Guidance for Grants and Agreements
| Citation | 85 FR 49506 |
| Record Number | 2020-17468 |
| Published date | 13 August 2020 |
| Section | Rules and Regulations |
| Court | Management And Budget Office |
Federal Register, Volume 85 Issue 157 (Thursday, August 13, 2020)
[Federal Register Volume 85, Number 157 (Thursday, August 13, 2020)]
[Rules and Regulations]
[Pages 49506-49582]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-17468]
[[Page 49505]]
Vol. 85
Thursday,
No. 157
August 13, 2020
Part IV
Office of Management and Budget
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2 CFR Parts 25, 170, 183, et al.
Guidance for Grants and Agreements; Final Rule
Federal Register / Vol. 85, No. 157 / Thursday, August 13, 2020 /
Rules and Regulations
[[Page 49506]]
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OFFICE OF MANAGEMENT AND BUDGET
2 CFR Parts 25, 170, 183, and 200
Guidance for Grants and Agreements
ACTION: Final guidance.
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SUMMARY: The Office of Management and Budget (OMB) is revising sections
of OMB Guidance for Grants and Agreements. This revision reflects the
foundational shift outlined in the President's Management Agenda (PMA)
to set the stage for enhanced result-oriented accountability for
grants. This guidance is reflects the Administration's focus on
improved stewardship and ensuring that the American people are
receiving value for funds spent on grant programs. The revisions are
limited in scope to support implementation of the President's
Management Agenda, Results-Oriented Accountability for Grants Cross-
Agency Priority Goal (Grants CAP Goal) and other Administration
priorities; implementation of statutory requirements and alignment of
these sections with other authoritative source requirements; and
clarifications of existing requirements in particular areas within
these sections.
DATES: These revisions to the guidance are effective November 12, 2020,
except for the amendments to Sec. Sec. 200.216 and 200.340, which are
effective on August 13, 2020.
FOR FURTHER INFORMATION CONTACT: Nicole Waldeck or Gil Tran at the OMB
Office of Federal Financial Management at [email protected] or
202-395-3993.
SUPPLEMENTARY INFORMATION:
Background and Objectives
In 2013, OMB partnered with the Council on Financial Assistance
Reform (COFAR) to revise and streamline guidance to develop the Uniform
Administrative Requirements, Cost Principles, and Audit Requirements
for Federal Awards (Uniform Guidance) located in title 2 of the Code of
Federal Regulations (2 CFR part 200) (79 FR 78589; December 26, 2013).
The intent of this effort was to simultaneously reduce administrative
burden and the risk of waste, fraud, and abuse while delivering better
performance on behalf of the American people. Implementation of the
Uniform Guidance became effective on December 26, 2014 (79 FR 75867,
December 19, 2014) and must be reviewed every five years in accordance
with 2 CFR 200.109.
Based on feedback and ongoing engagement with the grants management
community, the Administration established the Results-Oriented
Accountability for Grants Cross Agency Priority Goal (Grants CAP Goal)
in the President's Management Agenda on March 20, 2018 (available at:
https://www.performance.gov/CAP/grants/). The Grants CAP Goal
recognizes that grants managers report spending a disproportionate
amount of time using antiquated processes to monitor compliance.
Efficiencies could be gained from modernization and grants managers
could instead shift their time to analyze data to improve results. To
address this challenge, the Grants CAP Goal Executive Steering
Committee (ESC), which reports to the Chief Financial Officer's Council
(CFOC), has identified four strategies to work toward maximizing the
value of grant funding by developing a risk-based, data-driven
framework that balances compliance requirements with demonstrating
successful results for the American taxpayer.
1. Strategy 1: Operationalize the Grants Management Standards
2. Strategy 2: Establish a Robust Marketplace of Modern Solutions
3. Strategy 3: Manage Risk
4. Strategy 4: Achieve Program Goals and Objectives
The revisions to 2 CFR support these four strategies. In support of
Strategies 1 and 2, OMB is implementing changes throughout 2 CFR to
modernize reporting by recipients of Federal grants by requiring
Federal agencies to adopt standard data elements for the information
recipients are required to report (available at: https://ussm.gsa.gov/fibf/). This adoption will enable technology solutions to better manage
the data the recipients report to the Federal government. These changes
also support implementation of the Grants Reporting Efficiency and
Agreements Transparency Act of 2019 (GREAT Act). OMB is also
implementing revisions to strengthen the governmentwide approach to
performance and risk, to support efforts under Strategies 3 and 4 by
encouraging agencies to measure the recipient's performance in a way
that will help Federal awarding agencies and non-Federal entities to
improve program goals and objectives, share lessons learned, and spread
the adoption of promising performance practices.
OMB is also revising 2 CFR to implement relevant statutory
requirements. These revisions include requirements from several
National Defense Authorization Acts (NDAAs) and the Federal Funding
Accountability and Transparency Act (FFATA), as amended by the Digital
Accountability and Transparency Act (DATA Act).
Finally, OMB is implementing revisions to 2 CFR to clarify areas of
misinterpretation. The revisions are intended to reduce recipient
burden by improving consistent interpretation. OMB consulted and
collaborated with agency representatives identified by the Grants CAP
Goal ESC to support the implementation of these revisions. OMB also
solicited feedback from the broader Federal financial assistance
community by publishing the proposed changes to 2 CFR in the Federal
Register for a sixty (60) day public comment period (https://www.federalregister.gov/d/2019-28524). OMB received 215 submissions
with over 1,200 comments from the public, around 1,200 comments from
Federal agencies, and around 100 comments from the Council of the
Inspectors General on Integrity and Efficiency (CIGIE) Grant Reform
Workgroup for a total of over 2,500 comments. OMB reconvened agency
representatives to review the comments and make changes to the proposed
revisions as appropriate.
In summary and as discussed further in the sections below, OMB is
revising 2 CFR parts 25, 170, and 200. Additionally, OMB is adding part
183 to 2 CFR to implement Never Contract with the Enemy. The sections
are revised within the following scope. Comments received that were out
of scope for the revision were not accepted by OMB.
I. To support implementation of the President's Management Agenda
Results-Oriented Accountability for Grants CAP Goal and other
Administration priorities;
II. To meet statutory requirements and to align with other
authoritative source requirements; and
III. To clarify existing requirements.
I. Support Implementation of the President's Management Agenda and
Other Administration Priorities
A. Emphasizing Stewardship and Results-Oriented Accountability for
Grant Program Results
The President's Management Agenda, Results-Oriented Accountability
for Grants CAP goal is working toward shifting the balance between
compliance and performance while reducing burden. Agencies are
encouraged to promote promising performance practices that support the
achievement of program goals and objectives. Many Federal agencies are
working together to innovate and develop a risk-based approach that
incorporates performance to achieve
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results-oriented grants (where applicable). By shifting the focus to
the balance between performance and compliance, agencies may have the
opportunity to streamline burdensome compliance requirements for
programs that demonstrate results. To support this goal, OMB is
publishing revisions in multiple sections of the guidance that together
emphasize the importance of focusing on performance to achieve program
results throughout the Federal award lifecycle.
The provisions that were revised to improve the governmentwide
approach to performance and risk emphasize stewardship and results-
oriented grant making. Revisions to 2 CFR 200.102 Exceptions encourages
Federal awarding agencies to apply a risk-based, data-driven framework
to alleviate select compliance requirements for programs that
demonstrate results. 2 CFR 200.202 Program planning and design
highlights the importance of developing a strong plan and design to set
the stage for demonstrating program results. 2 CFR 200.205 Federal
awarding agency review of merit proposals strengthens the merit review
process which is linked to 2 CFR 200.301 Performance measurement
requiring Federal awarding agencies to measure recipient performance,
which is derived from program planning and design (Sec. 200.202).
Performance information focused on results must be made available to
recipients in the solicitation and in the award, which is reflected in
2 CFR 200.211 Information contained in a Federal award. Award
recipients must also be aware of termination provisions in 2 CFR
200.340 Termination and reinforced in 2 CFR 200.211 Information
contained in a Federal award, which are linked to performance goals of
the program (Sec. 200.301). Revisions to 2 CFR 200.413 Direct costs
were also made to include evaluation costs as an example of a direct
cost, which demonstrates program results.
