Agency Grants Management Manual

For Grant Management Policy #FM020

Effective Date: November 30, 2022

Revised: February 6, 2023

Introduction

MnDOT's Mission

Plan, build, operate, and maintain a safe, accessible, efficient, and reliable multimodal transportation system that connects people to destinations and markets throughout the state, regionally and around the world.

MnDOT uses grants as one of its methods to achieve its mission.

Purpose

MnDOT must protect and promote public trust and achieve the program objectives in all grant programs it administers. These procedures establish agency-level minimum control activities in accordance with state and federal policies, procedures, and regulations applicable to all MnDOT grant programs to ensure integrity, accountability and that legal and financial risks are mitigated. MnDOT offices and districts may have additional procedures specific to their business process and specific funding requirements.

MnDOT’s Office of Financial Management Grants Unit (OFMGU) provides tools, training and technical support for agency staff working with both state and federal grant funds, including General Obligation bonds. OFMGU, in collaboration with the Office of Chief Counsel, is responsible for determining the agency’s internal controls for grants and developing agency-level minimum control activities to meet them. OFMGU will consult with program offices on implementation of the agency-level minimum control activities through the Stakeholder Feedback process. For a visual on how state and federal requirements apply and how the agency’s internal controls and associated control activities are developed, see MnDOT’s Grant Administration Ecosystem.

Contact the Office of Financial Management - Grants Unit: GrantSupport.DOT@state.mn.us

Grant-Making Authority

MnDOT does not have general or automatic authority to award grants at its discretion to any recipient for any purpose. Grant-making authority is found in state statute or authorizing appropriation legislation that funds the grant program. State executive branch agencies have limited powers – meaning that MnDOT can only exercise those powers that the legislature has authorized. This authority should be identified in the recitals of every grant contract.

Grant Award Funding

MnDOT may award grants with state general or revenue funds, general obligation bonds including Trunk Highway bond funds or federal funds, solely or in combination.

Federal funding is subject to Title 2 Grants and Agreements of the Code of Federal Regulations (CFR). MnDOT must pass these and other related requirements down to grantee organizations (known as subrecipients in the federal regulations) when awarding federal funds. 2 CFR Part 200 provides Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards which are applicable to all federal funds regardless of the program or project.

In addition, when awarding grants with federal or state general/revenue funds, MnDOT is subject to follow the grants management policies set by the Minnesota Department of Administration, Office of Grants Management (OGM). This authority comes from Minnesota Statutes sections 16B.97 and 16B.98.

Lastly, MnDOT may make grants that are paid with proceeds from the sale of state General Obligation (GO) bonds. The requirements applicable to bond-financed projects are set forth both in Minn. Stat. § 16A.695 and the most recent Minnesota Management & Budget (MMB) directive entitled “Fourth Order Amending Order of the Commissioner of Finance Relating to Use and Sale of State Bond-Financed Property” (known more commonly as the “Commissioner’s Order”). These projects must be publicly-owned and for a public purpose.

Life Cycle of a Grant

Grants typically follow three phases in their lifecycle.

Pre-award Phase – Activities prior to the grant contract execution.

Ex: announcing grant opportunities, reviewing applications, completing a pre-award risk assessment, requesting a pre-award audit, reviewing, and approving workplans and budgets, and drafting and executing a grant contract.

Post-award Phase – Post-execution activities during the period of performance of the grant.

Ex: performing reconciliations, reviewing payment requests, monitoring, and overseeing the work plan and budget to ensure adequate progress towards the goals of the grant.

Closeout Phase – Activities after the identified period of performance or after all actions have been completed.

Ex: reviewing all final financial and programmatic/progress reports, requesting a post-award audit, submit final invoices for payment, complete the Grant Agreement Closeout Assessment (GACA) form in the Contracts Agreements Auditing Tracking System (CAATS).

How this Manual is Organized

This manual is organized by topics that generally follow the lifecycle of a grant. Each section may include the following:

Applicability – specifies how the section applies to the type of funds in the grant award (state, federal, bond funds).
Minimum Control Activities – outlines the minimum actions that every grant-making or grant channeling division or office must perform to safeguard public funds.
Best Practices – guidelines for grants management based on experience to achieve effective results. Many of the best practices identified can be applied or adapted to various programs/projects but they are not required by this manual.
Resources – relevant policies, regulations, tools, and guidance documents to assist Program/Project Managers in grants administration.

The term “grantee” is used broadly throughout the manual, and, for purposes of this manual, it is intended to be used interchangeably with “subrecipient” when MnDOT is passing down federal funds to a grantee.

Offices and districts may use different terms for their employees such as grant manager, contract administrator, or program manager. This manual uses the term Program/Project Manager (PM) to encompass this individual’s responsibilities, with the acknowledgement that the offices and districts may have multiple staff completing the responsibilities of the PM. Each office and district are responsible for ensuring that the financial and technical deliverables are met for each contract it creates and administers.

Definitions

Advance Payment

An advance payment is a type of grant payment in which the grantor pays the grantee for costs associated with a grant before the grantee has incurred and paid the expense. (OGM Policy 08-08, 2021)

Agency-level

Items listed as “agency-level” or for the “agency” means a requirement or internal control that applies to more than one program. OFMGU is responsible for making or obtaining a decision on minimum control activities that are required to be used by all program offices as defined by the roles and responsibilities.

Best Practices

A MnDOT governance document containing procedures which have been shown by research and experience to achieve effective results. (Business Data Catalog (BDC), 2022)

Bonding (or Bond) Grant

A grant that is funded with the proceeds of General Obligation or Trunk Highway bond sales. These grants have constitutional restrictions that limit the use of funds to improvements of a capital nature, require that the facility or property be owned by a state agency or political subdivision of the state, and require that a public program be provided in the facility or operated on the property. (BDC, 2022)

CAATS (Contracts Agreements Auditing Tracking System)

The system of record for managing contracts, agreements, and associated documents between MnDOT and other parties. (BDC, 2022)

Capital Asset

A tangible or intangible asset having a useful life of more than one year which is capitalized in accordance with Generally Accepted Accounting Principles (GAAP). (BDC, 2022)

Capital Grant

A grant provided to enable a grantee to purchase and/or make additions, improvements, modifications, replacements, rearrangements, reinstallations, renovations, or alteration to capital assets that materially increase their value or useful life. (BDC, 2022)

Certified Financial Audit

A certified financial audit is a review of an organization’s financial statements, fiscal policies, and control procedures by an independent third party to determine if the statements fairly represent the organization’s financial position and if organizational procedures are in accordance with Generally Accepted Accounting Principles (GAAP). Minnesota nonprofit organizations are required to have a certified financial audit completed for any fiscal year in which they have total revenue of more than $750,000. (OGM Policy 08-06, 2024)

Closeout

The final phase of the grant lifecycle, completed when the award recipient submits the final financial and programmatic reports, determines final allowable expenditures, and collects any amount due. (BDC, 2022)

Competitive Grants

A competitive grant is a grant that is awarded through an application process in which multiple grant applications are solicited through a grant notice or request for proposal and reviewed by the state agency. In a competitive grants process, grants are awarded to those applicants that most closely meet the selection criteria identified by the granting agency, based on the availability of grant funds. (OGM Policy 08-06, 2024)

Conflict of Interest (Organizational)

Situation in which a contractor has an unfair advantage, or the contractor is unable or potentially unable to render impartial advice or assistance to the state because of existing or planned activities or because of relationships with other persons. (BDC, 2022)

Conflict of Interest (Personal)

Situation in which a person has a private or personal interest sufficient to, or appearing to, influence the objective exercise of their official duties as a public official, employee, or professional. (BDC, 2022)

Contract

A written document signed by two or more parties outlining the parties’ respective rights and obligations for a particular transaction or exchange. (BDC, 2022)

Contractor

Generic reference to the other party (or parties) to a MnDOT contract. (BDC, 2022)

Control Activities

Policies, procedures, techniques, and mechanisms that enforce the directives of management to achieve the entity’s objectives and address related risks. Examples of control activities include authorization and approval, reconciliations, and separation of duties.

