Federal Assistance Manual Chapter 1-465

CHAPTER 1-465 REDUCTION, SUSPENSION AND TERMINATION OF GRANTS AND COOPERATIVE AGREEMENTS

• 1-465-00 Purpose
  
• 1-465-05 Applicability
  
• 1-465-10 Definitions
  
• 1-465-15 Suspension for Cause
  
• 1-465-20 Termination for Cause
  
• 1-465-25 Termination for Convenience
  
• 1-465-30 Procedures for Suspension of Payments
  
• 1-465-35 Procedures for Reduction, Suspension and Termination of Grants

1-465-00 PURPOSE

This chapter prescribes procedures for suspension of payments and reduction, suspension and termination of grants and cooperativeagreements. Reference 43 CFR 12.

1-465-05 APPLICABILITY

The actions outlined in this chapter are pertinent to individual grant payments and awards. See chapter 1-500 for debarment or suspension of a grantee.

1-465-10 DEFINITIONS

For the purposes of this chapter, the following definitions are provided:

1. Suspension - an action by OSM that either temporarily withholds payments under an agreement or temporarily interrupts Federal assistance pending corrective action by the recipient or pending a decision by OSM to terminate the grant/cooperative agreement.

2. Termination - the withdrawal of support through the cancellation of Federal assistance in whole or in part any time prior to the date of completion of the grant/cooperative agreement.

1-465-15 SUSPENSION FOR CAUSE

1. When a recipient materially fails to comply with the terms and conditions of an award and does not appear to be taking steps to resolve the problem, OSM may, after reasonable notice to the grantee, take one or more of the following actions:
   1. Temporarily withhold payments under an award pending resolution of the issue or correction of the deficiency by the grantee;

   2. Disallow both the use of funds and the matching credit for all or part of the cost of the activity or action not in compliance;

   3. Suspend or terminate the current award, in whole or in part; or

   4. Withhold further awards for the program.

2. Costs incurred and payments withheld during the period of the suspension of payments under an award shall be allowed and paid when the issue has been resolved or the deficiency corrected.

3. No obligations incurred by the grantee during the period of suspension of the grant shall be allowed under the suspended grant/cooperative agreement. The suspension shall remain in effect until the grantee has taken corrective action.

1-465-20 TERMINATION FOR CAUSE

OSM may terminate a grant/cooperative agreement in whole or in part any time before the date of completion if: (a) it has been determined that the grantee has failed to comply with the terms and conditions of the grant/cooperative agreement and resolution does not seem probable; (b) approval of all or part of the State's approved program is withdrawn; or (c) Federal enforcement is substituted for all or part of the State program.

1-465-25 TERMINATION FOR CONVENIENCE

1. OSM or the recipient may terminate a grant/cooperative agreement in whole or in part when both parties agree that the continuation of the project or program would not produce beneficial results commensurate with the further expenditure of funds.

2. The two parties shall agree upon the termination conditions, including the effective date and, in the case of partial termination, the portion to be terminated. Termination for convenience shall be handled as an amendment to the current grant and shall be signed by the RCC/FO grant approving official.

3. The recipient shall not incur new obligations for the terminated portion after the effective date and shall cancel as many outstanding obligations as possible.

4. OSM shall allow full credit to the recipient for the Federal share of the noncancellable obligations properly incurred by the recipient prior to termination.

1-465-30 PROCEDURES FOR SUSPENSION OF PAYMENTS

1. The RCC/FO shall identify the issue or deficiency which precipitated the proposed suspension of payments and work with the grantee to resolve the issue or develop a timetable for resolution.

2. If the grantee does not resolve the issue in a timely manner or does not adhere to the agreed-to timetable, the RCC/FO shall evaluate the situation and coordinate with DFM and, when necessary, the appropriate Headquarters program division.

3. If the decision is made to suspend payments, the RCC/FO shall inform the grantee of the decision and the approximate date on which payments will be suspended if satisfactory resolution is not achieved.

4. DFM shall take final actions to suspend payments.

1-465-35 PROCEDURES FOR REDUCTION, SUSPENSION AND TERMINATION OF GRANTS

1. The RCC/FO shall identify any possible deficiencies and attempt resolution, coordinating with the appropriate Headquarters program division and recommend action to the RD.

2. After receiving the RD concurrence in the proposed action, the RCC/FO shall prepare a notice to the State agency. The RCC/FO shall give thirty (30) days written notice to the recipient by certified mail of the proposed action after identifying the violation or deficiency and attempting resolution. The notice shall inform the recipient that reduction, suspension or termination of the grant or cooperative agreement will begin 30 days from the date of the notice if appeal action is not taken within the 30 day period.

3. The RCC/FO shall give the recipient the opportunity for consultation and remedial action.

4. If no remedial action is taken, or appeal made, by the recipient within 30 days from the date of the notice letter, the RCC/FO shall initiate the reduction, suspension or termination of the grant or cooperative agreement by informing RD that no appeal is being processed by the recipient.

5. The recipient may appeal the decision to the Director, OSM, in writing, outlining reasons for requesting review. This must be done within thirty (30) days of the notice of reduction, suspension or termination of the grant or cooperative agreement.

6. The recipient may appeal the Director's decision to the Secretary, DOI, in writing, outlining the reasons for requesting review. This must be done within thirty (30) days of the Director's decision. The Secretary's decision is final.

7. When the reduction, suspension or termination action is finalized, the recipient must refund the unobligated portion of funds. Termination costs may be allowed.

FEDERAL ASSISTANCE MANUAL
January 2, 1998