the new authorizing agent, the signature of new agent and the reason for the change.
   1. When there is a change in operators, a new DDX Operator form must be completed. If there are already two operators, one of them must be removed on the same form the new operator is designated.

   2. DFM will confirm the information on the DDX Operator form and send a logon identification and passwords to the new operator via certified mail in a privacy envelope. At this point, the operator will be able to access the ABACIS Service Network, but he/she will not have the capability to request draws until the security notification contained in the privacy envelope has been signed and returned to DFM.

   3. The DDX Operator is responsible for keeping his/her identification and passwords confidential and is responsible for any abuse of the system from his/her logon. If this information has been compromised, a new identification and passwords can be obtained by contacting DFM.

5. Each State/Tribe must submit a signed copy of each request. A copy of each request should be made after it has been posted; the copy should be signed by both the DDX Operator and the Authorizing Official.

6. See the DrawDown Express Manual (Appendix 113) for detailed instructions on the operation of the DDX system.

1-102-50 REFUNDING FEDERAL FUNDS

1. Amounts may be due OSM by a recipient for a variety of reasons on either open or closed grants. For sound accountability of funds, it is important that the amounts be returned to the grant from which they were originally obligated and disbursed.

2. The preferred method for returning funds to OSM is a negative draw to the appropriate grant on DDX. Since all advances on DDX must be for positive amounts, other draws must be made on other grants at the same time in order to maintain a total request for a positive amount. If this cannot be accomplished, then the recipient will need to issue a check.

3. If the grant on which funds are being returned is closed, the grant must be re-opened. In addition, a revised financial status report must be prepared. The deobligation of funds and reduction in costs cannot be entered into the accounting system until these reports have been received by DFM.

FEDERAL ASSISTANCE MANUAL
January 2, 1998