Diversity in Grant-Making

A process that intentionally identifies how a grant program serves diverse populations, and especially populations experiencing inequities and/or disparities. Agencies can identify diverse populations served through grant outcomes by pointing to under-served, targeted, and/or grantee populations experiencing inequities and/or disparities past grant funding has not adequately addressed. (OGM Policy 08-03, 2017)

Diverse populations include:

Racial and ethnic communities, including American Indians
LGBTQI communities
Disability status
Veterans
Geographic diversity within and across Minnesota – including greater MN, urban/metro

eDOCS

MnDOT’s official electronic repository for documents and business records. (MnDOT iHUB, 2022)

Encumbrance

The commitment of a portion or all of an allotment in order to meet an obligation that is expected to be incurred to pay for goods or services received by the state or to pay a grant. (BDC, 2022)

Financial Reconciliation

The process of using supporting documentation, such as purchase orders, receipts, and payroll records, to validate a grantee’s request for payment for a given period. (BDC, 2022)

Formula Grant

Noncompetitive awards based on a predetermined formula awarded to eligible entities or individuals based on an allocation determined by a program's authorizing legislation or administrative regulation. Formula grants are typically based on entitlements or reimbursement of specified costs (OGM Policy 08-04, 2021)

Governmental Entity

For the purpose of this guidance, a government entity is defined as a federal, state, local or tribal government. that has been established and/or recognized by the U.S. Constitution, a state constitution, treaty, statute, or court decision. (Pre-Award Audit Criteria, 2022)

Grant

An agreement between a grantor and a grantee when the principal purpose of the relationship is to transfer cash or something of value to the grantee who will administer a public program or deliver a public service. A grant includes competitive, legislatively mandated, formula, single and sole source, and capital grants. (BDC, 2022)

Grant Budget

A grant budget is a plan for all income and expenses for the grant project and is based on the grant work plan. Grant budgets typically include line items for salaries and benefits, contracted services, training, travel and transportation, equipment, office expenses, and program expenses. (OGM Policy 08-08, 2021)

Grant Contract

A grant contract is a written instrument or electronic document defining a legal relationship between a grantor and a grantee when the principal purpose of the relationship is to transfer cash or something of value to the grantee to support a public purpose authorized by law. (OGM Policy 08-04, 2021)

Grantee

An entity that receives a grant from MnDOT. Note: The term “grantee” is used broadly throughout the policy and is intended to be used interchangeably with “subrecipient” when federal funds are passed through MnDOT. See also definition of subrecipient. (BDC, 2022)

Grant Fraud

Grant fraud is the expenditure of grant dollars for a purpose other than their intended use. Common examples of grant fraud include but are not limited to:

Charging personal expenses as business expenses against a grant
Charging for costs which have not been incurred or are not attributable to a grant
Charging for inflated labor costs or hours against a grant

(OGM Policy 08-05, 2008)

Grant Monitoring

Process that assesses the quality of internal control performance over the lifecycle of the grant, funding requirements, and/or the useful life of the asset. (BDC, 2022)

Grant Progress Reports

A grant progress report summarizes grant activities and outcomes for a given period. A progress report may have narrative, statistical and/or financial elements. Information requested in a grant progress report may include, but is not limited to goals and objectives, activities, outcomes, challenges, lessons learned and financial information. (OGM Policy 08-09, 2008)

Grant Outcomes

Grant outcomes are the observable and measurable results that are expected from the grant. “Grant Outcomes.” (OGM Policy 08-09, 2008)

Grant Reviewer

A grant reviewer is a person that evaluates competitive grant proposals. Grant reviewers include state employees, appointed members serving on an executive branch board, committee, authority, task force, and council and community members. (OGM Policy 08-01, 2022)

Guidelines

A MnDOT governance document containing recommended or suggested practices to promote consistent practice and decision-making. (BDC, 2022)

Inclusion in Grant-Making

A process that identifies how the grantee community is included in the grant review process. (OGM Policy 08-03, 2017)

Internal Controls

The activities, plans, policies, training, and efforts of MnDOT staff working together to provide reasonable assurance that the agency’s strategic priorities are being met. Good internal controls encourage efficiency, comply with laws, regulations, and policies, and seek to eliminate fraud, waste, and abuse. (BDC, 2022)

Legislatively Mandated Grant

Legislatively mandated grant is a legislative appropriation in which the amount and purpose of a grant is named in law. In some legislatively mandated grants, the grantee organization is also named in law. (OGM Policy 08-11, 2008)

Minimum Control Activities

Minimum Control Activities are the activities that every grant-making or grant-channeling division or office must perform in order to safeguard public funds, minimize the likelihood of waste, fraud, or abuse and ensure programs are administered in compliance with applicable federal and state laws. Examples of minimum control activities include authorization and approval, reconciliations, and separation of duties. These are defined by the requirements the agency must follow for compliance purposes (federal, state, MnDOT-specific policies, accounting standards, technical standards for IT systems, etc.) These may include procedures as mandated by OFMGU as a required agency standard. OFMGU will consult with divisions and program offices on effective, proven procedures that go beyond statutory mandates.

Monitoring and Financial Reconciliation Plan

A grant monitoring and financial reconciliation plan involves completing a risk assessment of agency grantees and outlining a specific plan to monitor and reconcile agency grants over $50,000 during the grant period or before final payment is made. The plan can incorporate an agency’s risk assessment and include a timeline for completing ongoing monitoring and financial reconciliations during the grant period or before final payments is made. (OGM Policy 08-10, 2016)

Non-Federal Entity

A state, local government, Indian tribe, institution of higher education (IHE), or non-profit organization that carries out a Federal Award as a recipient or subrecipient. (2 CFR 200.1, 2022)

Nongovernmental Organizations

A nongovernmental organization is an organization that is a nonprofit, also known as a charitable organization, that is formed for the purpose of fulfilling a mission to improve the common good of society rather than to acquire and distribute profits. The organization meets the definition in Minn. Stat. §309.50 Subd. 4 and meets the definitions defined in the Internal Revenue Service code, with the most common type being a 501(c)(3). (OGM Policy 08-06, 2024)

Pass-through entity

A non-federal entity that provides a sub-award to a subrecipient to carry out part of a federal program. (2 CFR 200.1, 2022)

Period of Performance

The time during which the grantee may incur new obligations to carry out the work authorized under the award. The awarding agency or pass-through entity must include start and end dates of the period of performance in the award. (2 CFR 200.1, 2022)

Post Award Phase

The phase of the grant lifecycle which includes implementing the grant, performing reconciliations, monitoring, and reporting financial and performance progress during the period of performance. (BDC, 2022)

Pre-Award Audit

An audit conducted by, or on behalf of, MnDOT to verify financial information supplied by a consulting firm, grantee, or subrecipient. Upon completion, the audit results are provided to MnDOT’s contracting officer for use during contract negotiations. (Pre-Award Audit Criteria, 2022)

Pre-Award Phase

The pre-award phase includes announcing opportunities, reviewing applications, determining the contractor vs. grantee relationships, completing risk assessments, notifying the grantee of subaward, and drafting and executing grant agreements.

Pre-Award Risk Assessment

The identification, analysis and management of risks or threats that could negatively affect the grant and prevent it from achieving its goals and objectives.

