Revised Uniform Guidance Becomes Effective on Nov. 12
On Nov. 12, the Office of Management and Budget’s (OMB) revisions to the uniform guidance issued on Aug. 13 will officially become effective. The revised guidance will apply to new awards and modifications to existing awards issued on or after Nov. 12. Awards received prior to that date will continue to follow the uniform guidance provisions as they previously existed throughout the life of the award.
The issuance of the Aug. 13 final guidance addressing revisions to the guidance contained in Title 2, Subtitle A, of the Code of Federal Regulations, which includes the uniform guidance at 2 C.F.R. Part 200, was the most wide-sweeping changes to provisions at 2 C.F.R. Part 200 since it was originally released in December 2013 and adopted by federal awarding agencies in December 2014.
The Aug. 13 revisions were the culmination of the required five-year review of the guidance, as stated at §200.109. While the majority of the guidance becomes effective this week, two requirements — a new provision at §200.216, Prohibition on certain telecommunications and video surveillance services or equipment, and a revised §200.340, Termination — went into effect on Aug. 13.
The new provision at §200.216 states that “recipients and subrecipients are prohibited from obligating or expending loan or grant funds to: (1) procure or obtain; (2) extend or renew a contract to procure or obtain; or (3) enter into a contract (or extend or renew a contract) to procure or obtain equipment, services or systems that use(s) covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.”
The termination provision at §200.340 now eliminates the current “for cause” reason for termination and replaces it with one stating that an award may be terminated “if an award no longer effectuates the program goals or agency priorities.” In addition, federal awarding agencies must make recipients aware, in a clear and unambiguous manner, of the termination provisions in §200.340.
Beyond the Uniform Guidance
Along with the uniform guidance, other regulations also will experience changes on Nov. 12, including OMB’s revised 2 C.F.R. Part 25, “Universal Identifier and System for Award Management,” and 2 C.F.R. Part 170, “Reporting Subaward and Executive Compensation Information.” OMB expanded the applicability of federal financial assistance under these two parts beyond grants and cooperative agreements to also include other types of financial assistance that federal agencies receive or administer, such as loans, insurance, contributions and direct appropriations. Additionally, within Title 2, a new 2 C.F.R. Part 183 was added to apply Never Contract with the Enemy provisions to grants and cooperative agreements, as required by subtitle E, title VIII of the National Defense Authorization Act (NDAA) for federal Fiscal Year (FY) 2015 (Pub. L. 113-291).
Grant applicants and recipients should be aware that the revisions add new provisions that will change the numbering system in the revised guidance compared to the current guidance, thereby necessitating corresponding changes to nonfederal entities’ internal policy references for awards received under the revised guidance.
The provisions in Subpart C (pre-award) of the revised guidance add a new §200.202, Program planning and design, and push subsequent Subpart C provisions back. The Subpart D (post-award) remains consistent to the current guidance through §200.321, but the revised guidance adds a new §200.322, Domestic preference for procurements, pushing the post-award provisions back from that point on. In the Subpart E cost principles, a new provision at §200.471, Telecommunications and video surveillance costs, pushes back the remaining five cost items to §§200.472-200.476.
The revised guidance also includes numerous changes based on statutory requirements. Along with adding the new domestic preference for procurements provision at §200.322 in response to recent Buy American presidential executive orders (E.O. 13788 and E.O. 13858), the rule changes current closeout provisions (§200.344 in the revised guidance) based on lessons learned from implementation of the Grants Oversight and New Efficiency Act (GONE Act), thereby increasing the number of days for recipients to submit closeout reports and liquidate all financial obligations from 90 to 120 days.
Other revisions were made to comply with the Federal Funding Accountability and Transparency Act, as amended by the Digital Accountability and Transparency Act. This includes a new indirect cost requirement at §200.414(h) to make all negotiated indirect cost rate agreements publicly available on an OMB-designated federal website. In response to comments submitted when this provision was proposed, OMB now clarifies that it is excluding Indian tribes and tribal organizations from the requirement, and it specifically details the exact information grantees must provide (i.e., federally negotiated indirect cost rate, distribution base and rate type).
The revised guidance maintains language included in the proposed revisions that will allow nonfederal entities to develop documented procurement procedures with higher thresholds that meet the current micro-purchase ($10,000) and simplified acquisition threshold ($250,000) levels under the Federal Acquisition Regulations.
Other Key Changes
OMB clarified in the revised guidance that any nonfederal entity that does not have a current negotiated (including provisional) indirect cost rate, except for those nonfederal entities described in Appendix VII.D.1.b, may use the 10% de minimis rate in §200.414(f), thus expanding this option to all nonfederal entities where currently it is only available to recipients with no previously negotiated indirect cost rate. No documentation will be required to justify the 10% de minimis indirect cost rate.
The revised guidance also adds new language to the effective date provision under a new §200.110(b) indicating that “existing negotiated indirect cost rates as of Aug. 13, 2020, will remain in place until they expire. The effective date of changes to indirect cost rates must be based upon the date that a newly renegotiated rate goes into effect for a specific nonfederal entity’s fiscal year. Therefore, for indirect cost rates and cost allocation plans, the revised uniform guidance as of Aug. 13 becomes effective in generating proposals and negotiating a new rate (when the rate is renegotiated).”
Going forward, recipients should ensure that they follow the guidance applicable to when the award was made. For example, if a grantee is closing out an existing award issued prior to Nov. 12, it has 90 days to submit closeout reports and liquidate financial obligations, not 120 days, as provided for in the updated guidance. In addition, the awardee should work with its auditor conducting single audits to ensure the auditor tests grant award compliance based on the guidance that was effective at the time of the award.
For More Information
More information about all the changes within the guidance can be found at the 2020 Uniform Guidance Changes Info Center at https://grants.complianceexpert.com/news/2020-uniform-guidance-changes-info-center.