1. 45 C.F.R. Parts 1630 and 1631 – What’s New?
Main cover slide
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(10” x 7.5”)
November 3, 2017

2. Topics Basics Prior approval Questioned cost proceedings Purchasing
Property management
Contact information
(59.8%) (57.7%) (56.4%) (56.7%)

3. The Basics
Updated and reorganized Part 1630 – Cost standards and procedures
Existing version of rule:
Eliminated Property Acquisition and Management Manual (PAMM); substance in new Part 1631
Final rule published August 10, 2017 (82 FR 37327)
Effective date: December 31, 2017
Rule changes will be in purple text
(59.8%) (57.7%) (56.4%) (56.7%)

4. Allowable cost standards‒§1630.5
The Basics:
Allowable cost standards‒§1630.5
Based on 2 CFR part 200 (formerly OMB Circulars)
General principle: costs must be reasonable and necessary to carrying out LSC grant
1630.5(i) -- Recipients may use LSC funds to pay costs associated with fundraising
EX , Whether Recipients May Use LSC Funds for Fundraising Activities

5. Prior approval process – § 1631.3
˃ $25K in LSC funds
Requirements in
LSC must respond within 30 or 60 days, depending on purchase
Response time based on date LSC receives ALL information needed to make decision

6. Prior approval ‒ § 1630.6 Requirement applies to:
Single purchase or lease of personal property
Single contract for services
Single combined purchase or lease of personal property and contract for services
Single purchase of real estate
Capital improvements

7. Definitions Single purchase, single lease, and single contract:
Single order or lease of goods; includes order or lease of multiple items
Single contract for services from single vendor
Single purchase of goods bundled with contract for services

8. Definitions
Capital improvement: Use of more than $25K in LSC funds to improve real estate through construction or addition of fixtures that become integral part of real estate
Does not include capital improvements negotiated as part of lease terms
Purchase: buying personal property or real estate or contracting for services using LSC funds

9. Definitions
Services: professional and consultant services rendered by people who are members of profession or have special skill and who are not officers or employees of recipient
Examples: accountants, custodians, consultants
Does not include
Services provided to employees as fringe benefits
Insurance (e.g. malpractice, D&O liability)
Annual audits required by Pub. L § 509(a)
Services needed for litigation on behalf of clients
Services necessary to address internal personnel issues
Contracts for employees

10. Single Purchase or Lease of Property

11. Single Purchase or Lease of Property
Combination purchase or lease: purchase or lease of personal property and purchase of services made at the same time.
Example: A recipient purchases both a telephone system (personal property) and a one-year service and maintenance contract (purchase of services) from one vendor in one transaction.

12. Prior approval process; exception for exigent circumstances ‒ §1631
Prior approval process; exception for exigent circumstances ‒ §1631.3(d)
Four categories
Avoid imminent harm to recipient personnel, physical facilities, or systems
Remediate or mitigate damage to same
Avoid disruption to client service delivery system
Respond to natural disaster

13. Questioned Cost Proceedings ‒
Subpart C
New Provisions
Eliminated 5-year lookback period
Request extensions of time to respond before time expires (§ (d)(2)(ii))
Formalized LSC policy requiring management-level review before appealing to President (§ (a)(2))

14. Characteristics of purchases–§
Recipient enters agreement with third party who:
Provides goods and services to recipient within its normal business operations
Provides similar goods or services to many different purchasers
Normally operates in a competitive environment
Provides goods or services that are ancillary to the operation of the LSC grant
Is not subject to LSC’s compliance requirements as a result of the agreement

15. Example #1
New Urban Legal Services (NULS) wants to improve its volunteer attorney program. NULS gives a consultant $25K to evaluate its existing program, make recommendations about how to improve the program, and help the program implement the recommended changes.
Is this a purchase under ?

16. Example #2
As part of improving its volunteer attorney program, NULS gives $15K to Old Urban Legal Services to supervise the volunteer attorneys. The OULS attorney will review advice given to clients, provide subject matter expertise to the volunteer attorneys if they have questions, and attend court appearances with the volunteer attorney.
Is this a purchase under ?

17. Purchasing policies and procedures;
Required elements – §
Competition thresholds that establish basis for level of competition required at each threshold
Establish grounds for non-competitive purchases
Establish level of documentation to justify procurement
Establish internal controls
Establish procedures to ensure quality and cost control
Establish procedures for identifying and preventing conflicts of interest

18. Use of Property – §
Must comply with LSC governing statutes and regulations
Can be used for other activities if such use does not interfere with legal services activities
Restrictions = rent
§ – applies same rules to real estate

19. Intellectual property –§
IP developed by grantee using LSC funds
Grantee owns
LSC has royalty-free, nonexclusive, irrevocable license
Contracts with vendors who develop or improve LSC-funded products, technologies, and software
Must have provision disclosing license
Must prohibit vendor from denying, challenging, or interfering with LSC’s use of license

20. Disposal of personal property ‒§
3 options
Trade in
Sale (or other when fair market value (FMV) is negligible)
Transfer to another LSC grantee or non-profit organization serving the poor in the recipient’s service area

21. Purchasing real estate with LSC funds ‒§
Taken from PAMM § 4
Must conduct pre-purchase market assessment
Must obtain prior approval from LSC
Must ensure property meets, or will meet after capital improvements, ADA or state standards, whichever is stricter
Must enter into property interest agreement with LSC

22. Maintenance and Insurance‒
§§ ,
Maintenance – property must be kept
In efficient operating condition
In compliance with state and local property standards and building codes
Insurance
Same level of coverage as other recipient property
Must have
Title insurance
Physical destruction policy

23. Accounting and reporting to LSC –§
Amount of LSC funds used to pay acquisition costs, financing, and capital improvements
Submit no later than April 30 of year following accounting year or with audited financial statements

24. Recipient disposal of real estate – § 1631.20
Method of Disposal
Compensation
Sale after advertising and receiving offers
N/A
Transfer to another LSC recipient
Receiving recipient may pay transferring recipient %age of current FMV equal to %age of LSC funds invested

25. Questions?

26. Assistant General Counsel
Contact Information
Stefanie K. Davis
Assistant General Counsel

27. 45 C.F.R. Parts 1630 and 1631 – What’s New?
Main cover slide
960 pixels wide X 720 pixels high 96 dpi)
(10” x 7.5”)
November 3, 2017