Program-level

Items listed as “program-level” or for the “program office” means a requirement or internal control that applies solely to a program and no other program in the agency. The program office is responsible for making or obtaining a decision on control activities that add to but do not replace any agency-level internal controls.

Program/Project Manager (PM)

Includes any position in which an employee is actively managing a grant contract during any part of the grant lifecycle. (BDC, 2022)

Real Property

Land, including land improvements, structure, and appurtenances thereto, but excludes moveable machinery and equipment. (BDC, 2022)

Recipient

A non-federal entity that receives a federal award directly from a federal awarding agency to carry out an activity under a federal program. Recipient does not include “subrecipient.” (2 CFR 200.1, 2022)

Request For Proposal (RFP)/Solicitation

A request for proposal or grant solicitation is a document that notifies grant seekers of a competitive grant opportunity and includes information on grant requirements, selection criteria, timelines, and process. Grant applications are solicited and reviewed by the agency for applicants which closely meet the selection criteria to be awarded funds. (OGM Policy 08-12, 2021)

Review Criteria

The review criteria for a competitive grant process are the standards by which the grant applications will be evaluated. Typically, review criteria are based both on the programmatic requirements and on an applicant’s ability to carry out the grant.

Review criteria may include but are not limited to the following: project need, project sustainability, soundness of approach, probability of achieving results, financial management capacity (accounting, timekeeping, and funds management), project funds raised to-date, geographic coverage, and knowledge of the community being served. The state agency must include review criteria in a grant request for proposal that identifies diversity in grant-making. The applicant’s past performance as a grantee of that state agency should also be considered when evaluating a grant application. (OGM Policy 08-02, 2017)

Single Audit

A single audit is an examination of an organization that spend at least $750,000 of federal funds in a fiscal year. The audit is intended to provide assurance to the government that its funds are being expended appropriately, and that the targeted entity has adequate internal controls in place. The audit is conducted by a certified public accountant, and the resulting compliance report is submitted to the Federal Audit Clearinghouse.

Sole and Single Source Grants

A sole source grant is a type of non-competitive grant that is awarded to an entity because it is the only provider of a particular service. A single source grant is a type of non-competitive grant that is awarded to an entity that is selected due to specific reasons, such as a geographic location or community knowledge and relationships that make that entity uniquely able to fulfill the intent of the grant. (OGM Policy 08-07, 2012)

Standardized Scoring System

A standardized scoring system is a rating system that assesses how well each grant application conforms to each of the selected criterion. Grant applications are assigned a score for each criterion, based upon the extent to which they meet the standard. Scores for each criterion are tallied to arrive at a cumulative score for each application. The most important criteria to the success of the grant program should have the highest potential score. The scoring system must include weighted criteria that identifies verifiable and measurable diversity, equity, and inclusion in grant-making outcomes and/or grantee performance. (OGM Policy 08-02, 2017)

Subcontractor/Subconsultant

A consultant/contractor hired by a consulting firm, grantee, or subrecipient to assist in their execution of their contract with MnDOT. (Pre-Award Audit Criteria, 2022)

Subrecipient

An entity that enters into a grant agreement with MnDOT, whereby that entity agrees to carry out all or part of a federal award. The term “grantee” is used broadly throughout the policy, and it is intended to be used interchangeably with “subrecipient” when federal funds are passed through MnDOT. (BDC, 2022)

Waste

Waste in grants programs occurs when the granting entity does not receive the full value from a grant due to the grantor’s inability to establish proper grants management controls.

Examples of waste in grants include but are not limited to:

improper grant payments,
overpayments,
lack of controls in the payment process,
poor financial management of grants, and/or
awarding grants to ineffective programs.

(OGM Policy 08-05, 2008)

Work Plan

A work plan, also referred to as a scope of work, is a written project or program management tool that identifies a desired project or program activities, timelines, and outcomes. (OGM Policy 08-11, 2008)

Conflict of Interest

Public trust and confidence are critical to MnDOT’s success. All MnDOT employees must use their authority and department resources in the public interest. When a conflict of interest concerning grant-making or grant administration exists, transparency should be the guiding principle in addressing it.

Applicability

This section applies to grants funded with state, federal and bond funds.

Competitive grant-making processes including:

Developing competitive grant opportunity notices (NOFOs, RFPs, solicitations).
Reviewing and evaluating competitive grant proposal responses.

Grant administration including:
- Awarding a grant; drafting, entering into, amending, or revising grant contracts; conducting grant monitoring; evaluating grant performance; and authorizing payments.

Minimum Control Activities

All MnDOT employees are required to comply with the MnDOT Code of Ethics Policy.
All MnDOT employees are required to comply with Minnesota Statute §43A.38, Code of Ethics, for Employees in the Executive Branch. This law governs a number of topics including accepting gifts, using confidential information, using state property, and determining and resolving conflicts of interest.
All grant reviewers in competitive grant-making processes must complete the agency’s Conflict of Interest Disclosure Form prior to reviewing applications.

If a potential or actual conflict of interest is identified in any grant selection or grant administration process, the Project Manager (PM) must follow the Contract Management Procedures by contacting Human Resources.
The PM must retain the Conflict of Interest Disclosure forms and related documentation according to their documented office procedures.

Resources

Pre-Award Phase Activities

Selecting Grant Recipients

MnDOT awards grants as one of four methods: (1) Formula Grants; (2) Single/Sole Source Grants; (3) Legislatively-mandated Grants; and (4) Competitive Grants. Understanding the differences in award methods is important to ensuring the right processes are followed and appropriate documentation is retained. The guiding principles of MnDOT grant-making and administration are fairness, precision, equity, consistency, and transparency.

It is important for Program/Project Managers to know the specific rules, laws, and regulations, as well as the internal MnDOT processes, required of the funding source that is being used to make grant awards. This will guide the process for selection as well as the timeline for selecting awards and executing grant contracts. For example, if a project needs to be added to the State Transportation Improvement Program (STIP), this will add additional time and steps to the process.

Formula Grants

Formula grants are noncompetitive awards based on a predetermined formula. They are awarded to eligible entities or individuals based on an allocation determined by a program’s authorizing legislation or administrative regulation. Formula grants are typically based on entitlements or reimbursement of specified costs.

Applicability

This section applies to grants funded by state, federal and bond funds.

Minimum Control Activities

MnDOT Program/Project Manager (PM) must ensure the grant funds are distributed according to the law or regulation that authorized the program.
Grantee submits a work plan and budget for MnDOT review and approval.

MnDOT reviews and approves the work plan with a clear scope and timeline to help the grantee successfully carry out the terms and conditions of the grant.
MnDOT reviews the budget to ensure all costs included are allowable, allocable, reasonable, and necessary to carry out the grant.

The PM completes other applicable pre-award activities, such as the pre-award risk assessment or requesting a pre-award audit. See pre-award risk assessment and pre-award audit sections for further information on next steps.
The PM drafts and executes the grant contract.

Best Practices

Consult the authorizing law or regulation for any of the following:

Program/project purpose
Grantee eligibility
Eligible activities
Distribution formula
Payment schedule and terms
Other requirements such as reporting to the legislature or match requirements

Resources

MnDOT Office of Audit: Pre-Award & Overhead Audit Unit
- Pre-Award Audit Criteria
- Office of Audit Checklist: Pre-Award

Single/Sole Source Grants

The Minnesota Department of Administration, Office of Grants Management (OGM) Policy 08-07 provides the following definitions for Single/Sole Source Grants:

A sole source grant is a non-competitive grant that is awarded to an entity because it is the only provider of a particular service.
A single-source grant is a non-competitive grant that is awarded to an entity that is selected due to specific reasons, such as geographic location or community knowledge and relationships that make the entity uniquely able to fulfill the intent of the grant.