Revisions to 2 CFR 200.202 Program planning and design develops a
new provision. This section formalizes a requirement that are already
expected of Federal awarding agencies to develop a strong program
design by establishing program goals, objectives, and indicators, to
the extent permitted by law, before the applications are solicited. The
development of 2 CFR 200.202 emphasizes the importance of sound program
design as an essential component of performance management and program
administration. Ideally, program design takes place before an agency
drafts related projects. This enables Federal agency leadership and
employees to codify program goals, objectives, and intended results
before specifying the goals and objectives of in a solicitation. A
well-designed program has clear goals and objectives that facilitate
the delivery of meaningful results, whether a new scientific discovery,
positive impact on citizen's daily life, or improvement of the Nation's
infrastructure. Well-designed programs also represent a critical
component of an agency's implementation strategies and efforts that
contribute to and support the longer-term outcomes of an agency's
strategic plan. OMB encourages Federal awarding agencies to reference
the ``Managing for Results: The Performance Management Playbook for
Federal Awarding Agencies'' for promising performance practices
throughout the Federal award lifecycle, including steps to develop a
strong program plan and design (www.performance.gov/CAP/grants/).
Program design elements may include a problem or needs statement,
goals and objectives; a logic model depicting the program's structure;
program activities; a theory or theories of change and the evidence
supporting them; performance and other indicators to measure program
accomplishments and find ways to improve, set priorities, and identify
targets of opportunity. In addition, it may include use or intended use
of independently available sources of data, development and support of
learning communities which may benefit from a shared understanding of
promising practices and collaboration on common challenges and
opportunities, and a system to periodically review award selection
criteria.
OMB is revising to 2 CFR 200.205 Federal awarding agency review of
merit proposals, 2 CFR 200.203 Requirement to provide public notice of
Federal financial assistance programs and Sec. 200.204 Notices of
funding opportunities to strengthen merit review, public notice of
Federal financial assistance programs, and the notices of funding
opportunities to further the goals of results-oriented grantmaking.
These changes require Federal awarding agencies to extend their merit
review process to discretionary Federal awards, unless prohibited by
Federal statute, the Federal awarding agency must design and execute a
merit review process for applications.
Additional language was included to articulate an explanation of
the merit review process that Federal awarding agencies are expected to
follow. Further, Federal awarding agencies are required to periodically
review their Federal award merit review process. These changes support
the Administration's priority to ensure a fair and transparent process
for the selection of award recipients and supports efforts under the
President's Management Agenda to ensure that Federal awards are
designed to achieve program goals and objectives.
Changes to 2 CFR 200.206 Federal awarding agency review of risk
posed by applicants allow Federal awarding agencies to adjust
requirements when a risk-evaluation indicates that it may be merited.
Changes are included in 2 CFR 200.211 Information contained in a
Federal award and 2 CFR 200.301 Performance measurement further
emphasize existing requirements for requiring Federal awarding agencies
to provide recipients with clear performance goals, indicators,
targets, and baseline data. OMB is adding language to Sec. 200.102
Exceptions to emphasize that Federal awarding agencies are encouraged
to request exceptions to certain provisions of 2 CFR part 200 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. OMB recognizes that
Federal financial assistance program goals and their intended results
will differ by type of Federal program. For example, criminal justice
grant programs may focus on specific goals such as reducing crime,
basic scientific research grant programs may focus on expanding
knowledge, and infrastructure projects may fund building or
infrastructure projects.
Related to the above changes that aim to strengthen program
planning and Federal award terms and conditions, OMB is revising
Sec. Sec. 200.211 Information contained in a Federal award and 200.340
Termination to strengthen the ability of the Federal awarding agency to
terminate Federal awards, to the greatest extent authorized by law,
when the Federal award no longer effectuates the program goals or
Federal awarding agency priorities. Federal awarding agencies must
clearly and unambiguously articulate the conditions under which a
Federal award may be terminated in their applicable regulations and in
the terms and conditions of Federal awards. The intent of this change
is to ensure that Federal awarding agencies prioritize ongoing support
to Federal awards that meet program goals. For instance, following the
issuance of a Federal award, if additional evidence reveals that a
specific award objective is ineffective at achieving program goals, it
may be in the government's interest to terminate the Federal award.
Further, additional
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evidence may cause the Federal awarding agency to significantly
question the feasibility of the intended objective of the award, such
that it may be in the interest of the government to terminate the
Federal award. OMB is also eliminating the termination for cause
provision because this term is not substantially different than the
provision allowing Federal awarding agencies to terminate Federal
awards when the recipient fails to comply with the terms and
conditions.
In addition, OMB is expanding the definition of fixed amount awards
in Sec. 200.1 to allow Federal awarding agencies to apply the
provision to both grant agreements and cooperative agreements.
The revisions in 2 CFR 200.301 emphasize that agencies are
encouraged to measure recipient performance to improve program goals
and objectives, share lessons learned, and spread the adoption of
promising practices. While understanding that grant program goals and
their intended results will differ by type of program, the Grants CAP
Goal is working to shift the culture of Federal grant making from a
heavy focus on compliance to a balanced approach that includes a focus
on the degree to which grant programs achieve their goals and intended
results. To provide clarity and consistency among Federal awarding
agencies, a revision to include program evaluation costs as an example
of a direct cost under a Federal award has been included in 2 CFR
200.413 Direct costs. Please refer to OMB Circular A-11 for a
definition on program evaluation. Evaluation costs are allowed as a
direct cost in existing guidance. This language is intended to
strengthen this intent and ensure that agencies are applying this
consistently.
Agencies are reminded that evaluation costs are allowable costs
(either as direct or indirect), unless prohibited by statute or
regulation. The work under the Grants CAP goal performance work group
emphasizes evaluation as an important practice to understand the
results achieved with Federal funding.
200.102 Exceptions
OMB received several comments on this section asking for
clarification on the proposed revisions. Some commenters also noted
that the addition of the ``or less restrictive requirements'' in 2 CFR
200.102(c) and 200.208 is confusing, redundant and not needed because
Federal awarding agencies already have the discretion to impose
conditions on the recipient. OMB deliberated upon these comments and
ultimately agreed to replace the language ``or less restrictive
requirements'' with ``adjust requirements'' within the final guidance.
OMB strongly encourages Federal awarding agencies to add or remove
requirements by applying a risk-based, data-driven framework to
alleviate select compliance requirements and hold recipients
accountable for good performance. One commenter felt that the inclusion
of the requirement for agencies to ``apply more restrictive terms and
conditions when merited as indicated by a risk evaluation'' did not
warrant an exception from OMB and thus did not belong in the exceptions
section. OMB concurred with the commenter and moved this language to 2
CFR 200.206 Federal awarding agency review of risk posed by applicants.
200.202 Program Planning and Design
Many commenters were supportive of this new section and the other
revisions related to results-based grant making. Some commenters also
thought the proposal could go further to better utilize federal
grantees' activities to build and disseminate evidence of what works.
One commenter expressed concern that revisions to the performance
sections would lead to the unintended consequence of making research
look like a contract agreement. OMB provided explicit language to state
that performance measures for each program will be different. One
commenter expressed concern that this new requirement would add burden.
OMB respectfully disagrees, as this requirement is not new and does not
add burden. This section reflects activities that were previously
implied within 2 CFR and not explicitly included in its own section.
OMB appreciates the commenters who challenged OMB to go even
further with the proposal with regards to evidence-building. OMB looks
forward to furthering this discussion with stakeholder sessions in fall
2020 and will also consider these proposals in future revisions of 2
CFR. This provision is designed to operate in tandem with evidence-
related statutes (e.g., The Foundations for Evidence-Based Policymaking
Act of 2018, which emphasizes collaboration and coordination to advance
data and evidence-building functions in the Federal government) and
related OMB implementation guidance (e.g., OMB Memorandum M-19-23:
Phase 1 implementation of the Foundations for Evidence-Based
Policymaking Act of 2018. Learning Agendas, Personnel, and Planning
Guidance).
