Uniform Guidance Revisions Issued; Two Changes Take Effect Instantly
The Office of Management and Budget (OMB) on Aug. 13 published long-awaited revisions to the uniform guidance, 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. Provisions in the revised guidance will apply to awards issued after its effective date, except for two specific provisions that are effective immediately.
The revisions are part of an overall update to guidance contained in Title 2, Subtitle A, of the Code of Federal Regulations, and are the culmination of the required five-year review of the guidance, as stated at §200.109. They incorporate changes to implement goals under the President’s Management Agenda and its “Results-Oriented Accountability for Grants” Cross-Agency Priority Goal, as well as other administrative priorities (see ¶101 in the Federal Grants Management Handbook). The revisions also implement statutory requirements and align Title 2 with other authoritative source requirements, and aim to clarify confusion about existing requirements.
The issuance of the uniform guidance revisions comes seven months after OMB published proposed revisions in January and reviewed thousands of comments submitted in response to the proposal. The general effective date of the revised guidance is Nov. 12, and it becomes specifically effective for awardees as federal agencies implement the changes into their regulations (§200.110(a)). Therefore, it becomes effective for awards issued after that date (i.e., current award recipients, including those receiving awards under the Coronavirus Aid, Relief and Economic Security Act (CARES Act) (Pub. L. 116-136), will continue to follow the existing uniform guidance provisions). However, two regulations — §200.216, Prohibition on certain telecommunications and video surveillance services or equipment, and §200.340, Termination — are effective immediately.
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, OMB’s recent action 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 so that it includes other types of financial assistance that federal agencies receive or administer, such as loans, insurance, contributions and direct appropriations. Additionally, within Title 2, OMB added a new 2 C.F.R. Part 183 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 revisions also retain §200.309 (which was proposed for deletion), therefore the numbering system in 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.
Incorporating the President’s Management Agenda
OMB states that the revisions “set the stage for enhanced results-oriented accountability for grants under the President’s Management Agenda.” For example, the new program design provision at §200.202 will require federal awarding agencies to design programs with clear goals and objectives to achieve the delivery of meaningful results consistent with federal authorizing legislation. The guidance also clarifies for applicants that merit reviews must be conducted with the objective of selecting recipients most likely to be successful in delivering results based on objectives outlined in the program design, as stated under §200.205, Federal awarding agency review of merit of proposals. Further, federal agencies must periodically review the merit review process.
In the revisions, OMB implements standard data elements (see “OMB Issues Grants Management Standard Data Elements Version 1.0,” December 2019) within Subpart A, Definitions, by deleting the numbering system in the current uniform guidance for each definition and including all of the definitions under a single §200.1.
The uniform guidance revisions strengthen the governmentwide approach to performance and risk by encouraging agencies to measure recipient’s performance in a way that will help federal awarding agencies and nonfederal entities improve program goals and objectives, share lessons learned and spread the adoption of promising performance practices, according to OMB. New language has been included in both Subparts C and D requiring federal awarding agencies to provide recipients with clear performance goals, indicators and milestones.
For example, the exceptions provision at §200.102 in the revised guidance states that federal awarding agencies may request exceptions to certain uniform guidance provisions “in support of innovative program designs that apply a risk-based, data-driven framework to alleviate select compliance requirements and hold recipients accountable for good performance.” It also amends current uniform guidance language at §200.102(c) to state that a federal awarding agency “may adjust requirements to a class of federal awards or nonfederal entities when approved by OMB, or when required by federal statutes or regulations,” except for the single audit requirements in Subpart F.
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 micropurchase ($10,000) and simplified acquisition threshold ($250,000) levels under the Federal Acquisition Regulations. These threshold levels were increased under the NDAA of FY 2017 and FY 2018, and were addressed in OMB Memorandum M-18-18 (see ¶444 in the Federal Grants Management Handbook). OMB proposes changes to the procurement provisions in Subpart D to incorporate the guidance available in M-18-18.
The revised guidance also aligns the statutory and national policy requirements provision (§200.300) with E.O. 13798, “Promoting Free Speech and Religious Liberty,” and E.O. 13864, “Improving Free Inquiry, Transparency and Accountability at Colleges and Universities,” to underscore the importance of complying with the First Amendment and religious liberty laws under federal awards.
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 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).”
For More Information
The Aug. 13 revisions to the guidance are available at https://grants.complianceexpert.com/guidance-and-regulations/omb-uniform-grants-guidance/2020-uniform-guidance-revisions.