A single/sole source grant may not be based solely on convenience or on prior relationships with a potential grantee.

Applicability

This section applies to grants funded by state, federal and bond funds.

Minimum Control Activities

Prior to encumbrance, the Program/Project Manager (PM) must complete the Single Source Request Form and document the justification for a single or sole source grant.

PM saves the form as a PDF, signs the form, and obtains the Division Director’s signature (or their designee).
PM sends the form to the OFM Grants Unit at GrantSupport.DOT@state.mn.us.
OFM Grants Unit will review and respond to the request within three (3) business days.
PM will upload the completed form into the eDOCS tab in CAATS and select yes for a single/sole source contract in the General Information tab of CAATS.

The grantee submits a work plan and budget for MnDOT review and approval.

MnDOT reviews and approves work plan with a clear scope and timeline to help the grantee successfully carry out the terms and conditions of the grant.
MnDOT reviews the budget to ensure all costs included are allowable, allocable, reasonable, and necessary to carry out the grant.

The PM completes other applicable pre-award activities, such as the pre-award risk assessment or requesting a pre-award audit. See pre-award risk assessment and pre-award audit sections for further information on next steps.
The PM drafts and executes the grant contract.

Resources

Legislatively Mandated Grants

A legislatively mandated grant is a legislative appropriation in which the recipient, the amount, and the purpose of a grant is named in law. MnDOT is obligated to award the grant to the named grantee, regardless of whether there are other potential grantees that could also provide the program or project. These grants are non-competitive and may also be known as earmarks or direct appropriations.

Applicability

This section applies to grants funded by state, federal and bond funds.

Minimum Control Activities

The PM must exercise the same level of oversight and monitoring as all other grants while respecting and maintaining the legislative intent of the appropriation.
The PM requests the grantee send a work plan and budget for MnDOT review and approval.

MnDOT reviews the work plan for a clear scope and timeline to ensure the grantee is successful in carrying out the grant and meeting all applicable requirements.
MnDOT reviews the grant budget to ensure all costs included are allowable, allocable, reasonable, and necessary to carry out the grant.

The PM completes other applicable pre-award activities, such as the pre-award risk assessment or requesting a pre-award audit. See pre-award risk assessment and pre-award audit sections for further information on next steps.
The PM drafts and executes the grant contract.

Resources

Competitive Grants

Generally, if a grant is not formula-based, a single/sole source, or legislatively mandated, it must be awarded through a competitive process. MnDOT uses a competitive application process to solicit and receive grant applications, review the applications against established rating criteria, assign a score based on how well the application meets the criteria, and award grants to applicants that most closely meet the selection criteria. The process should be as open, fair, and as competitive as practical. The competitive grant process may be known as a Notice of Funding Opportunity (NOFO), Request for Proposal (RFP), application process or solicitation. For purposes of this manual, it will be referred to as the solicitation.

Ensure fairness, precision, equity, and consistency in the solicitation process and results.
Include sufficient information in the solicitation so potential applicants can make decisions about applying for and managing grants.
Use transparency as the guiding principle.
Publicize as broadly as possible.
Ensure diversity, equity, and inclusion in grant-making.

Applicability – Competitive Grants with State/Federal Funds

This section applies to grants funded by state and federal funds.
Competitive grant requirements for bond-funded grants are listed separately below.

Minimum Control Activities for the Competitive Grant Process – State and Federal Funds

Drafting a Solicitation
- Use a template approved by the Office of Chief Counsel (OCC).
- Establish the rating criteria.
- Develop a standardized scoring system based on the rating criteria.
- The following elements must be included in the solicitation:
Solicitation Review
- The PM must ensure the solicitation is reviewed by the Office Director, OCC, and OFM Grants Unit prior to posting.
Post the Solicitation
- The solicitation must be posted on MnDOT’s Grant Opportunities webpage. This page is linked to OGM’s MN Grants portal for all statewide grant opportunities. PMs work with MnDOT Communications staff to post on the website.
- Publicize as broadly as possible.
Standardized Scoring and Selection Process
- Develop score sheets based on the review criteria to be used by all reviewers when evaluating applications.
- Finalize the score sheets prior to receiving applications.
- Convene the selection panel to discuss applications and scores – may be in person, by conference call, or on Microsoft Teams.
- Panel members must complete a Conflict of Interest disclosure form.
- After the selection panel has met and finalized scores, the PM creates a recommendation of grant award(s) and submits to the Office Director for approval prior to notifying applicants.
- Notify applicants if their application was successful or not.
- The PM starts negotiations with the grantee to discuss revisions to the work plan (scope) and budget, if needed.
- The PM approves the final work plan and budget ensuring there is a clear scope and timeline identified and all costs are allowable. For federal grants, this includes ensuring that all federal requirements are met, for example, completing NEPA documentation and gathering documentation of Buy America compliance.
- The PM completes other applicable pre-award activities, such as the pre-award risk assessment. See pre-award risk assessment and pre-award audit sections for further information on next steps.
- The PM drafts and executes the grant contract.
- The program office must document the competitive grant process including the steps taken, who was involved, how applications were reviewed, how decisions were made and what was the final recommendations and awards.
- Store selection documents according to documented office procedures and in accordance with record retention requirements. For example: solicitation, applications, conflict of interest disclosure forms, score sheets, and recommendation of grant award(s).

Minimum Control Activities for Bond-Funded Competitive Grants

Use a template approved by OCC.

Consult with OCC on program-specific language, as needed.

Identify rating criteria and a standardized scoring system to be used when evaluating competitive grant applications.
Document a scoring process and include consistent criteria per program.
Panel members must complete a Conflict of Interest disclosure form.

The PM must ensure the solicitation is reviewed by the Office Director, OCC, and OFM Grants Unit prior to posting.

The PM sends the solicitation via email to OCC and the OFM Grants Unit for concurrent review. Offices should factor one (1) week into their timeline to allow for comments or revisions before posting.

The solicitation must be posted on MnDOT’s Grant Opportunities webpage. This page is linked to OGM’s MN Grants portal for all statewide grant opportunities. PMs must work with MnDOT Communications staff to post on the website.
The program office must document the competitive grant process including the steps taken, who was involved, how applications were reviewed, how decisions were made and what was the final recommendations and awards.
Store selection documents according to documented office procedures and in accordance with record retention requirements. (For example: solicitation, applications, conflict of interest disclosure forms, score sheets, and recommendation of grant award(s)).

Best Practices

Development of Selection Criteria

Development of selection criteria is based on the authorizing legislation, applicable laws, rules, and statutes, as well as program goals and project objectives. The selection criteria for a competitive grant process informs potential applicants how the grant applications will be evaluated, and it is the basis for a standardized scoring system used by application reviewers. The selection criteria are based both on the programmatic requirements and the applicant’s ability to carry out the grant.
- Seek and incorporate grantee community input on program design as much as possible/practical through public engagement efforts.
- Use plain language when writing the solicitation.
- Fair rating criteria may include, but is not limited to, the following:
- Consider including an application (work plan) and grant budget template and instructions for clear, consistent guidance to the applicants and easier review by the selection panel.
- For grants funded with federal funds, consider sending the solicitation and recommended awards to the appropriate USDOT Operating Administration staff for their review, if necessary.
- Typical posting time is 4 – 6 weeks to allow potential applicants time to gather and submit application materials.
- Approximately 1 – 2 weeks after posting the solicitation, consider hosting an informational webinar to allow potential applicants to ask questions or seek clarifications.
- Post a Frequently Asked Questions (FAQ) document that includes all questions received and answers provided from the informational webinar and/or by email to be transparent and fair.
Standardized Scoring and Selection Panel
- Incorporate community reviewers, subject matter experts, employees from other agencies, etc. to provide diverse perspectives and include multiple viewpoints in the evaluation of applications.
Diversity, Equity, and Inclusion (DEI) in Grant-Making

Resources

Office of Grants Management Policy 08-02 Rating Criteria for Competitive Grant Review
Office of Grants Management Policy 08-03 Writing and Publicizing Grants Notices and RFPs
Competitive Grant Solicitation Process (in process)
MnDOT Office of Audit: Pre-Award & Overhead Audit Unit

Pre-Award Audit

MnDOT’s Office of Audit may perform a pre-award audit to ensure that a consulting firm, grantee, subrecipient, railroad, or utility has:

an acceptable accounting system,
adequate and proper justification for the various rates charged to perform the work, and
knowledge of cost eligibility and documentation requirements.