200.203 Requirement To Provide Public Notice of Federal Financial
Assistance Programs
There were several comments provided in response to the changes
made to 2 CFR 200.203. One comment inquired as to why no similar
requirements exist within the Uniform Guidance and is applicable to
pass-through entities within 2 CFR 200.332. OMB notes that the Federal
awarding agency does not have a direct relationship with the subaward
recipient; that is the role of the pass-through entity. Mandating
application of this requirement would require additional public comment
as it would add burden to the process. Further, comments asked for OMB
to develop guidance to help ensure that Federal awarding agencies have
the appropriate controls in place with respect to their processes for
making awarding decisions. OMB rejects this change for this iteration
of 2 CFR as it would be a significant change that would require an
opportunity for public comment based on the language and requirements
imposed. Additionally, some commenters requested for language to be
added regarding how often updates are expected. OMB rejects these
suggestions as the language references guidance provided by General
Services Administration (GSA) in consultation with OMB. That is where
the requirement to update each Assistance Listing on an annual basis is
specified, and it is not necessary to include this level of detail in 2
CFR 200.203.
200.204 Notice of Funding Opportunities
Commenters observed that the change in terminology from
``competitive'' to ``discretionary'' appears to broaden the requirement
of these notices to not just competitive announcements, but also sole
source discretionary announcements. Some commenters suggested for the
language to be changed back to ``competitive'' and questioned the value
of this revision. One commenter requested clarification as to whether
or not this new requirement is intended to apply when the discretionary
award is non-competitive. Another commenter suggested that it would be
burdensome and inefficient to require agencies to have notices of
funding opportunities for noncompetitive awards. OMB deliberated these
comments and subsequently decided to change this language to reflect
discretionary awards that are competed.
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200.205 Federal Awarding Agency Review of Merit Proposals
Some of the comments received were from Federal agencies who wanted
to know the purpose and the benefits behind the proposed revisions to
justify the added burden. There were also concerns about the efficiency
of the awarding process if these changes are made. Some commenters
asked for clarity on what a systematic review meant and what would
classify as ``effective.'' OMB considered all comments and made further
revisions to specify that the merit review process should be
periodically reviewed as a point of clarity on the process review.
OMB disagrees with the commenters that expressed these revisions
will add burden. The purpose of these revisions is to add clarity to
the merit review process which should already be occurring and is not a
new requirement.
200.206 Federal Awarding Agency Review of Risk Posed by Applicants
As stated in the above section describing the comments received for
Sec. 200.102, one commenter felt that the inclusion of the requirement
for agencies to ``apply more restrictive terms and conditions when
merited as indicated by a risk evaluation'' did not warrant an
exception from OMB and thus did not belong in the exceptions section.
OMB concurred with the commenter, moved this language to 2 CFR 200.206
Federal awarding agency review of risk posed by applicants, and
provided revisions to the language to read ``. . . adjust requirements
when a risk-evaluation indicates that it may be merited either pre-
award or post-award.'' One commenter requested pass-through entities to
have access to enter information into the FAPIIS system and require a
pass-through entity review as part of the risk assessment process. OMB
deliberated this comment and while it is an important topic for
discussion, OMB feels the scope of this revision would be too
substantial for finalization without receiving additional comments from
the public. Thus, OMB respectfully declines this comment. Some
commenters requested for OMB to include the requirement for Federal
awarding agencies to leverage commercially available data management
tools. OMB declines this comment and does not specify tools required
for use.
200.208 Specific Conditions
As stated above in 2 CFR 200.102, some commenters were not
supportive of the requirement of the language ``or less restrictive
requirements'' in 2 CFR 200.102(c) and 200.208. Some commenters
described this new language as confusing, redundant and not needed
because Federal awarding agencies already have the discretion to impose
conditions on the recipient. One commenter applauded OMB's decision to
further emphasize the flexibilities afforded to Federal awarding
agencies revise or remove certain requirements based on a risk
analysis. After deliberation, OMB replaced this language with ``the
Federal awarding agency may adjust requirements to a class of Federal
awards or non-Federal entities when approved by OMB . . . .''
200.211 Information Contained in a Federal Award
Some comments asked for clarity on the revisions that were
proposed. One clarifying question was the difference between the data
point for the ``Total Approved Cost Sharing or Matching, where
applicable'' and ``Total Amount of the Federal Award including approved
Cost Sharing or Matching.'' These are two completely separate data
points which call for the approved cost sharing or matching to be
identified, and then the total amount of the Federal award that is
approved cost sharing or matching. OMB did not recommend that these
were removed. Further, in response to various comments, the language in
(a) was streamlined and users are referred to the relevant performance
sections for additional information. The data points previously
proposed in paragraph (b) related to performance were already captured
in paragraph (a), and thus removed from (b). The proposed language for
(e) was revised and moved to Sec. 200.105(b) within the guidance. Many
comments received suggested revisions that would make the language more
prescriptive. Title 2 CFR was written as guidance for a large array of
users. If the language is too prescriptive, it doesn't provide
sufficient flexibility for use by the large array of users. Additional
technical corrections were made for clarity throughout this provision.
Revisions were made to Sec. 200.211(c)(1)(iv) to clarify that if the
underlying legal authority for a program changes, that may be a reason
why there would be no future budget periods under an award.
200.301 Performance Measurement
Some commenters were in support of the revisions to this section.
Many commenters provided suggestions for further revisions to the
guidance. Several commenters provided suggestions with regards to the
use of ``should'' and ``must'' throughout this section. Some commenters
wanted the language to be written strongly and use the word ``must''
throughout, others preferred ``should'' and many suggested the use of
these words should be consistent throughout this section. Some
commenters also expressed the need for OMB to include data quality
within this section. OMB concurs with the comments that consistent use
of ``must'' and ``may'' should be used in this section. Some commenters
also pointed out discrepancies between various performance sections and
a few commenters pointed out that there are discrepancies between what
is required in 2 CFR 200.211 and 200.301. In response to commenters,
OMB re-wrote this section for clarity and consistency.
200.340 Termination
There were several comments received in response to the revisions
proposed to this section. The comments can be group into the following
discreet categories:
Concern over arbitrary Federal award termination;
Adding or editing language for clarity;
Concern over how Federal awarding agencies will evaluate
awards with long-term outcomes;
Request further OMB guidance; and
Not relevant.
The largest number of commenters expressed a concern that the
proposed language will provide Federal agencies too much leverage to
arbitrarily terminate awards without sufficient cause. Several
commenters requested OMB reinstate the language, for cause, to address
this issue. Some commenters requested additional clarity and examples.
OMB deliberated upon these requests and decided as written agencies are
not able to terminate grants arbitrarily and that it was not
appropriate to include examples in 2 CFR for this section. OMB made a
technical correction to provide additional clarity. Some commenters
expressed concerns over how Federal awarding agencies will evaluate
awards with long-term outcomes. One example from the commenter was an
environmental program where the performance will require years to
measure. The example from the commenter should be determined in
coordination with the Federal awarding agency. OMB respectfully
declines this comment. Title 2 CFR is intended to be written and used
by a large array of stakeholders and thus the language is not intended
to be prescriptive, as the commenter has requested. Some commenters
requested further OMB guidance on this provision. OMB appreciates the
request for additional
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guidance and notes that guidance beyond what has been provided in the
proposed rule is out of scope for this revision effort. Other comments
provided were not relevant to the revisions proposed and thus OMB has
rejected these comments.
200.413 Direct Costs
Most comments received for this 2 CFR 200.413 were in agreement of
the revisions. The remaining comments were out of scope. Therefore, OMB
did not make changes to the revised language. Some commenters requested
OMB include additional examples for clarity that the activities are
direct costs such as planning and program coordination, data
technology, analytics, staff training, data collection, storage,
communication of evaluation and analytics, and more. OMB appreciates
the request to clarify additional examples as direct costs and would
like to expand on this further in future revisions of 2 CFR. OMB does
not think it is appropriate to include specific examples within the
guidance because it could be unintentionally interpreted to be limited
to only that list of items. However, as we think of ways to encourage
promising performance practices, OMB would like to discuss this further
during stakeholder sessions in the fall 2020.
200.328 Financial Reporting
There were some comments received in response to the revisions made
to this provision. One commenter requested that the collection of
information be no more frequently than semiannually to reduce burden.
OMB declines this comment and notes that it was out of scope because
there were no proposed changes to the frequency of financial reporting.
One commenter requested that OMB add language to discourage pass-
through entities from the practice of requiring more frequent and more
detailed financial reporting. After discussion, OMB declines this
comment as it is out of scope for this revision but will consider the
comment for a future revision of 2 CFR. Several commenters sought
clarification on the use of the term ``OMB-designated standards lead.''
