award phase
(CT:FIN-499; 04-07-2025)
(Office of Origin: CGFS/FPRA/FAFM)
4 FAM 631 general award information
(CT:FIN-499; 04-07-2025)
This chapter covers the policy for the critical components of, and processes for all Federal assistance awards for the U.S. Department of State during the award phase of the grants lifecycle.
4 FAM 631.1 General Federal Award Information
(CT:FIN-499; 04-07-2025)
The OMB-required general award information includes the recipient's name, unique entity identifier, Federal award identification number, Federal award date, total approved cost sharing or matching, Federal award description, assistance listings number and title, and terms and conditions, including termination provisions.
4 FAM 631.2 Terms and Conditions
(CT:FIN-499; 04-07-2025)
a. The Department of State Standard Terms and Conditions incorporate the requirements of 2 CFR 200, which covers award provisions among other requirements for federal financial assistance.
b. These requirements include the following points:
(1) The recipient must maintain complete records and books of accounts covering financial details applicable to the activities funded under the award at its principal offices;
(2) The Department of State, the Inspector General, the Comptroller General, and their authorized representatives have the right to examine, audit, and copy all records and books of accounts mentioned in this section at any reasonable time;
(3) Financial reports must show amounts expended/liquidated under Cash Disbursements (Line 10b) and if applicable also under the Federal Share of Expenditure (line 10e) by the recipients in fulfilling the purposes of the award and must be submitted no later than annually. A final financial report must be submitted 120 days after the expiration of the award period. The recipient must submit financial reports in coordination with performance reports.
(4) Recipient expenditures must follow the guidelines for determining allowable costs that are presented in 2 CFR 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. The regulation requires that such costs must be:
(a) Necessary, reasonable, and allocable (see definitions in 4 FAM 617);
(b) In alignment with any expressed limitations or exclusions;
(c) In alignment with relevant policies and procedures;
(d) Defined consistently across budget and financial documents/records;
(e) Excluded from cost share (in-kind) requirements; and
(f) Adequately documented.
4 FAM 632 Performance Measurement
(CT:FIN-499; 04-07-2025)
a. The issuing bureau or post must measure the recipient's performance to show achievement of program goals and objectives. To that end, the Federal award should include specific program goals, indicators, targets, baseline data, and expected outcomes of the project/program; and timelines for project/program completion.
b. The issuing bureau or post will determine how performance progress is measured. Issuing bureaus or posts must also specify any requirements regarding the award recipients' participation in a Department-funded evaluation (whether post/bureau-funded or centrally funded by the Department), and/or any monitoring, evaluation, and learning activities.
4 FAM 633 financial management
(CT:FIN-499; 04-07-2025)
4 FAM 633.1 Financial Management Systems for Recipients
(CT:FIN-499; 04-07-2025)
a. Department-issued award recipients and subrecipients must have a financial management system that can:
(1) Provide accurate, current, and complete financial reporting, meaning that on required Form SF-245s/FFRs per reporting frequency listed in Award Specifics, recipients must be able to show amounts expended/liquidated under Cash Disbursements (Line 10b) and if applicable also under the Federal Share of Expenditure (line 10e) in fulfilling the purposes of the award;
(2) Maintain source documents and other records that identify the source and application of funds (i.e., account, appropriation, issuing bureau/post, authorizing legislation as applicable, purpose of funds);
(3) Provide effective control over all funds, property, and other assets, including, for domestic bureaus, interface with the Department of Health and Human Services (HHS) Payment Management System (PMS);
(4) Compare expenditures with budget amounts for each Federal award, including in PMS where that system is used; and
(5) Include written procedures for payment processing (and/or returning) and for determining the allowability of costs, including whether PMS is used, as well as coordination and agreement with issuing bureau or post on issues of VAT, banking system capabilities, and exchange rates with regard to overseas recipients.
