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GRANT CONTRACT REQUIREMENTS
General
The state's contractual relationship with the County is in the form of a grant contract. The County's relationship with its construction contractor is in the form of a County Agreement for Construction contract. As such, the state is not contracting for facility construction. Counties are responsible for compliance with the state Public Contract Code and compliance with County bidding and construction contracting rules and procedures. Resolution of bid disputes, or subsequent construction contract or consultant disputes, is the sole responsibility of the County. Counties should ensure that its construction contracting rules and procedures include (and do not conflict with) the requirements in this guide. After grant award, counties should work closely with their BOC-assigned construction grant field representative and, if needed, County legal counsel, in addressing questions or resolving issues.
At the time of local bid award, when notice to proceed is issued and construction has begun, with costs identified and budgeted by the Grantee by CSI Division and sub-element, and other appropriate budget categories, the Board will enter into a formal state/county grant contract. Grant funds cannot be released until construction has begun and counties are under formal state/county grant contract.
The grant contract between the Board and a county is a legally binding, formal document and consists of standard grant contract requirements of the State of California and, if applicable, the federal government, as well as sufficient technical, environmental, and financial information to enable the Board to evaluate the construction project including County compliance with the staffing plan, approved by the Board, and assurance that the facility will be fully staffed and operational within 90 days of completion of construction.
The Standard Board State/County Grant Contract consists of six parts (general provisions are contained in Appendix C):
1. The Standard Agreement of the state (a face sheet identified as form STD 2);
2. Grant Contract (a summary contract document);
3. Exhibit A (Construction Grant Contract Standard Conditions);
4. Exhibit B (Project Description and Budget);
5. Exhibit C (General Terms and Conditions); and
6. If federally funded, Exhibit D (Federal Assurances).
The general provisions of the six-part grant contract are not negotiable; they should be read in entirety before proceeding further in this manual (or if a county is already under grant contract, the county-specific grant contract should be read in entirety before proceeding further in this manual). Please note that the provisions of Exhibit D and the Equal Employment Opportunity Plan submittals and approvals only apply to federal-funded grants. Board staff should be contacted if there are any questions about general grant contract provisions or county-specific contracts.
Board staff will meet with appropriate county officials during grant contract development. Four sets of the completed grant contract must be signed by the Chair of the County Board of Supervisors (original signature on each set) and submitted to the Board, along with a completed copy of the county Team Data Sheet (Appendix D). If there are any outstanding precontractual assurances, resolutions, and submittals, these must accompany the grant contract submittal.
Project description, timeline/completion date, and benchmarks identified in the Board-approved county construction proposal and other county submittals will be incorporated into the grant contract. Information will also be incorporated into the grant contract that:
1. Outlines the timetable, construction schedule, and construction management plan (including methods to monitor and control the project and ensure successful, on-time completion);
2. Identifies the names, titles, and roles of all key construction and management personnel;
3. Identifies the projected dates of expenditure of grant and cash (hard) match funds and identifies the source of cash (hard) match; and
4. Lists and describes all grant, cash (hard) match and in-kind (soft) match budget detail by CSI Divisions (Appendix E) and budget items of architectural, environmental impact report, construction management, audit of grant, site acquisition land cost/value, needs assessment, county administration, and transition planning.
Grant funds and cash (hard) matching funds placed under contract must be used to supplement existing funds for construction activities and may not replace (supplant) other funds that have been dedicated or appropriated for the same purpose.
On-Site and Off-Site Costs
The Board will allow grant funds and matching funds to be used for "on-site" costs directly related to the construction project. On-site means generally within the established perimeter of the detention facility (e.g., security fence, detention facility building, parking lot). The Board will not allow grant funds and matching funds to be used for "off-site" costs including access roads and utilities development. "Off-site" means outside of a reasonable buffer zone surrounding the perimeter of the security fence, detention facility building, and parking lot. Counties should consider potential off-site costs and how these will be paid outside of the grant; off-site costs for access roads and utilities development can be substantial when construction is planned in large open areas. Counties should consult with their Board-assigned field representative about project specific issues to avoid any misunderstandings.
Use of Grant and Cash (Hard) Matching Funds - Allowable and Disallowable Costs
Federal grant funds (and applied cash [hard] match) can only be used for activities that occur on or after the Board grant award date. State grant funds from Chapter 499, Statutes of 1998 (and applied cash [hard] match) can only be used for activities that occur on or after September 15, 1998. State grant funds from Chapter 52, Statutes of 2000 (and applied cash [hard] match) can only be used for activities that occur after the Board grant award date. Minimum cash (hard) match applied to both federal and state grant funds must be at least one-ninth of the grant amount (the amount of the grant divided by nine). For example, a $1,000,000 grant award would require at least $111,111 in cash (hard) match.