Pursuant to the Grant Reporting Efficiency and Agreements Transparency
Act of 2019 (GREAT Act), the OMB Director is required to designate a
standard-setting agency (i.e., the Executive department that
administers the greatest number of programs under which Federal awards
are issued in a calendar year). The Executive department designated by
OMB as the standard-setting agency assists OMB with execution of the
requirements of the GREAT Act.
In response to commenters' requests for clarity on the performance
sections of the guidance, OMB moved the financial reporting requirement
noted currently in 2 CFR 200.301 Performance measurement to 2 CFR
200.328 Financial reporting.
200.329 Monitoring and Reporting Program Performance
Several commenters requested clarity regarding the ``OMB-designated
standards lead'' and notes that this terminology has been used
throughout the guidance. As mentioned above, one commenter also
suggested a technical correction to reference the Grant Reporting
Efficiency and Agreements Transparency (GREAT) Act for clarity on this
designation. One commenter suggested that this provision should be tied
together with the closeout provision with regards to the timeframe to
submission of reports. OMB concurred with this commenter and made
revisions accordingly. One commenter noted concern and confusion
regarding the requirement that ``costs must be charged to the approved
budget period in which they were incurred.'' The commenter also
suggested edits to clarify this requirement. OMB concurred with the
commenter and accepted the edits for incorporation into the package.
Appendix I to Part 200--Full Text of the Notice of Funding Opportunity
A number of commenters suggested edits to this section. One
commenter suggested including the term ``outcome'' to indicate the end
result and also include terms for tracking and determining if that end
result is being or has been achieved. OMB agreed with this commenter
and made the revisions accordingly. Another commenter suggested that
OMB include the requirement for Federal awarding agencies to ensure SAM
registration is current before making any advanced payments and/or
issuing any reimbursements. OMB disagrees with this recommendation, as
this requirements is already stated in 2 CFR 25.205.
B. Expanded Use of the De Minimis Rate
The revision to 2 CFR 200.414(f) expands use of the de minimis rate
of 10 percent of modified total direct costs (MTDC) to all non-Federal
entities (except for those described in Appendix VII to Part 200--State
and Local Government and Indian Tribe Indirect Cost Proposals,
paragraph D.1.b). Currently, the de minimis rate can only be used for
non-Federal entities that have never received a negotiated indirect
cost rate. The use of the de minimis rate has reduced burden for both
the non-Federal entities and the Federal agencies for preparing,
reviewing, and negotiating indirect cost rates. Since the publication
of 2 CFR in 2013, both Federal agencies and non-Federal entities have
advocated expansion of the de minimis rate for non-Federal entities
that have negotiated an indirect cost rate previously, but for some
circumstances, the negotiated rates have expired. The expiration may be
due to breaks in Federal relationships and grant funding, or lack of
resources for preparing an indirect cost proposal. This change will
further reduce the administrative burden for non-Federal entities and
Federal agencies and shift more resources toward accomplishing the
program mission.
Another revision adds language to 2 CFR 200.414(f) to clarify that
when a non-Federal entity is using the de minimis rate for its Federal
grants, it is not required to provide proof of costs that are covered
under that rate. The 10 percent de minimis rate was designed to reduce
burden for small non-Federal entities and the requirement to document
the actual indirect costs would eliminate the benefits of using the de
minimis rate. Lastly, for transparency purposes, another revision adds
a new paragraph (h) to Sec. 200.414 to require that negotiated
agreements for indirect cost rates are collected and displayed on a
public website.
200.414 Indirect (F&A) Costs
200.414(f)
OMB received several comments that were concerned with awarding a
de minimis rate that is higher than a Negotiated Indirect Cost Rate
Agreement (NICRA). OMB concurs with the concerns regarding applying a
higher de minimis rate in cases where a NICRA rate is lower than 10
percent. However, the regulation states in paragraph (c)(1) that
Federal agencies must honor negotiated rates. Additionally, some
commenters expressed concern that guidance will be misinterpreted to
allow provisional rates to be considered as expired. OMB intends to
include provisional rates and added clarifying language to the section
in response to these comments. Further, commenters were concerned with
a lack of required documentation. OMB concurs with concerns that the
language implies source documents rather than the indirect cost rate
agreement and altered the language accordingly. There were
[[Page 49511]]
several comments that suggested that the Modified Total Direct Cost
(MTDC) be used as the base. However, this suggestion is out of the
scope of this revision. Additionally, OMB would like to note that
Federal agencies must accept the negotiated rate even if it is lower
than the de minimis rate.
200.414(h)
OMB appreciated the many comments that supported the proposed
requirement to post NICRAs to a public website. There were several
comments that cited concerns over the sharing of proprietary
information through the posting of NICRA information on a public
website. To address these concerns, OMB clarified that the requirement
is not for the entire rate agreement and added language to specify the
exact information that is requested be provided for a non-Federal
entity; the indirect negotiated rate; distribution base; and the rate
type. In addition, the Indian tribes or tribal organizations, as
defined in the Indian Self Determination, Education and Assistance Act,
25 U.S.C. 450b(1)) are excluded. Further, there were several comments
that inquired about the applicability of this section. Lastly, there
were comments that inquired about who is responsible for making sure
this information is publically posted. OMB recognizes this concern and
notes that the responsibility of the Federal government will be
communicated appropriately.
C. Eliminate References to Non-Authoritative Guidance
To support implementation of E.O. 13892 of October 9, 2019
(Promoting the Rule of Law Through Transparency and Fairness in Civil
Administrative Enforcement and Adjudication) and to prohibit Federal
awarding agencies from including references to non-authoritative
guidance in the terms and conditions of Federal awards, OMB proposed
changes to Sec. 200.105 Effect on other issuances. The proposed change
was intended to reduce recipient burden and prevent Federal awarding
agencies from imposing non-binding guidance as award requirements for
recipients that has not gone through appropriate public notice and
comment. The proposed revisions related to eliminating references to
non-authoritative guidance were included in 2 CFR 200.211(e)
Information contained in a Federal award. Some commenters suggested for
this requirement to be moved within the guidance to 2 CFR 200.105(b)
Effect on other issuances for clarity of the policy intent. OMB
concurred with the commenter's suggestion and moved the requirement
accordingly.
200.105 Effect on Other Issuances
There were several commenters in strong support of this new
provision while other commenters expressed concerns regarding the
implementation. One commenter mentioned that finalizing this proposal
would cause significant difficulties in effective implementation and
effectively overseeing programs. OMB appreciates the comments received.
To address concerns, the language was re-written to better align with
E.O. 13892 and provide clarity.
D. Promoting Free Speech
Several provisions within 2 CFR are revised to align with E.O.
13798 ``Promoting Free Speech and Religious Liberty'' and E.O. 13864
``Improving Free Inquiry, Transparency, and Accountability at Colleges
and Universities.'' These sections include 2 CFR 200.300 Statutory and
national policy requirements, 200.303 Internal controls, 200.339
Remedies for noncompliance, and 200.341 Notification of termination
requirement. These E.O.s advise Federal awarding agencies on the
requirements of religious liberty laws, including those laws that apply
to grants and provide a policy for free inquiry at institutions
receiving Federal grants. The revision to 2 CFR underscores the
importance of compliance with the First Amendment.
200.209 Certifications and Representations, 200.300 Statutory and
National Policy Requirements, 200.303 Internal Controls, 200.339
Remedies for Noncompliance, 200.341 Notification of Termination
Requirement
OMB received several comments in response to this policy proposal.
Some commenters supported compliance with the Constitution while other
commenters questioned the need to include a reference to the
Constitution. OMB appreciates all comments received and after
consideration has decided to retain the proposed language within these
sections. One comment suggested the removal of the word ``statutory.''
OMB concurred with this recommendation and made the change.
E. Standardization of Terminology and Implementation of Standard Data
Elements
OMB is standardizing terms across 2 CFR part 200 to support efforts
under the Grants CAP Goal to standardize the grants management business
process and data. OMB is replacing the term ``obligation'' to either
``financial obligation'' or ``responsibility'' within the guidance as
appropriate, to ensure alignment with DATA Act definitions. OMB is
adding changes across the entirety of 2 CFR to ensure consistent use of
terms across parts 25, 170, 183, and 200 where possible, relying on 2
CFR part 200 as the primary source. As reflected in the changes, there
are instances where the terms within 2 CFR cannot be made consistent.