b. Internal Controls: Recipients and subrecipients need to establish and maintain effective internal controls over award activities. This includes:
(1) Complying with applicable Federal statutes, regulations, and terms and conditions, including any special conditions outlined by Congressional mandate, or for higher risk programs, with regard to reporting frequency, consultation, and the timing of payments;
(2) Evaluating and monitoring compliance and performance, including alignment statues and regulations as per (1) above, but also with regard to meeting project or program specific goals, as determined appropriate by issuing bureau or post Integrated Country Strategy (ICS) and/or Joint Regional Strategy (JRS) or Functional Bureau Strategy (FBS) Goals and - when foreign assistance is used for awards - Objectives, and the use of targets and indicators from those strategies (ICS, JRS, and/or FBS) as delineated according to relevant Standard Program Structure and Definitions in consultation with issuing post and bureau contacts;
(3) Taking prompt action on audit findings, including those outlined by the Department in single audit or Office of the Inspector General reports; and
(4) Taking measures to mitigate cybersecurity and fraud risks and taking into account any possible effects on local communities of federal assistance programming on local communities, as outlined in 2 CFR 200.208, as well as specific security measures safeguard personally identifiable information and other critical information, whether in hard copy or digital files/records.
4 FAM 633.2 Payment Management System
(CT:FIN-499; 04-07-2025)
a. PMS is a U.S. Government-wide, centralized, electronic payment and cash management system for Federal assistance, used by the Department of State for domestic Federal assistance payment-related activities from the time of award through closeout.
b. PMS must be used by domestic bureaus to pay all U.S.-based organizational recipients, or overseas organizations with U.S. bank accounts (PMS is not used to pay individuals), for all award instruments (see 4 FAM 617 for definition).
c. Exceptions: A domestic recipient may be exempted from the use of PMS in instances where they qualify under an exception category below, or when an exception request is granted by CGFS/FPRA/FAFM (email: FAFM@state.gov). These are the qualifying exceptions:
(1) The recipient is an individual;
(2) The U.S.-based recipient will only receive a single lump sum payment (a method usually reserved for certain voluntary or assessed contributions to international organizations) under the award agreement;
(3) The recipient is a foreign (non-U.S.) organization; or
(4) The recipient is an eligible Foreign Public Entity, which includes Public International Organizations.
4 FAM 633.3 Federal Assistance Not Using the Payment Management System
(CT:FIN-499; 04-07-2025)
a. Form SF-270, Request for Advance or Reimbursement, is the correct payment form for Federal assistance that is not paid through PMS. A Form SF-270 must be signed by the award recipient and then submitted to the Grants Officer (GO) managing the award. It is the responsibility of the GO to review and approve any submitted Form SF-270s before submitting them to the budget officer for payment action. Only a warranted GO can approve payments. Approval considerations listed under 4 FAM 633.2, paragraph c (exceptions to use of PMS), above apply to both PMS and non-PMS payments.
b. It is the responsibility of recipient organizations and individuals, however, to ensure that they are using the most current OMB-issued Form SF-270. If the form the recipient has is an expired version, it must not be used. Expired versions of the Form SF-270 will be rejected by the GO when submitted.
c. Exception: Recipients of grants awarded by the Office of Overseas Schools (A/OPR/OS) use Form DS-2028, Overseas Schools – Grant Status Report, for payments, in lieu of the Form SF-270.
4 FAM 633.4 Advance Payments
(CT:FIN-499; 04-07-2025)
a. The statutory prohibition on the advance payment of public funds, 31 U.S.C. 3324, does not apply to Federal assistance awards including budget realignment amendments/modifications. Per 2 CFR 200.305: "Advance payments must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the recipient or subrecipient in carrying out the purpose of the award. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the recipient or subrecipient for direct program or project costs and the proportionate share of any allowable indirect costs." Whenever possible, advance payments must be consolidated to cover anticipated cash needs. Meaning multiple small requests for the same time periods, or closely adjacent time periods, is not recommended.
b. Reimbursement is the preferred method of payment on awards when the recipient or subrecipient cannot meet the requirements of advance payment. Requests should be sent through PMS, or on a Form SF-270 that has been signed by an authorized official of the recipient organization (or individual).
(1) For recipients requesting to be paid in advance, they must maintain:
(a) Written procedures that minimize the time elapsing between the transfer of funds and disbursements by the recipient; and
(b) Financial management systems that meet the standards established in paragraph 200.302, Financial Management, of 2 CFR 200.