The cash (hard) match expenditure schedule identified in the county financial plan will be listed in the grant contract and must be expended at least proportional to the expenditure of grants. Counties receiving grants will receive a one-time credit for eligible match identified in the grant contract. If counties receive additional grants in future years, match requirements in place at that time must be met.
Refer to the Standard Board State/County Grant Contract (Appendix C) for description of allowable and disallowable cost items. Generally, if approved in the grant contract, grant funds can be used for items such as:
1. Construction of the Board-approved project, including site preparation;
2. Fixed equipment;
3. Fixed furnishings; and
4. Installation of fixed equipment and fixed furnishings.
Generally, cash (hard) matching funds can be used for the same items as grant funds. Cash (hard) matching funds (but not grant funds) if approved in the grant contract can also be used for costs of consultant(s) or contractor(s) that provide architectural programming/design, construction management, and compliance with CEQA/EIR activities. Cash match expended for individual consultant fees (e.g., architectural/engineering consultants, construction management consultants, environmental impact report consultants, etc.) for daily consultant activities cannot exceed $450 per day/consultant. This cap applies only to fees paid to individual consultants and does not apply to fees paid to companies or firms retained by the Grantee for consultant services. Cash (hard) matching funds cannot be used to pay for services performed by employees of the regular county workforce.
Disallowable costs using grant and cash (hard) matching funds generally include, but are not limited to:
1. Off-site items/costs (as previously defined);
2. Detention facility personnel, operational and supplies costs;
3. Needs assessments;
4. Architectural programming/design services by employees of the county workforce;
5. Construction management or administrative services by employees of the county workforce;
6. Site acquisition, including purchase, lease, or rent of land;
7. Outside landscaping;
8. Moveable equipment and moveable furnishings;
9. Soil/water contamination assessment/mitigation;
10. Replacement or upgrading of infrastructure not directly related to the project;
11. Permit, inspection, and use fees;
12. Interest charges or payments on bonds or indebtedness required to finance project costs; and
13. Bonus payments for early completion of work.
In-Kind (Soft) Matching Funds - Allowable Costs
In-kind (soft) match is required only for grants from Chapter 324, Statutes of 1998; Chapter 499, Statutes of 1998; Chapter 50, Statutes of 1999; Chapter 52, Statutes of 2000; and Chapter 106, Statutes of 2001, and can be used for project-related costs/value of services for activities performed by county staff or consultants. For grants from Statutes of 1998 and 1999, activities claimed must occur on or after September 15, 1998, except for needs assessments that may be claimed on or after July 1, 1998 and land acquisition as indicated below. For grants from Statutes of 2000, activities claimed must occur on or after July 1, 2000, except for land acquisition as indicated below. For grants from Statutes of 2001, activities claimed must occur on or after July 1, 2001, except for land acquisition as indicated below. Generally, if approved in the grant contract, in-kind (soft) match can be used for items such as:
1. Items eligible for grant funding and cash (hard) match as previously indicated;
2. Audit of grant (staff salary/benefits of independent county auditor or services of contracted auditor);
3. Needs assessments (staff salary/benefits and consultant costs directly related to project activities);
4. Site acquisition (land only, regardless of acquisition date - cost or fair market land value supported by appraisal). This can be claimed for land cost/value for new facility construction, land cost/value of a closed facility that will be renovated and reopened, or land cost/value used for expansion of an existing facility. It cannot be claimed for land cost/value under an existing operational detention facility;
5. County administration (staff salary/benefits directly related to the project); and
6. Transition planning (staff salary/benefits and consultant activities directly related to the project).
The County, at its discretion, and with Board approval, may add additional cash (hard) match in lieu of soft match.
Equal Employment Opportunity Plan (Federal Funds Only)
An Equal Employment Opportunity Plan (EEOP) is a U.S. Department of Justice required written document that analyzes the countywide workforce in comparison to its relevant labor market and all agency employment practices to determine their impact on the basis of race, sex, or national origin, including a written analysis that provides a statistical profile of the internal workforce by race, sex and national origin; identifies problems in employment practices and procedure; specifies corrective action; and forms the basis of ongoing evaluation. The EEOP provides the basis for an Equal Employment Opportunity Program.