Upon completion, the audit results are provided to the requesting PM for use during contract negotiations.

Applicability

This section applies to grants funded by state, federal, and bond funds.

Minimum Control Activities

When a grantee’s costs are expected to be $50,000 or more, the PM must:

Request a pre-award audit of the grantee unless the grantee is a governmental entity. If the grantee is a governmental entity, that entity is not required to submit for a pre-award audit.
Request a pre-award audit of a grantee’s subcontractor/subconsultant if they expect costs to be $10,000 or more.

If a subconsultant/subcontractor’s cost are expected to be $9,999.99 or less, they are considered a vendor and are not subject to pre-award audit.

A PM may consult with the Office of Audit to request a pre-award audit of any grantee regardless of the thresholds established above.
PMs may review CAATS to see if a pre-award audit has been completed within the timeframe given in the “Resubmission Courtesy” section of the Pre-Award Audit Criteria document. Use the following steps to review previously completed audits:
- In CAATS, search the grantee on the Contractor tab either by name or vendor number and select the record.

Select the Audit Info tab.
Select the Pre-Award Audits Accordion to see a list of completed pre-award audits.
Select the Audit Report Number (hyperlink) to view the report.

PMs must request a pre-award audit of new transit system providers and their subrecipients regardless of the total contract amount.
- For existing transit system providers, pre-award audits must be requested prior to a capital purchase (e.g., new buses) regardless of whether the transit system provider or the Purchase of Services (POS) provider is making the purchase. These pre-award audits would follow the same $50,000 threshold indicated above.

Resources

Pre-Award Risk Assessment

Pre-award risk assessment activities analyze the risk of noncompliance with the applicable state and/or federal statutes, regulations and terms and conditions of the award.

Applicability

This section applies to grants funded by state and federal funds.
Bond funded grants are not required to perform a pre-award risk assessment.

Minimum Control Activities

Bond-funded grants are not required to perform a pre-award risk assessment, but offices must document completion of MMB requirements, when applicable (e.g., full funding, other applicable program requirements). Please reference the MMB Capital Grants Manual.
PMs must complete a pre-award risk assessment prior to executing a grant contract.

Risk assessments are valid for 12 months, so repeat grantees do not require an additional risk assessment if one has been performed within the last 12 months.
Programmatic risk assessments will not be accepted in lieu of a pre-award risk assessment, but they are a useful tool for managing risk if the PM chooses to complete one.

Use the results of the pre-award risk assessment to determine the appropriate level of monitoring.

For example, if a grantee is high risk due to lack of financial internal controls and serious previous single audit findings, the PM may consider performing more frequent financial reconciliations and requiring monthly financial reports or requests for reimbursement.

While managing the grant, the PM may encounter compliance issues with the grantee. Depending on the severity of the compliance issue, PMs are encouraged to complete a new risk assessment at that time to document the change in risk level and use it as a reference during corrective action.
The results of the risk assessment must be available in CAATS and accessible to all MnDOT staff.
For Federally-funded Airport Improvement Program (AIP) grants, Aeronautics staff can choose to use an FAA performed risk assessment if it was completed within the last 12 months. PMs must upload a copy of the FAA's risk assessment to eDOCS before routing the contract in workflow.

Financial Review of Non-Governmental Organizations
When MnDOT selects applicants to award a grant over $25,000, a review of the financial statements of any selected non-governmental organization must be completed prior to executing a grant contract. The purpose of this review is to ensure the applicant is financially stable enough to carry out the terms and conditions of the grant. This requirement is based on the Office of Grants Management Policy 08-06 Financial Review of Nongovernmental Organizations.

Program Offices may choose to either conduct the review or request the OFM Grants Unit conduct the review on their behalf by sending an email to Grant Support (GrantSupport.DOT@state.mn.us).

Prior to awarding the grant, MnDOT must:
- Review one of the following financial statements:
- Determine whether the applicant has a significant operating deficit or deficit in unrestricted net assets.
- Summarize the results of the review and store the summary in eDOCS and link to CAATS.
If the PM made a pre-award audit referral, based on the Pre-Award Audit Criteria, to MnDOT’s Office of Audit, the financial statement review will be completed as a part of that process and the PM will receive a summary report upon completion. This report must be kept as part of the grant file.

Debarment/Suspension in SAM
- The System for Award Management (SAM) is an official website of the U.S. Government where all businesses must register to be awarded a grant or contract funded in whole or part with federal funds.
- The grantee must request a Unique Entity Identifier (UEI) from www.sam.gov prior to award and provide this number to MnDOT.
- The PM is required to ensure potential grantees are not suspended or debarred by searching the entity UEI and verifying the record in www.sam.gov. Retain a copy of the search results to document this verification.

Contractor/Subrecipient Determination Form for Grants Containing Federal Funds
- If a grant is funded in whole or part with federal funds, PMs must complete the Contractor/Subrecipient Determination checklist in CAATS when routing the grant contract for signature.
- OCC will review and approve the contractor/subrecipient determination form when reviewing the grant contract for signature.
- Contact the Office of Chief Counsel, Contract Management Section with questions.

Subrecipient Monitoring/Management Decision Letter
When PMs receive a copy of the Subrecipient Monitoring/Management Decision Letter, they are responsible for reviewing the information to conduct the necessary follow-up on the deficiencies identified from the independent audit and to determine if monitoring activities for their active grant contracts should be adjusted. Reference: Subrecipient Monitoring Letters and Single Audit Review.

According to 2 CFR 200.501 Audit requirements, when a grantee (as a recipient or subrecipient) expends more than $750,000 of federal funds in the entity’s fiscal year, they are required to have a single or program-specific audit conducted. This audit is conducted by a third-party independent firm and the grantee is provided an audit report with the results.
- Grantees are required to submit the independent audit report to the Federal Audit Clearinghouse (FAC) within thirty (30) days of receipt of the report, or nine (9) months after the end of the audit period.
- Per 2 CFR 200.521 Management Decision, MnDOT’s Office of Audit reviews the independent audit report and uses the information to make recommendations on deficiencies detected through independent audits, on-site reviews, and single audits.
- OFM verifies the grantee’s single audit was conducted and filed in the FAC as required by 2 CFR 200 Subpart F. OFM will follow up with the grantee if the single audit was not submitted to the FAC in the required timeframe.
- The Office of State Auditor sends an annual report compiling all audit findings related to federal awards to Minnesota Management and Budget (MMB). OFM is required to submit all Subrecipient Monitoring/Management Decision Letters to MMB demonstrating compliance with 2 CFR 200.