For example, the term ``non-Federal entity'' cannot be consistently
defined across 2 CFR: Parts 25 and 170 apply to Federal awards to
foreign organizations, foreign public entities, and for-profit
organizations, while part 200 only applies to these type of non-Federal
entities when a Federal awarding agency elects for part 200 to apply.
For definitions that are consistent across 2 CFR parts 25, 170, and
200, revisions have been made to parts 25 and 170 to refer definitions
to part 200 as the authoritative source.
The definitions ``Catalog for Federal Domestic Assistance (CFDA)
number'' and ``CFDA program title'' have been replaced with the terms
``Assistance Listings number'' and ``Assistance Listings program
title'' to reflect the change in terminology.
OMB is also revising several definitions for clarity. For example,
the term management decision is revised to emphasize that it is a
written determination provided by a Federal awarding agency or pass-
through entity.
To promote uniform application of standard data elements in future
information collection requests, OMB is also revising 2 CFR 200.207 and
200.328 to reflect that information collection requests must adhere to
the standards available from the OMB-designated standards lead. This
change further supports OMB Memorandum M-19-16 Centralized Mission
Support Capabilities for the Federal Government, which requires that
future shared service solutions must adhere to the Federal Integrated
Business Framework standards (available at: https://ussm.gsa.gov/fibf/
).
Further, OMB is revising 2 CFR part 200 to replace the term
``standard form'' with ``common form.'' Some commenters submitted
feedback with concerns that the change in terminology would allow
agencies to create unique forms with a lack of standardization. OMB did
not make any changes to the final language based on these comments.
Existing forms widely adopted by Federal awarding agencies that are
regularly referred to as standard forms are in fact common forms. For
instance, the SF-424 series, SF-425,
[[Page 49512]]
and research performance progress report are all common forms/formats.
OMB acknowledges that this is a significant change in how the community
refers to these forms and will ensure that any future guidance on the
adoption of standard data elements clarifies the use of common forms.
More information regarding common forms and flexibility under the
Paperwork Reduction Act is available at: https://www.whitehouse.gov/omb/information-regulatory-affairs/federal-collection-information/.
Finally, OMB is reformatting the definitions section of 2 CFR part 200,
subpart A--Acronyms and Definitions, by removing the section numbers to
facilitate future additions to this section.
Subpart A--Acronyms and Definitions
New Defined Terms
Several commenters sought to clarify existing parts within 2 CFR
and grant processes and procedures through the addition of several
defined terms under 200.1 Definitions. Examples of recommended terms to
include were formula grant, program beneficiary/recipient, procurement,
administrative costs, for-profit organization, conflict of interest,
covered technology, architectural/engineering professional services,
Federally-owned property, and demonstration.
In certain cases OMB agrees that additional terms may provide
greater clarification to the regulation and the management of Federal
financial assistance. OMB may consider the recommended definitions for
the suggested terms in future updates to 2 CFR. In other cases, the
terms are either not used in 2 CFR or are only applicable to a small
number of Federal awarding agencies. OMB declined these recommendation
either due to scope, or because they do not align with the intent of
this regulation.
Inserting Programmatic Instruction in Definitions
Several commenters recommended inserting programmatic instruction
for specific terms, which would provide more guidance for Federal
agencies, non-Federal entities, auditors, or others.
OMB considered these comments, but determined that it was
inappropriate to include programmatic guidance in the definition of
terms for the regulation. The purpose of 2 CFR 200.1 Definitions is to
provide meaning for specified terms within the regulation; guidance and
instruction is more appropriate other parts of 2 CFR.
Modification to Existing Definitions
Several commenters sought to clarify existing definitions by
providing technical corrections or clarification statements.
In several cases, OMB agrees that technical corrections are
necessary. The updates to these definitions are minor and did not
affect the intent of the term. In other cases, the recommendations were
either too substantive or did not align with the intent of this update
to the regulation. OMB may consider these recommendations in future
updates to 2 CFR.
Formatting
Several commenters disagreed with the removal of the numbering of
the definitions. The commenters were concerned about the overall
changes to the numbering of 2 CFR part 200, which would add burden to
updating the non-Federal entities' policies and procedures.
OMB appreciates these concerns, but does not believe that the
removal of the definition numbering will generate any significant
additional burden on non-Federal entities, because these groups already
should regularly review and update their policies and procedures to
ensure compliance with Federal, state, and local laws and regulations.
This revision is expected to limit future burden for non-Federal
entities in the event of new terms are added to this section of part
200, which would change the section's numeration.
Subpart A--Specific Definitions
Compliance Supplement
A number of commenters recommended clarifying the definition of
compliance supplement and offered revised wording for the definition.
OMB concurred and adapted the definition in consultation with members
of the interagency working group. One commenter recommended revising
the definition to frame the compliance supplement as the sole source of
information for auditors. OMB did not include this recommendation
because the compliance supplement is one of the authoritative sources
that auditors can use when auditing Federal programs. Other sources
include Federal awarding agency and program specific documents.
Contract
One commenter noted that the definition of contract was confusing,
while another recommended cross-referencing the Subrecipient and
Contractor Determinations subsection (Sec. 200.331). OMB agreed with
this assessment and updated the definition to make it easier to read,
understand, and use. Another commenter recommended the addition of
mutual aid or intergovernmental agreements to the definition of
contract. This change was not considered because it would substantively
alter the definition without providing the public the opportunity to
comment on the revision.
Cooperative Agreement, Grant Agreement
One commenter recommended specifically explaining ``transfer
anything of value'' in the definitions of cooperative agreement and
grant agreement. OMB opted to keep the existing language because both
definitions cite 31 U.S.C. 6101(3), which provides the scope of the
``transfer of anything of value.'' A commenter recommended further
describing substantial involvement in the definition of cooperative
agreement. This change was not considered because the Federal awarding
agency and the recipient are given the discretion to negotiate this
relationship. Another commenter stated that there was a conflict
Sec. Sec. 25.306 and 200.1 associated with the transfer of land or
property. OMB disagrees as the two definitions align and are also in
alignment with the associated legislation. Through the review of the
definitions of cooperative agreement and grant agreement, OMB and
members of the working group clarified that the relationship was
between the Federal awarding agency and a recipient or a pass-through
entity and a subrecipient.
Discretionary, Non-Discretionary Award
Technical edits were made to the definitions of discretionary award
and non-discretionary award to provide clarity to the intended
definitions.
Federal Interest
Two commenters recommended correcting the formula for determining
Federal interest, noting that reliance on the Federal share of the
total project costs does not appropriately account for the Federal
interest in real property, equipment, or supplies. OMB agreed with this
recommendation and amended the definition to appropriately rely on the
percentage of Federal participation in the total cost of the real
property, equipment, or supplies as part of the formula.
Recipient
One commenter recommended amending recipient be inclusive of
entities that are not necessarily non-Federal entities such as for-
profit and
[[Page 49513]]
foreign entities as well as Federal agencies. OMB agreed with this
assessment and updated the definition appropriately.
Subsidiary
One commenter recommended replacing non-Federal entity with entity,
while another recommended adding ``or controlled'' after owned to be
more inclusive of a diversity of organizations that may have
subsidiaries. Several other commenters were confused by the reference
to the FAR or found it to be redundant, recommending that it be removed
from the definition. OMB agreed with these recommended changes to the
definition and incorporated them, as appropriate.
Period of Performance, Budget Period, and Renewal
OMB also revised the proposed definitions of period of performance,
budget period, and renewal in 2 CFR part 200, as there were a
significant number of comments from varying stakeholders indicating
that the proposed revised definitions of period of performance, budget
period, and renewal created more confusion than clarity. In response,
the final rule revises the definitions for these terms to clarify how
period of performance, budget period, and renewal operationally relate.
Additionally, the final rule revises 2 CFR 200.309 to better describe
how the period of performance is modified if there is an extension or
termination of a current award. Some commenters expressed concern about
the removal of pass-through entities' authority to allow pre-award
costs to subrecipients. It was not OMB's intention to remove the pass-
through entities' authority to allow pre-award costs to subrecipients.
