29 C.F.R. § 35.38 – Procedure for disbursal of funds to an alternate recipient.

(a) If funds are withheld from a recipient under this part, the Secretary may disburse the funds withheld directly to an alternate recipient.
(b) The Secretary will require any alternate recipient to demonstrate:
1. (1) The ability to comply with the Act and this part; and
2. (2) The ability to achieve the goals of the Federal statute authorizing the Federal financial assistance.