(2) To the extent available, the recipient or subrecipient must disburse funds available from program income (including repayments to a revolving fund), rebates, refunds, contract settlements, audit recoveries, and interest earned on such funds before requesting additional cash payments. Additional payment should not be requested from Department of State when there are funds available to the recipient through program income;
(3) The recipient or subrecipient must maintain advance payments of Federal awards in interest-bearing accounts unless:
(a) They receive less than $250,000 in Federal awards per year;
(b) The depository would require an average or minimum balance so high that it would not be feasible;
(c) The best available interest-bearing account would not reasonably be expected to earn interest in excess of $500 per year on Federal cash balances; or
(d) In the case of some overseas recipients, a foreign government or banking system prohibits or precludes interest-bearing accounts.
(4) Unless otherwise required by statute, bureaus must not withhold payments for proper charges made by recipients unless:
(a) A recipient has failed to comply with the project/program objectives, award requirements (terms and conditions, award specifics), other Federal reporting requirements; or
(b) The recipient is delinquent on a debt to the United States Government.
(5) There are other applicable award Terms and Conditions regarding payments.
4 FAM 633.5 Alternate Payees
(CT:FIN-499; 04-07-2025)
a. Payments should only be made to the prime recipient and, unless required by special circumstances, should be paid via electronic funds transfer (EFT). However, situations may occur when the prime recipient is unable to receive a payment and/or needs to issue disbursements but is temporarily unable to do so as the result of changes in the operating environment (i.e., political instability, litigation, natural disaster/emergency, etc.). In general, it is preferable for the recipient to use an existing alternative bank account or establish a new bank account that will allow payments to continue, but if neither of those options are possible, an alternate payee may be established to receive and disburse funds. An alternate payee is an organization or individual not listed as the official recipient in Box 1 of Form DS-1909, Federal Assistance Award Coversheet.
b. These are a few examples of issues a prime recipient may experience with payments:
(1) No longer has access to a bank account (e.g., relocation, account closed or frozen, bank governance issues, etc.);
(2) Unable to receive funds to a bank account (e.g., EFT issues, physical access to bank blocked, internet access blocked, etc.);
(3) Unable to establish an alternate bank account in a timely manner;
(4) U.S. Sanctions; or
(5) Security risks receiving and disbursing funds from the United States (e.g., political issues, corruption issues, etc.).
c. An alternate payee must have a demonstrated, formal relationship with the prime recipient. This could be, for example, a Director, Chief Financial Officer, or Member of the Board of Directors of the recipient organization. Requests for individuals or organizations that do not have a formal relationship with the prime recipient will not be approved.
d. Approval may be granted, by the Bureau of the Comptroller and Global Financial Services, Office of Federal Assistance Financial Management (CGFS/FPRA/FAFM), for an alternate payee for a single-use or limited basis such as a final payment for closeout or payments to cover activities while a new bank account is being established.
e. Other situations may arise, however, the above are the most common. An alternate payee request must not be submitted with the intent of using it as a permanent solution to a recipient payment issue. If a prime award recipient is no longer able to disburse funds, the GO or financial management officer (FMO) can consult with CGFS/FPRA/FAFM to determine if a replacement grant or novation (see definition in 4 FAM 617) is warranted.
4 FAM 633.6 Return of Unexpended Funds
(CT:FIN-499; 04-07-2025)
a. At the end of an award’s period of performance a recipient may not have spent the full amount advanced by the issuing bureau or post, or there may be interest or profit that was earned on the Federal assistance funds. In these cases, the U.S. Government must collect these unexpended/unspent funds.
b. Interest earned of up to $500 per year may be retained by the recipient or subrecipient for administrative expenses. However, Per 2 CFR 200.305 and the Cash Management Improvement Act of 1990, as amended (Public Law 101-453), any additional interest earned must be sent back annually to the Department of Health and Human Services Payment Management System (HHS/PMS) through an electronic medium using either the Automated Clearing House network or a Fedwire Funds Service payment. These funds need to be returned to HHS/PMS regardless of whether the recipient or subrecipient was paid through PMS.
c. For returning interest on Federal awards paid through PMS, follow instructions provided at the PMS/PSC website addressing the returning of funds and interest for grants recipients.