OMB recognizes these concerns and added language to 2 CFR 200.458 for
clarification in response to commenters. Further, there were many
comments that expressed concern about removing 2 CFR 200.309 from the
guidance due to burden with other entities that reference 2 CFR within
their own rules and regulations. Including 2 CFR 200.309 in the final
publication will eliminate that concern from commenters.
The definition of period of performance and renewal was revised to
help clarify that the term period of performance reflects the total
estimated time interval between the start of an initial Federal award
and the planned end date, and that the period of performance may
include one or more budget periods, but the identification of the
period of performance does not commit funding beyond the currently
approved budget period. The definition of budget period was edited to
clarify that recipients are authorized to expend the current funds
awarded, including any funds carried forward or other revisions
pursuant to 2 CFR 200.308. Further, recipients may only incur costs
during the first year budget period until subsequent budget periods are
funded based on the availability of appropriations, satisfactory
performance, and compliance with the terms and conditions of the award.
The definition of renewal was edited to help clarify that a renewal
award begins a distinct period of performance that starts contiguous
with, or closely following, the end of the expiring award. This change
also ensures consistent use of the term for purposes of transparency
reporting as required by FFATA.
200.403 Factors Affecting Allowability of Costs
To maintain consistency within the guidance regarding the
definition of Budget Period, 2 CFR 200.403(h) has been added to clarify
that costs must be incurred during the approved budget period and the
Federal awarding agency may waive prior written approval to carry
forward unobligated balances to subsequent budget periods.
Improper Payment, Questioned Costs
Based on some confusion expressed in comments, the definition of
improper payment was revised to accurately reflect how questioned
costs, including costs questioned costs identified in audits, are not
improper payments until reviewed and confirmed as such.
Internal Controls
Based on some confusion expressed in comments, minor modifications
to the definition of internal controls were made to provide greater
clarity on the internal controls requirements for non-Federal entities
and Federal agencies.
Oversight Agency for Audit
Several commenters expressed confusion with the revision to this
definition. Some commenters provided suggested edits for clarity. After
deliberation and in response to the commenters, OMB made further edits
to this definition for clarity.
Simplified Acquisition Threshold, Micro-Purchase
Multiple commenters were confused by the second paragraph proposed
to be added to the definition for simplified acquisition threshold.
Revisions were made to this paragraph to alleviate confusion and
accurately reflect how the simplified acquisition may be determined.
Minor technical edits were made to the definition for micro-purchase,
based on comments, to clarify that the cognizant agency for indirect
costs may approve a higher micro-purchase threshold if requested by the
non-Federal entity.
F. Support for Domestic Preferences for Procurement
As expressed in Executive Order (E.O) 13788 of April 18, 2017 (Buy
American and Hire American) and E.O. 13858 of January 21, 2019
(Executive Order on Strengthening Buy-American Preferences for
Infrastructure Projects), it is the policy of this Administration to
maximize, consistent with law, the use of goods, products, and
materials produced in the United States, in Federal procurements and
through the terms and conditions of Federal financial assistance
awards. In support of this policy, OMB is adding a new section 2 CFR
200.322 Domestic preferences for procurement, encouraging Federal award
recipients, to the extent permitted by law, to maximize use of goods,
products, and materials produced in the United States when procuring
goods and services under Federal awards. This Part will apply to
procurements under a grant or cooperative agreement.
200.322 Domestic Preferences for Procurement
OMB appreciates the many comments were very supportive of this
section. Several comments suggested including language in Appendix II
because the proposed new 2 CFR 200.322 includes the requirement that
such term be flowed down to all contracts and purchase orders. OMB
accepts this change and has made the appropriate edits to the final
language. Several comments asked for clarification regarding how
preference is given. OMB rejects this change as the language gives
Federal awarding agencies the flexibility to adjust their guidance
accordingly. Further, another comment suggested to exempt purchases
below the micro-purchase threshold from requirements in this section to
reduce the burden on non-Federal entities. OMB rejects this suggestion
as OMB does not agree with the assessment that an additional burden is
being placed. The language did not set a dollar threshold and instead
states that domestic preference should be used as appropriate and to
``to the maximum extent practicable.'' One commenter suggested a
reference to this section should also be included in Appendix II to
Part 200--Contract Provisions for Non-Federal Entity
[[Page 49514]]
Contracts Under Federal Awards. OMB concurred with this commenter and
made the revision accordingly.
G. Changes to the Procurement Standards to Better Target Areas of
Greater Risk and Conform to Statutory Requirements
To better target 2 CFR requirements on areas of greater risk
consistent with the intent of the Grants CAP Goal, and to align with
legislation related to procurement standards, OMB is revising the
guidance to increase the micro-purchase threshold from $3,500 to
$10,000, raising the simplified acquisition threshold from $100,000 to
$250,000, and allowing non-Federal entities to request a micro-purchase
threshold higher than $10,000 based on certain conditions. The NDAA
2017 increased the micro-purchase threshold from $3,500 to $10,000 for
institutions of higher education, or related or affiliated nonprofit
entities, nonprofit research organizations or independent research
institutes (41 U.S.C. 1908).
The NDAA 2017 also established an interim uniform process by which
these recipients can request, and Federal awarding agencies can approve
requests to apply, a higher micro-purchase threshold. Specifically, the
NDAA 2017 allowed a threshold above $10,000, if approved by the head of
the relevant executive agency and consistent with clean audit findings
under chapter 75 of title 31, internal institutional risk assessment,
or State law. The NDAA for FY 2018 (NDAA 2018) increased the micro-
purchase threshold to $10,000 for all recipients and also increased the
simplified acquisition threshold from $100,000 to $250,000 for all
recipients. The revisions to Sec. 200.320 outline a permanent process
by which non-Federal entities may establish a micro-purchase level
above the $10,000 threshold.
A proposal to increase the micro-purchase and simplified
acquisition thresholds in the Federal Acquisition Regulation (FAR) was
published in the Federal Register on October 2, 2019 (84 FR 52420), FAR
Case 2018-004. The FAR Rules at 48 CFR part 2, subpart 2.1, were
finalized on July 2, 2020 (85 FR 40060, 85 FR 40064) with the effective
date of August 31, 2020. In addition, the American Innovation and
Competitiveness Act of 2017 (AICA), section 207(b) required that 2 CFR
part 200 be revised to conform to the requirements concerning the
micro-purchase threshold.
In response to these statutory changes, OMB issued OMB Memorandum
M-18-18, Implementing Statutory Changes to the Micro-Purchase and the
Simplified Acquisition Thresholds for Financial Assistance (June 20,
2018) which is now incorporated in 200.320. With the final procurement
guidance now implemented, OMB Memorandum M-18-18 is rescinded.
200.320 Methods of Procurement To Be Followed
There were nearly 100 comments received relating to this section.
Many expressed confusion with the proposed revisions and provided
recommendations for clarity. In response, the section was rewritten to
incorporate many of the suggestions from commenters.
The following revisions were made to 2 CFR 200.320:
The procurement types were grouped into three categories: (1)
Informal (micro-purchase, small purchase); (2) formal (sealed bids,
proposals) and (3) Non-Competitive (sole source)
The micro-purchase threshold was raised from $3,500 to $10,000
All non-Federal entities are now authorized to request a
micro-purchase threshold higher than $10,000 based on certain
conditions that include a requirement to maintain records for threshold
up to $50,000 and a formal approval process by the Federal government
for threshold above $50,000; and
The simplified acquisition threshold was raised from $150,000
to $250,000
200.321 Contracting With Small and Minority Businesses, Women's
Business Enterprises, and Labor Surplus Area Firms
Several comments were made regarding this section that were out of
scope for the current set of revisions. As such, no changes to the
proposed language will be made at this time.
200.317 Procurements by States
One commenter suggested that 2 CFR 200.317 should reference the
procurement requirements in 2 CFR 200.322 Domestic preference for
procurements, as it is applicable to all non-Federal entities. OMB
concurred with the commenter and made revisions accordingly.
200.318 General Procurement Standards
One commenter expressed strong support for the revisions proposed
for this provision. Most commenters provided suggested edits for
clarity. One commenter provided suggested edits to clarify that the ``.