Best Practices

Consult with the grantees for questions concerning the organizational structure and finances if information is unclear or a question cannot be answered with a reasonable degree of certainty.
PMs are subject matter experts and should rely on their previous experience working with grantees when identifying the risks associated with the program and responding to the questions.
Consult previously completed Grant Agreement Closeout Assessments (GACA) in CAATS to review past performance.
Use all available information to identify whether to incorporate additional monitoring strategies, document those strategies in the monitoring plan and notify the grantee when applicable.

Resources

Advance Payments

It is the State of Minnesota’s standard practice to make all grant payments to grantees as reimbursements. Exceptions to this standard practice may be allowed on a case-by-case basis upon approval from the OFM Grants Unit. In most cases, advance payments are not allowed to be made with federal funds. When applicable, the pre-award audit may also inform whether this is available depending on the results and the fiscal health of the grantee.

Applicability

This section applies to grants funded by state, federal, and bond funds.
This section does not apply to grants in which the payment terms are statutorily defined.

Minimum Control Activities

Prior to encumbrance, the PM must complete the Advance Payment Justification form.
The PM is responsible for ensuring an advance payment is allowed by the funding source.
The PM must email the completed form to the OFM Grants Unit at GrantSupport.DOT@state.mn.us.
The Grants Unit will review the form for the following:

justification of the grantee’s financial stability
the grantee’s past performance has been taken into consideration
the advance payment amount is limited to the minimum amounts needed and timed with the actual, immediate cash required to carry out the purpose of the program/project.

Grants Unit will sign the form or follow-up with questions within two (2) business days.
Once the form is signed, the Grants Unit will email the completed form to the PM and copy OCC.

The terms of advance grant payments and settlements must be reflected in the grant contract.
All advance payments on grants over $50,000 must be reconciled within 12 months of issuance or within 60 days of the end of the grant period of performance.
Program offices should have a procedure to ensure the payment is reconciled within the required timeframe.

The PM must upload the approved justification form into eDOCS and link to CAATS.
Once the contract is executed, PMs work through their internal process to process the grantee invoice for the advance and approve the payment.

Best Practices

When determining the amount for an advance payment, the following should be taken into consideration:
- The grantee’s financial position and ability to manage the advanced funds.
- Align the amount with the grant budget and work plan as part of the basis for the request. For example, startup costs or purchase of equipment that is needed up front to carry out the grant program.
- Whether the funding source allows for advance payments.

Resources

Grant Work Plans and Budgets

The grant work plan identifies the program or project activities, timelines, and outcomes. Work plans can look different depending on the objective of the grant and can be either incorporated into the scope of the contract or attached to the grant contract as an exhibit.

The grant budget is a plan for all income and expenses of the program/project. Accurate budgeting ensures that program/project goals are achieved, all costs are allowable, risks are reduced, and public funds are used responsibly and in compliance with rules and regulations.

Applicability

This section applies to grants funded by state, federal and bond funds.

Minimum Control Activities

The solicitation must contain guidance on allowable budget categories and allowable costs.
PMs must review the grantee’s submitted grant budget to ensure all costs included are allowable, allocable, reasonable, and necessary to carry out the award.
The approved grant budget must be attached or incorporated by reference into the grant contract.
Program offices must have a documented process for budget revisions including when a grant budget revision is required, how the revision is submitted by the grantee and how MnDOT will indicate approval.
PMs must review grantee’s requests for reimbursement against the approved line item budget, grant expenditures to date and the latest progress report prior to approving payment.

Best Practices

Consider including a work plan and budget template and instructions for clear, consistent guidance to the grantee.
- When creating the work plan template, sample considerations include:
- When creating a grant budget template, sample considerations include:

Resources

Grant Work Plan and Budget Revisions

Revising the work plan and budget to shift activities and costs from one category to another is a common practice in grants management but it must be adequately documented and may require prior approvals.

Applicability

This section applies to grants funded by state, federal and bond funds.

Minimum Control Activities

For federally-funded grants, the PMs are required to report deviations from the grant budget or project scope or objective and must request prior approvals from the federal awarding agencies for work plan and grant budget revisions.
Program offices must have a documented process for work plan and budget revisions and clear guidance on when prior approval is required. Offices must collaborate with Office of Chief Counsel on the process to determine how the revision is submitted and approved and to ensure the process is clearly documented when a revision is required versus a grant contract amendment.
Amendments to the grant contract are required when there are changes to the total obligation amount, grant expiration date, or scope of the grant.
The PM must communicate the work plan and grant budget revision process to grantees so that grantees know when to request a revision, how to request the revision and what’s allowed per the program/funding source.

Include instructions on the level of detail and supporting documentation, if any, needed to verify the costs are allowable prior to approving the revision.

Document each grant budget revision, approvals and update the grant budget accordingly. Save the documentation as part of the grant file according to documented office procedures and record retention requirements.

Best Practices

Providing the grantee with a process to submit grant budget revisions will ensure clarity and consistency.
A complete grant budget revision form includes the following columns:

the previously approved grant budget categories and amounts
the expenditures to date
the amount and category revisions being requested
the revised budget categories and amounts
the balance of each budget category

Common budget revisions may include:

Requests to move money from one existing budget category to another existing category
Requests to add a new budget category line item
Requests to add or remove staff from the personnel line item

Considerations for when to require the grantee to seek prior approval from the PM:
- Changes to staff in the personnel line item (adding or removing staff)
- Purchase of equipment
- The amounts being requested to move. For example, set a threshold for prior approval for anything over 10% of the total grant award. Other applications may include 10% of the annual budget or 10% of the budget category. All are acceptable and will depend on the project/program, but it should be consistent throughout.

Resources

Grant Contracts and Amendments

A grant contract is a written instrument or electronic document defining a legal relationship between a granting agency and a grantee when the principal purpose of the relationship is to transfer cash or something of value to the recipient to support a public purpose authorized by law. Drafting MnDOT grant contracts is a shared responsibility. The Office of Chief Counsel is responsible for drafting boilerplate language in the grant contract template. MnDOT Program/Project Managers are responsible for drafting “non-boilerplate” sections of the grant contract such as the scope of work, deliverables, schedule, and payment sections.

Applicability

This section applies to grants funded by state, federal, and bond funds.

Minimum Control Activities for Grant Contracts

PMs must follow the Contract Management Policy and Procedures for preparing, drafting, and executing grant contracts and amendments.
PMs must use a current template prepared by, or approved by, the Office of Chief Counsel Contract Management Section to ensure the terms and conditions comply with current state and federal law and MnDOT policies.
Grant contracts must have an approved budget attached or incorporated by reference into the contract.
Grant contracts must specify payment terms of the grant.
Grant contracts must include a process for submitting invoices/requests for payment and the required source documentation.
Grant contract templates must include a clause for how budget revisions will be processed. Program offices must document their program-specific budget revision process.
An employee who authorizes or permits work to proceed before funds are encumbered may be required to complete a 16A/16C Contract Violation Form. For exceptions, see

Minnesota Department of Administration Policy 21-01 Encumbrance and Contract Execution
MnDOT Internal Memo Re: Minnesota Statutes §§ 16A.15, 16B.98, and 16C.05 Applicability to Grant Contracts; Minnesota Department of Administration Policy 21-01 dated February 5, 2021.

Contracts must be executed prior to payment.
When a grant contract includes federal funds, the grant contract must include the Federal Award Information sheet as the cover page prior to routing the grant contract for signature.
Program office must enter core contract data into CAATS before routing the grant contract for signature in workflow.
When routing a grant contract agreement for signature in workflow, the following parties are included:

The Grantee (may be obtained outside of workflow)
The Commissioner of Transportation, or their delegated representative
The MnDOT Office of Administration Business Services Unit will verify the funds are encumbered.

