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14 <br />b. Access to Records of Contractor and Subcontractors. The Contractor shall permit <br />and shall require its third party contractors to permit the Department, the Comptroller <br />General of the United States, and the Secretary of the United States Department of <br />Transportation, or their authorized representatives, to inspect all work, materials, payrolls, <br />and other data and records with regard to the Project, and to audit the books, records, and <br />accounts of the Contractor pertaining to the Project. The Department shall reserve the <br />right to reject any and all materials and workmanship for defects and incompatibility with <br />Project Description or excessive cost. The Department shall notify the Contractor, in <br />writing, if materials and/or workmanship are found to be unacceptable. The Contractor <br />shall have ninety (90) days from notification to correct defects or to provide acceptable <br />materials and/or workmanship. Failure by the Contractor to provide acceptable materials <br />and/or workmanship, or to correct noted defects, shall constitute a breach of contract. <br />c. Proiect Closeout. The Contractor agrees that Project closeout does not alter the <br />reporting and record retention requirements of this Agreement. <br />Section 14. Proiect Completion, Audit, Settlement, and Closeout. <br />a. Within ninety (90) calendar days following Project completion, the end of the <br />Project's period of performance, or termination by the Department, the Contractor agrees <br />to submit a final reimbursement request to the Department for eligible Project expenses. <br />b. Financial Reporting and Audit Requirements. In accordance with OMB Circular A- <br />133, "Audits of State, Local Govemments and Non-Profit Organizations," revised on June <br />27, 2003, and N.C.G.S. 159-34, the Contractor shall have its accounts audited as soon as <br />possible after the close of each fiscal year by an independent auditor. The Contractor <br />agrees to submit the required number of copies of the audit reporting package to the Local <br />Government Commission four months after the Contractor's fiscal year-end. <br />c. Audit Costs: Unless prohibited by law, the costs of audits made in accordance with <br />the provisions of OMB Circular A-133 are allowable charges to State and Federal awards. <br />The charges may be considered a direct cost or an allocated indirect cost, as determined <br />in accordance with cost principles outlined in OMB Circular A-87 "Cost Principles for State, <br />Local, and Indian Tribal Governments." The cost of any audit not conducted in <br />accordance with OMB Circular A-133 and N.C.G.S. 159-34 is unallowable and shall not be <br />charged to State or Federal grants. <br />d. Funds Owed to the Department. The Contractor agrees to remit to the Department <br />any excess payments made to the Contractor, any costs disallowed by the Department, <br />and any amounts recovered by the Contractor from third parties or from other sources, as <br />well as any penalties and any interest required by Subsection 10d1 of this Agreement. <br />e. Proiect Closeout. Project closeout occurs when the Department issues the final <br />project payment or acknowledges that the Contractor has remitted the proper refund. The <br />Contractor agrees that Project closeout by the Department does not invalidate any <br />continuing requirements imposed by this Agreement. <br />Section 15: Subcontracts and Lessees <br />a. Significant Participation by a Third Party Contractor. Although the Contractor may <br />enter into a third party contract, after obtaining approval from the Department, in which the <br />third party contractor agrees to provide property or services in support of the Project, or <br />even carry out Project activities normally performed by the Contractor (such as in a <br />Revised 1/6/10 <br />