. . non-Federal entity must use its own documented procurement
procedures which must conform to applicable State, local, and tribal
laws and regulations; and Federal law. In addition, procurements for
goods and services that are directly charged to a Federal award must
conform to the standards identified in this part.'' OMB agreed with
this clarifying revision and incorporated it within 2 CFR 200.318.
200.319 Competition
One commenter expressed support for the revisions to 2 CFR 200.319.
Other commenters provided suggested edits for clarity. One commenter
asked for clarity of the meaning ``section'' and expressed the entire
subpart D should be referenced. OMB declines this comment and notes
that the term ``section'' should not be interpreted to mean the entire
subpart D and the proposed revisions to 2 CFR 200.319 only adds a new
reference to 2 CFR 200.320. This new language in no way infers that the
other procurement provisions do not apply. One commenter expressed that
it is unclear what ``required'' under an award means. OMB notes that
this language is used throughout the document as no such change was
made.
H. Emphasis on Machine-Readable Information Format
OMB aims to clarify the methods for collection, transmission, and
storage of data in 2 CFR 200.336 to further explain and promote the
collection of data in machine-readable formats. A machine-readable
format is a format that can be easily processed by a computer without
human intervention while ensuring no semantic meaning is lost (44
U.S.C. 3502(18)). The clarification reinforces the machine-readable
requirements in the Foundations of Evidence-Based Policymaking Act of
2018 (Pub. L. 115-435) and accompanying OMB guidance. This requirement
also reflects the need to continually evaluate which formats (and
structures) maximize accessibility and usability for all stakeholders.
Machine-readable formats will also help support the Leveraging Data as
a Strategic Asset Cross-Agency Priority Goal (CAP Goal #2) and efforts
under the Grants CAP Goal to Build Shared IT Infrastructure.
200.336 Methods for Collection, Transmission, and Storage of
Information
OMB received some comments on 2 CFR 200.336 requesting the
inclusion of PDFs in the language. OMB declined this suggestion since
prescribing a specific format in official guidance was deemed
inappropriate.
[[Page 49515]]
I. Changes to Closeout Provisions To Reduce Recipient Burden and
Support GONE Act Implementation
Based on lessons learned from the implementation of 2 CFR part 200
and the Grants Oversight and New Efficiency Act (GONE Act), OMB is
revising 2 CFR 200.344 Closeout to support timely closeout of awards,
improve the accuracy of final closeout reporting, and reduce recipient
burden.
The final language will increase the number of days for recipients
to submit closeout reports and liquidate all financial obligations from
90 days to 120 days. This change takes into consideration the
challenges faced by pass-through entities with respect to awards that
contain a large number of subawards. These recipients must reconcile
subawards and submit final reports to Federal awarding agencies within
the same 90 day period. Recognizing the need for pass-through entities
to receive timely reports from subrecipients to report back to Federal
awarding agencies, OMB will continue to require subrecipients to submit
their reports to the pass-through entity within 90 days. The intent of
this change is to support financial reconciliation, help ease the
burden associated with submitting reports for closeout, and promote
improved accuracy. However, OMB recognizes that providing additional
time may increase the likelihood that non-Federal entities will not
submit their final closeout reports. To mitigate this risk, OMB is
requiring Federal awarding agencies to report when a non-Federal entity
does not submit final closeout reports as a failure to comply with the
terms and conditions of the award to the OMB-designated integrity and
performance system. Finally, OMB is publishing the requirement of
Federal awarding agencies to make every effort to close out Federal
awards within one year after the end of the period of performance
unless otherwise directed by authorizing statute. The language is
intended to promote timely closeout of awards, assist with reconciling
closeout activities, and hold recipients accountable for submitting
required closeout reports.
200.344 Closeout
Many of the comments in response to revisions to 2 CFR 200.344 were
in support of the proposed revisions. The two sections listed below
received the highest volume of comments.
200.344(a)
OMB is appreciative of the many commenters who supported the
proposed extension of deadlines for the submission of reports. Due to
the significant amount of support for the changes, OMB is keeping the
language published in the proposed version. OMB also received comments
to permit pass-through entities to establish earlier dates, in
accordance with existing practice. OMB accepts this recommendation. OMB
also received comments relating to final indirect cost rates after the
end of the period of performance. OMB rejects these suggestions, as a
revised final Federal financial report can be submitted after closeout.
Therefore, lengthening the deadline would not have an impact. OMB is
making several small changes based on received comments, such as
changing ``non-Federal entity'' to ``recipient'' and adding ``or an
earlier date as agreed upon by the pass-through entity and
subrecipient.''
200.344(i)
OMB received several comments that recommended making the Federal
Awardee Performance and Integrity Information System (FAPIIS) entries
optional. The intent of the added regulation was to hold recipients
accountable and share performance across Federal agencies, which
promotes results-oriented grantmaking. Therefore, OMB is finalizing the
language that makes entry into FAPIIS mandatory. Further, it should be
noted that entry into FAPIIS does not constitute a termination, which
OMB has clarified in the final language.
200.345 Post-Closeout Adjustments and Continuing Responsibilities
Some commenters expressed concerns that the language proposed for
this provision was too open-ended and the period could extend beyond
record retention. OMB concurred with the commenters and made revisions
to address these concerns.
J. Changes to Performing the Governmentwide Audit Quality Project
Revisions to 2 CFR 200.513 include a change in the date for the
requirement for a governmentwide audit data quality project that must
be performed once every 6 years beginning with audits submitted in
2018. This date has been changed to 2021, given the significant changes
to the 2019 Compliance Supplement in support of the Grants CAP Goal.
200.513 Responsibilities
Comments in response to the change regarding the assignment of the
cognizant agency for audit responsibilities based on the direct funding
and total funding were positive and thus OMB did not make changes to
the language for the final publication. We clarified that the
determination for funding is based the federal award expenditures as
reported in the recipient's Schedule of expenditures of Federal Awards
(see Sec. 200.510(b)). Commenters in response on the governmentwide
project to determine the quality of single audits suggested a delay on
such project by a few years due the changes in the 2019 Compliance
Supplement regarding the maximum of review for compliance areas.
Commenters also suggested the use of current and on-going quality
review performed by agencies on single audits to substitute or
complement the governmentwide project. We agreed on the suggested
timing of the project and have removed the specific date listed in the
proposal. OMB will work with the agencies and the single audit
stakeholders to determine a future date for the project that is more
optimal. OMB added language to address that current quality control
review work performed by the agencies can be leveraged for the
governmentwide project.
II. Meeting Statutory Requirements and Aligning 2 CFR With Other
Authoritative Source Requirements
A. Prohibition on Certain Telecommunication and Video Surveillance
Services or Equipment
OMB revised 2 CFR to align with section 889 of the NDAA for FY 2019
(NDAA 2019). The NDAA 2019 prohibits the head of an executive agency
from obligating or expending loan or grant funds to procure or obtain,
extend or renew a contract to procure or obtain, or enter into a
contract (or extend or renew a contract) to procure or obtain the
equipment, services, or systems prohibited systems as identified in
NDAA 2019. To implement this requirement, OMB is adding a new section,
2 CFR 200.216 Prohibition on certain telecommunication and video
surveillance services or equipment, which prohibit Federal award
recipients from using government funds to enter into contracts (or
extend or renew contracts) with entities that use covered
telecommunications equipment or services. This prohibition applies even
if the contract is not intended to procure or obtain, any equipment,
system, or service that uses covered telecommunications equipment or
services. As described in section 889 of the NDAA 2019, covered
telecommunications equipment or services includes:
[[Page 49516]]
[ssquf] Telecommunications equipment produced by Huawei
Technologies Company or ZTE Corporation (or any subsidiary or affiliate
of such entities).
[ssquf] For the purpose of public safety, security of government
facilities, physical security surveillance of critical infrastructure,
and other national security purposes, video surveillance and
telecommunications equipment produced by Hytera Communications
Corporation, Hangzhou Hikvision Digital Technology Company, or Dahua
Technology Company (or any subsidiary or affiliate of such entities).
[ssquf] Telecommunications or video surveillance services provided
by such entities or using such equipment.
[ssquf] Telecommunications or video surveillance equipment or
services produced or provided by an entity that the Secretary of
Defense, in consultation with the Director of the National Intelligence
or the Director of the Federal Bureau of Investigation, reasonably
believes to be an entity owned or controlled by, or otherwise connected
to, the government of a covered foreign country.