Exception: OFM State Aid Finance verifies the encumbrance in the State Aid Accounting System (SAAS) for all State Aid grant contracts.

OFM Grant Unit will review for quality control and to verify grant contract data has been entered in CAATS. The OFM Grants Unit will not sign the grant contract.
The Office of Chief Counsel, Contract Management Section, as to content, form, and execution.

Minimum Control Activities for Grant Contract Amendments

Grant contracts must be amended in writing whenever there are changes to the total obligation amount, grant expiration date, or scope of the grant.

Grant contract amendments must include recitals to clarify changes to the contract, while clearly identifying and sequentially numbering the changes.
The total time period of grant contract plus any amendments may not exceed five years without approval from the Office of Chief Counsel, Contract Management.

Each amendment must be executed with the same signatures blocks as the original contract.

Resources

Post-Award Phase Activities

Grant Payments

MnDOT has a responsibility to safeguard public funds and be alert for fraud, waste, and abuse. When making grant payments, all costs must be allowable, allocable, reasonable, and necessary to carry out the grant award.

Applicability

This section applies to grants funded with state, federal and bond funds.
This section does not apply to grants in which the payment terms are statutorily defined.

Minimum Control Activities

Reimbursement is the preferred method for making grant payments.

Advance payments should be negotiated on a case-by-case basis pursuant to the advance payment section of this manual.

Grantee’s request for reimbursement must correspond to the line items approved in the grant budget.
PMs or their designee must review each request for reimbursement against the approved grant budget, grant expenditures to date, and the latest progress report before approving payment.

Grant payments must not be made on grants with past due progress reports without prior written approval from MnDOT.
Requests for reimbursement/invoices must include sufficient detail to be able to determine the costs are allowable.

Payment approvals must include reviewing financial and performance/progress reports.
MnDOT staff must be on alert for fraud, waste and abuse.

Best Practices

When source documentation for expenditures is required, it may include things like detailed invoices, purchase orders or general ledgers.
Provide grantee with a template for financial reporting and requests for reimbursement.
Payment requests should be signed by the grantee and MnDOT’s program staff should indicate approval. Program offices may have electronic methods, such as a grant management system, to indicate approvals by the grantee and/or MnDOT program staff.
- Follow up with the grantee on questions or when clarification is needed prior to approving payment. This may include requesting additional information in order to conduct a complete and accurate review.

Resources

Grant Progress Reports

Progress reports provide a summary of the grant activities and progress on the goals and outcomes of the program/project.

Applicability

This section applies to grants funded with state, federal and bond funds.

Minimum Control Activities

Grantees must submit progress reports at least annually for approval by the PM.

The timing and frequency of reporting must be detailed in the grant contract.

Grant payments must not be made when progress reports are past due unless the PM has provided a written extension.

Best Practices

Progress reports may request information such as updates on the goals and objectives, grant activities, outcomes, challenges experienced, lessons learned or financial information.
Providing grantees with a template for progress reporting can provide clear expectations of the information being requested, assists the PM with gauging progress over time and provides consistency in the program/project.
Information in the progress reports can identify best practices or lead to process improvement in the program/project.

Resources

Grant Monitoring

The purpose of grant monitoring is to evaluate how a grantee is implementing and administering a MnDOT-funded grant activity, ensure progress against the grant’s goals, address any problems or issues before the end of the grant period and facilitate communication between MnDOT and the grantee. A grant-monitoring visit involves MnDOT staff and the grantee and occurs during the period of performance.

Types of Monitoring Visits

The type of monitoring report that will be used must be determined in advance of contract execution and informed by an evaluation of the completed Pre-Award Risk Assessment done for each grantee. On-site monitoring visits are MnDOT’s preferred method of monitoring as they provide a greater level of detail and involve direct contact with the grantee.

On-Site Visit
Conducted in person by a MnDOT staff member at the grantee’s physical location. The visit includes a review of financial and progress reports, a grantee interview and observation of grant activity in action. This is the preferred method of monitoring.
Virtual Visit
Conducted by a MnDOT staff member via conference call, Microsoft Teams and email. The virtual visit includes a review of financial and progress reports and a grantee interview, it may include verification of certain project activities via video conferencing. The virtual visit may take place as a result of resource constraints or other factors that make an on-site visit to the grantee’s location unreasonable.

Applicability

This section applies to grants funded by state and federal funds.
Bond-funded grants are not required to perform a monitoring visit but must monitor the progress of the project.

Minimum Control Activities for Monitoring – State and Federal Funds

A monitoring visit must be conducted at least once per the grant period of performance for grants over $50,000 and at least annually for grants over $250,000. The visit must be completed prior to final payment is made.

Documented through a monitoring plan, identify which grants require a monitoring visit, how the visit will be conducted (virtual or onsite) and who will participate, at a minimum.

If the results of the pre-award risk assessment, an audit conducted by an independent entity, or pre-award audit conducted by MnDOT’s Office of Audit determines that the grantee is medium or high-risk, monitoring activities must be adjusted to provide adequate oversight of the risk or deficiency identified.

For example, a high-risk grantee may require more frequent progress/performance reporting and multiple onsite visits by the PM.
Once notified of an audit or monitoring finding, the PM must follow up with the grantee to ensure timely and appropriate action is taken on the deficiency.

Schedule monitoring visits with ample notice to grantees and advise them on how to prepare, explain the format and which staff should be involved.
Monitoring visits must include review of the financial and performance/progress reports required of the grant to validate the grantee is meeting performance goals.
Upon completion of the visit, the PM must document the visit in a monitoring summary noting what documentation was reviewed, progress of the grant, any deficiencies identified and final resolutions.
Notify the grantee of the monitoring visit results, communicate outcomes and any steps to be taken as a result of the monitoring activity.
If, at any point during the period of performance, the PM is experiencing issues of non-responsiveness or non-compliance from the grantee, they must work through the following steps. Deficiencies must be addressed and resolved in a timely manner.

Notify a supervisor or manager of the situation for information or assistance in approach and communication.
Consult/inform the OFM Grants Unit and OCC so that they may coordinate with other offices and program staff who also have active grant contracts with the grantee and provide support to the program office.
Develop a corrective action plan with resolutions and timelines.
Retain documentation of communication between MnDOT and the grantee in eDOCS and in CAATS.
Reference: Grantee Performance Management and Noncompliance

When monitoring a grant that includes federal funds, ensure the grantee is abiding by the procurement standards in 2 CFR 200.318 – 200.327.
Monitoring summary documentation must be stored on the eDOCS tab in CAATS. Navigate to the Approvals tab, open the Grant Compliance Accordion, and record the activity by selecting “Add Compliance Activity” in CAATS.
MnDOT Program offices must maintain current procedures for conducting monitoring visits, monitoring plans, templates and corrective action plans including timelines.
If grant funds are used to purchase assets during the period of performance, the PM must follow the requirements set by the funding source to determine the level of monitoring required.
MnDOT’s Office of Audit makes recommendations on deficiencies detected through independent audits, on-site reviews, and single audits. PMs must follow up to ensure that grantees take timely and appropriate action on those deficiencies.

Asset Monitoring

If a grantee uses state grant funds (other than bond funds) to acquire a capital asset, the grantee should be required to use that asset for a public purpose for the normal useful life of the asset. The Program/Project Manager should establish asset reporting requirements in the grant contract and should ensure compliance with those requirements and to recapture funds when a grantee disposes of an asset before the end of its normal useful life, if appropriate.