d. Program Income: The following, per 2 CFR 200.307(e), are the possible uses for any income that is generated as a direct result of federally funded grant activities:
(1) Deduction: The Department can reduce the amount of the Federal funds to reflect the income earned;
(2) Addition: The Department can allow the recipient or subrecipient to expend the program income on the Federal award in addition to the Federal funds provided; and
(3) Cost sharing: Allows the recipient to use program income to meet the cost sharing or matching requirement of the Federal award.
e. Exception: A fixed amount award (FAA) may generate and use program income in accordance with the terms and conditions of the Federal award; however, the requirements of 2 CFR 200.307 do not apply. FAA recipients, generally, may retain unexpended funds if the full scope of the award has been completed. If the full scope has not been completed, then the GO must collect the funds associated with the uncompleted portion of the project.
f. Once a final determination is made that funds meet either of the criteria of 4 FAM 636(a) or (b) above (i.e., unexpended project/program funds or interest above $500), and per 2 CFR 200.346, those funds are due to the U.S. Government. These costs constitute a debt to the U.S. Government, just as unallowed/disallowed costs that have already been paid to a recipient constitute a debt. These debts are collected in accordance with 31 CFR 901, Standards for the Collection of Administrative Claims. All debtors must be notified of their indebtedness. Note: There is an exception for interest earned. See 2 CFR 200.305(b)(9). Collection of unallowable/disallowed costs, once the determination is made that the costs are unallowable (and thus a debt to the U.S. Government has been incurred), will be managed/processed the same way as unexpended program or interest funds.
g. Roles and Responsibilities for Collecting Unexpended/Unspent Funds: The GO, grants officer representative (GOR), and FMO at a bureau or post responsible for the award under which the debt arose, share responsibilities in the debt collection process. However, since the GO ultimately has the legal responsibility for the Federal assistance program and budget, all actions taken throughout this process must be closely coordinated with the GO.
(1) GO & GOR – Determines whether a debt exists and, if so, establishes the amount owed;
(2) FMO – Provides guidance to GO on Department debt collection and deposit procedures. Maintains records of the debt and monitors uncollected debts (i.e., open receivables);
(3) GO & FMO – Undertakes appropriate collection measures, including notifying the recipient about the debt owed and instructions for payment, in accordance with 4 FAM 493.1;
(4) FMO – Ensures recipient refund is correct and is correctly deposited in accordance with Department procedures (see Section 3, below);
(5) FMO – Works with the GO to refer uncollected debts, with the necessary documentation, to CGFS/F/RR/RMICD/ARB in accordance with the timetable established under 4 FAM 493.1;
(6) FMO – Working with the GO, refers the debt to the appropriate official under 4 FAM 494 for compromise, suspension, termination of collection, advance decision, settlement, and/or waiver of claims; and
(7) FMO – Ensures that the refund is posted at the obligation level and if not, works with the appropriate offices in their bureau and CGFS to move the charge against the correct obligation(s).
4 FAM 634 Changes and Amendments for scope, budget, and period of performance
(CT:FIN-499; 04-07-2025)
a. Changes in scope of award: These are significant changes to the nature of the project or program. The recipient must always request approval from the GO before making any changes to the scope of the project. This includes changes to the project's goals or outcomes, key personnel, intended beneficiaries, location, adding funds, or creating a sub-award.
b. Budget amendment/cost amendment: This entails adding funds to an ongoing project or program. Within 30 calendar days of receiving the request for budget revisions, the issuing bureau or post GO must review the request and notify the recipient regarding whether the budget amendment has been approved.
c. Extending the period of performance: This is a process to extend the length of a project or program beyond its initially scheduled end date. If a GO approves, a Federal assistance award can be extended beyond its original end date. This extension must be approved and put in place before the original end date. An award that has already expired cannot be extended. Recipients can only use Federal funds during the approved period of performance. If a project is terminated, the termination date becomes the new end date of the period of performance.
