(a) A recipient or subrecipient may be considered ``high-risk'' if
an awarding agency determines that the recipient or subrecipient is
otherwise responsible, but:
(1) Has a history of unsatisfactory performance;
(2) Is not financially stable;
(3) Has a management system which does not meet the management
standards set forth in this part; or
(4) Has not conformed to terms and conditions of a previously
awarded grant or subgrant.
(b) If the awarding agency determines that an award will be made to
a ``high-risk'' recipient or subrecipient, then special funding
restrictions that address the ``high-risk'' status may be included in
the award. Funding restrictions may include, but are not limited to:
(1) Payment on a reimbursement basis;
(2) Requiring additional and/or more detailed financial or
performance reports;
(3) Additional monitoring;
(4) Requiring the recipient or subrecipient to obtain specific
technical or management assistance; and/or
(5) Establishing additional prior approvals.
(c) If an awarding agency decides to impose such funding
restrictions, the awarding official will notify the recipient or
subrecipient as early as possible, in writing, of:
(1) The nature of the funding restrictions;
(2) The reason(s) for imposing them;
(3) The corrective actions which must be taken before they will be
removed and the time allowed for completing the corrective actions; and
(4) The method of requesting reconsideration of the restrictions
imposed.