Requirements for Monitoring Bond-Funded Grants

PMs must monitor bond grants to ensure the grant is used for its authorized purpose and the terms and conditions of the grant are met. These activities must be documented.
When state bond proceeds are used to acquire or improve property, the property becomes “state bond-financed property.” State bond-financed property is subject to Minnesota Statutes section 16A.695.
If a PM becomes aware that a grantee is selling state bond-financed property, report the sale or proposed sale to the Office of Chief Counsel as soon as possible. The Office of Chief Counsel will work with MMB, the program office, and any external parties to coordinate the sale process.

Best Practices

If the grant funds allow for it, PMs may choose to use documented risk factors to determine which grant(s) represent a sample that will receive monitoring and financial reconciliation before final payment is made.

PMs are responsible for knowing if this is allowable per the terms and conditions of the funding source.
Grant risk factors may include grantee staff turnover, prior performance, results of the pre-award risk assessment/pre-award audit/pre-award financial review and delayed or missing performance reports.
Program offices must have documented procedures for their monitoring and financial reconciliation plan including which grant factors are used, how they are applied and where the information is stored.

An effective grant-monitoring visit may cover topics including, but not limited to, statutory compliance, challenges faced by the grantee, modifications made to the grant program/project, grantee policies and procedures, program/project outcomes, grantee governance, and training and technical assistance needs.
Consider using a monitoring template or checklists for each program that includes specific administrative/financial and programmatic elements that require oversight.

An example of an administrative/financial element is whether the grantee has implemented adequate policies and procedures to manage the award.
An example of a programmatic element is whether the grantee is meeting certain performance metrics or outcome measures of the grant.
This information may be useful when completing future pre-award risk assessments.

Set clear expectations for the visit and ensure the right people are notified and involved in the monitoring visit.
Ask the grantee about best practices learned and areas of opportunity they may have experienced. Use this information for future changes to the program/project or to share successes with other grantees.
Monitoring visits are an opportunity to continue relationship and rapport building between MnDOT and the grantee.

Resources

Financial Reconciliations

The financial reconciliation process examines a grantee’s request for reimbursement for a given period by conducting a comprehensive review of expenses and supporting documentation to verify expenses are allowable and supported by adequate source documentation.

Applicability

This section applies to grants funded by state and federal funds.
This section does not apply to bond-funded grants.

Minimum Control Activities

A financial reconciliation must be conducted at least once on grants over $50,000 before final payment is made.
Results of the financial reconciliation must be documented in a summary that includes:

Whether it was completed as an onsite or desk review
What documents were reviewed
What information was analyzed
The results of the review and any questions or concerns
Discussions on resolution or an action plan to resolve outstanding issues

Store the summary and related documentation on the eDOCS tab in CAATS. Navigate to the Approvals tab, open the Grant Compliance Accordion, and record the activity by selecting “Add Compliance Activity” in CAATS.
Lump sum payment grants must have a financial reconciliation completed at closeout.

Best Practices

If the results of the pre-award risk assessment, an audit conducted by an independent entity, or pre-award audit conducted by MnDOT’s Office of Audit determines that the grantee is medium or high-risk, consider completing more frequent financial reconciliations as a part of increased monitoring activities.
Provide the grantee adequate, but not too much, notice of the selected period that will be reconciled. Typically, the grantee should be able to provide the documentation within two weeks.
Give the grantee a timeline for submitting the proof of payment or source documentation.
Ensure the appropriate staff from the grantee’s finance office are informed and involved in the financial reconciliation process.
Request the grantee provide a coversheet outlining the documentation included and highlights of the expenditures for easier reviewing and reconciling.
Program offices can choose to reconcile every invoice or to perform a financial reconciliation. If federal funds are included, understand the federal agency requirements for invoice review and documentation. Documentation that was reviewed and reconciled as part of the invoice or reconciliation process must be saved as part of the grant file.
Program offices should determine what factors result in more frequent reconciliations and which project expenditures are subject to reconciliation. When using this sample method, the determination must be based on a documented assessment of risk.
A process rooted in best practice may include the following:

identify the payment/timeframe to be reconciled
notify the grantee
receive the documents
review and analyze documents
document results
address questions and conduct follow up
reflect and adjust

Review the Financial Reconciliation Process document or contact the OFM Grants Unit for additional support.

Resources

Grant Closeouts

Grant closeout is the process by which all financial and administrative actions of the grant and all required work have been completed. Common actions taken during closeout include submitting final financial and programmatic reports, paying final allowable expenditures, and documenting the grant award evaluation.

The grant closeout evaluation provides important information that summarizes the performance of the grant and is used to inform future grant awards. The evaluation is completed by the Program/Project Manager on the Grant Agreement Closeout Assessment (GACA) form in CAATS and is available to all MnDOT staff.

Applicability

This section applies to grants funded by state and federal funds.
Grants funded by bond funds are not required to have a GACA form completed but they are subject to other financial and administrative closeout activities.

Minimum Control Activities

MnDOT is required to review and consider past performance when making grant awards. The GACA provides PMs the summary evaluation from previous awards.
MnDOT must share grantee performance with other state agencies when requested. OGM Policy 08-13 Grant Closeout Evaluation outlines the data MnDOT must make available when requested.
Closeout each grant contract promptly after the period of performance ends according to state and federal timelines.

For grants funded with federal funds, grantees must submit all financial, performance and other reports required by the terms and conditions of the grant within 90 calendar days after the end date of the period of performance.
MnDOT is required to submit reports required by the terms and conditions of the grant within 120 calendar days after the end date of the period of performance. MnDOT may request an extension from the federal awarding agency.
Unobligated cash balances must be refunded to the federal awarding agency.

Complete the agency Grant Agreement Closeout Assessment (GACA) form in CAATS as part of the grant closeout activities and in a timely manner. Navigate to the Approvals tab, open the Grant Compliance Accordion, and select Edit Grant Agreement Closeout Assessment to complete the GACA.
OFM Grants Unit will review and approve all GACA forms in CAATS.
Contracts with total costs of $50,000 or less are exempt from audit review. A PM may request a review for grant contracts not meeting this threshold.
Real and personal property acquired with federal funds must be accounted for in accordance with the property standards in 2 CFR Part 200.310 – 200.316 and according to the terms and conditions of the federal award.

2 CFR Part 200.330 details reporting requirements for real property in which the federal awarding agency retains an interest.
Program offices must have their closeout procedures documented to ensure all administrative and financial closeout activities are completed for each grant award.

Resources

Contracts Agreements Auditing Tracking System (CAATS)

MnDOT Policy #FM014 Contract Management designates CAATS as the agency system of record for certain contract types. The Office of Chief Counsel, Contract Management Section, is responsible for defining core contract data to be recorded in the system.

Applicability

This section applies to grants funded by state, federal and bond funds.

Minimum Control Activities

Program Offices must enter core contract data from the grant contract accurately and completely into CAATS before routing the contract for signature in workflow.
Program Offices must upload grant contract and amendment documents into CAATS. This includes a risk assessment, when required, and may include an encumbrance document.
The OFM Grants Unit will review and validate the data is accurate and complete during the contract signature routing process. The OFM Grants Unit will route contracts back to the initiating office when core contract data is incomplete.
The OFM Grants Unit and Office of Chief Counsel (OCC) will define core grant data to be stored in the CAATS Grants Module. Program office will be engaged as much is practical in this process.
The OFM Grants Unit will ensure the core grant data is entered in the CAATS Grants Module.
OCC and the OFM Grants Unit will provide training opportunities and resources on core contract and grant data.

Resources

Grant File Documentation
CAATS iHUB – Contract Types and Grant Subtypes
CAATS iHUB – Core Contract Data by lifecycle; Core Contract Data by category
CAATS iHUB – Grants
CAATS User Guide
eDOCS Manual - MNDOT_DOCS-#701028-eDOCS BASICS