Most counties that receive federal funds must complete an EEOP and maintain an equal employment opportunity program, if the grant award is more than $25,000. If the grant award is $500,000 or more, the county shall submit its EEOP to the Federal Office for Civil Rights (OCR) for federal review and approval, and submit a copy of the federal approval letter to the Board. If the county has been found in EEOP compliance by a federal agency within the past 12 months, documentation in lieu of the above (which includes the federal letter of compliance) may be submitted to the Board. Once received, federal officials have advised the Board that the county EEOP must be renewed every two years to remain current. The two-year period runs from the date at the top of the federal letter of compliance and must be maintained throughout the duration of the project.
Failure to obtain timely EEOP approval from federal officials may result in federally required withholding of construction funds. Counties are urged to develop and submit necessary EEOP material to federal officials as soon as possible to avoid potential delays in drawing down construction funds.
A federal document, Civil Rights Seven-Step Guide, describes federal requirements, exemptions, contains necessary forms, and lists a telephone number for counties to call if needed for federal technical assistance on filings and meeting EEOP requirements (copies available from the Board upon request).
Budget/Program Modification and Grant Contract Amendment
No substantial change or modification to the project is permitted without prior written approval of the Board. The following types of changes require Board approval:
1. Changes which affect the design or scope of the project;
2. Changes which impact compliance with Titles 15, 19, and 24, CCR, or which affect security, fire and life safety of the facility;
3. Changes that extend the construction completion date; materially change the Agreement for Construction with the contractor(s), or change the total amount of the grant contract; and
4. Changes in approved budget categories or Divisions, or movement of dollars between budget categories or Divisions (including movement of dollars from Contingency to other approved budget categories) as indicated in Exhibit B of the county-specific contract.
Minor modification(s) (or change orders) to the project, that do not alter budget items, do not require Board approval or grant contract amendment, but must be described and documented on quarterly progress reports. Minor modifications as those which are not substantial, do not change the budget, and do not alter the scope of the project.
A Budget Modification Request form (Appendix F) must be completed and submitted to the Board for review and approval if there are any budget changes (+/-) in grant or match line-items identified in the grant contract (including movement of any contingency grant funds to allowable line-items). In no event will staff approve any budget modification request that would alter the scope of the project or exceed the total grant amount. Further, in no event will Division 17, Contingency, be approved at greater than 10 percent (10%) of the total grant amount. Justification of the proposed budget changes must be included in the budget modification request.
Any change or proposal to extend the grant contract duration, or for substantial change or modification to the design or scope of the project (change that a reasonable person would conclude as altering the design or scope of the project), must be submitted in writing to the Board for review and approval. If applicable, any unavoidable circumstances and county responses must be clearly described in writing. These requests may require Board-level review, formal county testimony, and approval at scheduled Board meetings. There can be no assurance that the proposal to extend the grant contract duration, or for substantial project change or modification, will be approved. In no event will any change be approved that would increase the grant amount or extend the grant contract duration beyond state or federal limits.
Submittal of Progress Reports and Invoices for Reimbursement
Grant funds are provided to counties in arrears, on a quarterly reimbursement, based on project expenditures made and documented on the Quarterly Fiscal Invoice and Progress/Final Report (Appendix A). This means that counties pay the construction contractor first and then submit a reimbursement invoice to the Board. The Board will reimburse all eligible costs previously paid by the county to its construction contractor. All invoices for grant funds must be for actual expenditures made by the county for budget items identified in the grant contract. Invoices containing errors will be returned to the county for correction and resubmission; staff can make no annotations or corrections on invoices submitted. Upon receipt and approval of the invoice and report, warrants are normally issued and sent to counties within 20 days.
Counties must file the Quarterly Fiscal Invoice and Progress/Final Report with the Board for each quarter during the term of the grant contract (January-March; April-June; July-September; October-December). The first invoice/progress report can be for multiple quarters from the start of the project through the end of the calendar year quarter after the state grant contract is fully executed. Thereafter, invoice/progress reports must be submitted quarterly. Four sets of these reports with original signatures must be submitted within 45 days following the end of each quarter (due dates of February 15, May 15, August 15, and November 15 respectively). Reports are due even if no construction expenditure was made or reimbursement claimed in the period.
The report provides a format for narrative, descriptive information about the construction progress. Counties must provide sufficient information in quarterly reports to enable Board staff to understand construction activities that occurred, schedules met or unmet, changes or problems, and any needed technical assistance. Attach additional pages of progress narrative if needed.