4 FAM 635 Property
(CT:FIN-499; 04-07-2025)
4 FAM 635.1 Use, Management, and Disposition of Property
(CT:FIN-499; 04-07-2025)
a. In alignment with 2 CFR Part 200 Subpart D (Property Standards), the following information is about property under Federal assistance awards from the Department of State. It covers the use, management, and disposition of real property, equipment, supplies, and intangible property.
b. In many instances, the Department provides Federal assistance by transfer of property instead of funds. This can be provided under a property grant or a letter of agreement with host nations. The bureau or post making the transfer will maintain a record of the transfer including a description of the property transferred, the date of transfer, and the receiving agent. The Federal Assistance Directive (FAD) provides more specific guidance for acquiring property to be transferred under Federal financial assistance as well.
c. Government-purchased property: The Department may elect to acquire property or provide excess property to a recipient, especially overseas, often to ensure transparency in acquisitions processes and product quality. In most cases where acquisition of new property is required, a procurement process via an issuing bureau or post (or a standard acquisitions process for domestic bureaus) is followed by a zero-dollar grant being issued to transfer the property to the recipient:
(1) Unless stated otherwise, property grants are temporary donations. The U.S. Government keeps ownership of the property, and it should be recorded and listed in the Department’s property inventory management system, usually managed by the GSO overseas;
(2) For a property grant to be deemed a permanent donation, the property grant must explicitly state the title of the property is vested permanently with the recipient, with no further obligation to the U.S. Government. In these cases, excess property donated should be disposed from the Department’s inventory after the end of the award. Assets acquired for the purpose of permanent donation should not be recorded in the Department’s inventory management system and should be expensed;
(3) Property purchased by the Department on behalf of a recipient must be charged to the appropriate budget object class (BOC) code for the underlying property. BOCs in the 4100 series cannot be used. See 4 FAH-1 H-613 for the list of Department of State Budget Object Classification (BOC) Codes; and
(4) All procurement transactions for the acquisition of property or services must be conducted in a manner providing full and open competition. Also, the recipient or subrecipient can provide a preference for the purchase, acquisition, or use of goods, products, or materials produced in the United States.
d. Property purchased by recipient: In addition to having proper management procedures for property acquired under an award, recipients must ensure they are acquiring property appropriately. This means the recipient must have procurement procedures that reflect proper standards of conduct, competition, methods of procurement, contract cost and price, and contract provisions.
e. Definitions:
(1) Real Property: Land, including land improvements and structures, but excluding moveable machinery and equipment;
(2) Personal property: Property other than real property. This could be tangible (physical) or intangible (e.g., concepts, computer code, IP, etc.);
(3) Use: All property acquired with Federal funds must be used for the originally authorized purpose as needed; and
(4) Disposition: If the property is no longer needed for the original purpose, the recipient or subrecipient must obtain disposition instructions from the Department:
(a) Disposition of real property: May be either retained or sold, and the Department must be compensated; and
(b) Disposition of federally owned exempt property: This is property acquired under a Federal award where The Department of State has chosen to vest title to the property to the recipient, without further responsibility to the Federal Government. We can donate excess property under the Federal Technology Transfer Act of 1986. For exempt equipment, title vests (or remains) with the recipient based on award terms and conditions.
4 FAM 635.2 Equipment and Supplies
(CT:FIN-499; 04-07-2025)
a. Equipment: Tangible, personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost that equals or exceeds $10,000.
b. Disposition of equipment: Title to equipment acquired under a Federal award vests with the recipient or subrecipient. A physical inventory of the equipment must be taken, and results reconciled with the property records at least once every two years.
c. Supplies: Supplies are defined as tangible personal property other than those described under Equipment. A computing device is a supply if the acquisition cost is less than $10,000 per unit, regardless of the length of its useful life. Unused supplies exceeding $10,000 per unit must be used on other activities by the recipient or sold, and the Department is to be compensated.
d. Intangible Property: Property that no physical existence, such as computer code, trademarks, copyrights, patents and patent applications, and property such as loans, notes and other debt instruments, lease agreements, stocks and other instruments of property ownership:
(1) Recipient is subject to applicable regulations in 2 CFR Part 200 pertaining to Intangible Property, including 2 CFR 200.315; and
(2) Recipient is subject to applicable regulations governing patent and inventions.
4 FAM 636 through 639 unassigned