Submittal of Final Project Summary
At the conclusion of the construction project, a final project summary shall be submitted to the Board by completing Section VII on the final Quarterly Fiscal Invoice and Progress/Final Report. Information required to be submitted includes a detailed, precise written description of the finished project (i.e., number of beds added or modified, all construction changes made), accompanied by pre-construction and post-construction photographs or other visual material. A series of questions also must be answered pertaining to receiving necessary fire and inspection clearances; whether the facility is fully staffed and operational in compliance with Title 15, CCR; whether the project is complete and built in accordance with the Board-approved county proposal project description, and all terms, specifications, and conditions of the grant contract; and whether there are any claims or litigation pending related to the project.
Withholding of Disbursement
The Board may withhold all or any portion of the grant funds in the event of grant contract violations, insufficient county cash flow to support the project, or insufficient match expenditure. At such time as the balance of grant funds allocated to the county reaches 20 percent (20%), the Board shall withhold that amount as security, to be released to the county upon complying with all grant contract provisions and Board of Supervisors resolutions, including staffing and operating the facility within 90 days of construction completion consistent with Title 15, CCR, receipt and approval of the final audit and final project summary report, and final construction inspection and approval by appropriate officials.
Counties shall establish an official file for the project, containing adequate documentation of all actions in accordance with generally accepted government accounting principles. Counties shall establish separate fund accounts and accounting records for receipt, deposit, and disbursement of all grant and match funds. (See Accounting Standards and Procedures for Counties, California State Controller, Division of Local Government Fiscal Affairs.)
Counties shall maintain books, records, documents, and other evidence sufficient to reflect properly the amount, receipt, and disposition of all grant and match funds. The maintenance requirement extends to the books of original entry, source documents supporting accounting transactions, the general ledger, subsidiary ledgers, consultant and contractor payroll records, cancelled checks, and related documents and records. Source documents include copies of all awards, applications, and required fiscal invoice and progress reports. Time and effort reports are required for all staff, consultants, and contractors paid through the grant or with applied cash or in-kind match listed in state contract. Documentation shall be maintained in such detail that will permit tracing transactions from the invoices to the financial statement, to the accounting records, and to the supporting documentation.
All records relevant to the project must be preserved a minimum of three years after acceptance of the final (grant project) audit, and shall be subject at all reasonable times to inspection, examination, monitoring, copying, excerpting, transcribing, and audit by the Board or designees, by state government auditors or designees, or by federal government auditors or designees. Counties shall protect all records adequately from fire or other damage. When records are stored away from the principal office, a written index of the location of records stored must be on hand and ready access must be assured.
If any litigation, claim, negotiation, audit, or other action involving the records has been started before the expiration of the three-year period, the records must be retained until the completion of the action and resolution of all issues which arise from it or until the end of the regular three-year period, whichever is later.
Project Monitoring and Access to Site/Records
Board staff will regularly review invoices and progress reports and will conduct regular on-site monitoring of grant funded construction projects. Counties will be advised of the nature of the on-site monitoring in advance. A Site Monitoring Report (Appendix G) will be completed and a copy returned to the county after each on-site monitoring. In addition, federal grant managers or inspectors may also conduct periodic on-site monitoring of projects.
The purpose of monitoring is to assess programmatic and basic fiscal compliance to determine if the project is operating in accordance with state and/or federal law and regulation, the Board-approved proposal application, and the conditions of the grant contract. Access to the project site, county project files, and contractors' records must be provided to Board staff, or other state or federal officials, during all phases of construction throughout the term of the grant contract, and for at least three years after the acceptance of the final (grant project) audit (see Record Keeping and Accounting section of this manual).
Appendix H, Audit Guide and Requirements, is to assist the county auditor or independent auditor hired by the county to perform necessary audits of the state or federal funded grant projects. It offers general insight into the nature and scope of the audit(s), provides guidelines for the final grant project audit report and financial statements, and identifies the Board's minimum audit requirements. It is not intended to be either a complete manual of audit procedures or a substitute for the auditor's judgment.
Since many counties receive a variety of federal grants from a variety of federal agencies, many meet the federal expenditure criteria that generally require an annual federal audit. As such, many counties receiving federal funds through the Board may want to include the grant in their annual federal single audit report in lieu of performing a program audit during each expenditure year.
At the conclusion of construction, the Board requires a program (grant) audit of the construction project to be performed at the county's expense and submitted to the Board within 90 days of the Board State/County Grant Contract construction completion date. Appendix H provides specific information regarding federal and state Board audit requirements and guidelines.