200.216 Prohibition on Certain Telecommunication and Video Surveillance
Services or Equipment
Commenters expressed widespread concerns on the impact and
implementation of the statutory requirement. OMB sought to address
commenter concerns by re-writing this section to align closely with the
law, add a new definition for telecommunications and video surveillance
costs, and add a new section 2 CFR 200.471. The final language provides
guidance describing the meaning of covered telecommunications as
explained in the statute. The language also aligns with the
requirements in the statute affecting the financial assistance
community to include the prohibition of non-Federal entities 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 uses covered telecommunications
equipment or services as a substantial or essential component of any
system, or as a critical technology as part of any system.
Federal awarding agencies are also required by the law to work with
OMB to prioritize available funding and technical support to assist
affected businesses, institutions and organizations. In addition, the
funds must be prioritized as reasonably necessary for affected entities
to transition from covered communications equipment and services, to
procure replacement equipment and services, and to ensure that
communications service to users and customers is sustained. Further,
OMB added a new 2 CFR 200.471 Telecommunication and video surveillance
costs to provide clarity that the telecommunications and video
surveillance costs associated with 2 CFR 200.216 are unallowable. A new
definition for telecommunication and video surveillance costs, which is
described in 2 CFR 200.471, has also been added to 2 CFR for clarity.
B. Never Contract With the Enemy
To meet statutory requirements, OMB is adding part 183 to 2 CFR to
implement Never Contract with the Enemy, consistent with the fact that
the law applies to only a small number of grants and cooperative
agreements. Never Contract with the Enemy applies only to grants and
cooperative agreements that exceed $50,000, are performed outside the
United States, including U.S. territories, to a person or entity that
is actively opposing United States or coalition forces involved in a
contingency operation in which members of the Armed Forces are actively
engaged in hostilities.
To implement Never Contract with the Enemy and to reflect current
practice, OMB requires Federal awarding agencies to utilize the System
for Award Management (SAM) Exclusions and the FAPIIS to ensure
compliance before awarding a grant or cooperative agreement. Federal
awarding agencies are prohibited from making awards to persons or
entities listed in SAM Exclusions (NDAA 2017) pursuant to Never
Contract with the Enemy and are required to list in FAPIIS any grant or
cooperative agreement terminated due to Never Contract with the Enemy
as a Termination for Material Failure to Comply. The revisions also
require agencies to insert terms and conditions in grants and
cooperative agreements regarding non-Federal entities' responsibilities
to ensure no Federal award funds are provided directly or indirectly to
the enemy, to terminate subawards in violation of Never Contract with
the Enemy, and to allow the Federal Government access to records to
ensure that no Federal award funds are provided to the enemy.
The law allows Federal awarding agencies to terminate, in whole or
in part any grant, cooperative agreement, or contract that provides
funds to the enemy, as defined in the NDAA for FY 2015 (NDAA 2015).
This statute applies to procurement as well as to grants and
cooperative agreements. OMB coordinated with the procurement community
as appropriate before issuing this final guidance, including the roles
and responsibilities of the covered combatant command and Federal
awarding agencies.
Part 183 Never Contract With the Enemy
Many of the comments focused on aligning the regulation with the
authorizing legislation and streamlining and using consistent terms in
the regulatory language. OMB concurred with these comments and made the
necessary changes to the language. OMB also agreed with several
comments suggested the use of ``recipient'' rather than ``non-Federal
entity.'' In addition, OMB revised part 183 to include a reference to
void covered grants or cooperative agreements, and updated specific
parts of the legislative authority that were set to expire by aligning
with recently passed legislation for the extension of dates.
A couple commenters noted the potential burden associated with
checking SAM.gov on a monthly basis. OMB concurred with these comments
and revised the language accordingly.
C. Requirement for the FAPIIS To Include Information on a Non-Federal
Entity's Parent, Subsidiary, or Successor Entities
To meet statutory requirements, OMB revised 2 CFR parts 25 and 200
to implement Sec. 852 of the NDAA for FY 2013 (NDAA 2013), which
requires that the FAPIIS include information on a non-Federal entity's
parent, subsidiary, or successor entities. OMB requires financial
assistance applicants to provide information in SAM on their immediate
owner and highest-level owner and subsidiaries, as well as on all
predecessors that have been awarded a Federal contract, grant, or
cooperative agreement within the last three years. In addition, OMB
requires that prior to making a grant or cooperative agreement,
agencies must consider all of the information in FAPIIS with regard to
an applicant's immediate owner or highest-level owner and predecessor,
or subsidiary, if applicable. These revisions are consistent with the
Federal Acquisition Regulation (FAR) final rule regarding this law
published at 81 FR 11988 on March 7, 2016.
Part 25 Universal Identifier and System for Award Management
OMB received a significant number of comments concerning
subrecipient requirements and registration with the
[[Page 49517]]
SAM database. These commenters expressed concern with requiring
subrecipients to fully register with the SAM database. The commenters
thought this requirement would be overly burdensome and was
unnecessary.
It was not OMB's intention to require subrecipients to fully
register with the SAM database. To address this concern, OMB added a
new ``Subpart C-Recipient requirements of subrecipients'' and a note to
the terms in appendix A to clearly state that subrecipients do not need
to fully register with the SAM database.
Further, several commenters thought the addition of the requirement
for subrecipients to register with the SAM database, Federal agencies
applying for or receiving Federal awards register in the SAM database
made sections of part 25 confusing. The commenters thought that using
the term ``Federal agency'' could be misunderstood. Some commenters
thought this was particularly true with regard to section 100.
OMB agreed that the addition of the term ``Federal agency'' in part
25 made the requirements in part 25 less clear. OMB and the interagency
work group also thought that there was a need for additional clarity on
who the requirements actually apply to and in what situation. As a
result, OMB added definitions for ``applicant'' and ``recipient'' in
part 25 and removed ``non-Federal entity'' and ``Federal agency'' where
appropriate throughout part 25.
25.200 Requirements for Notice of Funding Opportunities, Regulations,
and Application Instructions
Several commenters stated that their organizations do not have a
higher level owner or subsidiaries and they may not have predecessors.
OMB recognizes that not all entities will have the same organizational
structure. The purpose of providing this information is for greater
transparency in the awarding of Federal financial assistance. The
regulatory language requires that applicants and recipients must
provide the information ``if applicable.'' If the requested information
is not applicable, an applicant or recipient would not be required to
report it.
D. Increase Transparency Through FFATA, as Amended by the DATA Act
OMB made several revisions to increase transparency regarding
Federal spending as required by FFATA, as amended by the DATA Act,
which mandates Federal agencies to report Federal appropriations
received or expended by Federal agencies and non-Federal entities. OMB
has revised the reporting thresholds to further align financial
assistance requirements with those of the Federal acquisition
community.
To increase transparency, OMB extended the applicability of Federal
financial assistance in 2 CFR part 25 and 2 CFR part 170 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.
OMB also made changes throughout 2 CFR to make it clear that
Federal agencies may receive Federal financial assistance awards. This
will increase transparency for Federal awards received by Federal
agencies.
To further align implementation of FFATA, as amended by DATA Act,
between the Federal financial assistance and acquisition communities,
OMB revises the Federal awarding agency and pass-through entity
reporting thresholds. For Federal awarding agencies, OMB revises 2 CFR
part 170 to require agencies to report Federal awards that equal or
exceed the micro-purchase threshold as set by the FAR at 48 CFR part 2,
subpart 2.1. Consistent with the FAR threshold for subcontract
reporting, OMB will raise the reporting threshold for subawards that
equal or exceed $30,000.
OMB proposed to revise 2 CFR part 25 to allow agencies the
flexibility to exempt a foreign entity applying for or receiving an
award for a project or program performed outside the United States
valued at less than $100,000. Currently, Federal awarding agencies have
the flexibility to exempt this requirement for awards valued at less
than $25,000. The exemption applies to cases where the Federal agency
has conducted a risk-based analysis and deems it impractical for the
entity to comply with the requirements(s). OMB proposed to make this
revision after receiving feedback from the international community that
requiring certain foreign entities to register in SAM introduces
substantial burden with no significant value for the Federal awarding
agency. Federal awarding agencies will continue to remain responsible
for reporting these awards for transparency purposes.
Finally, OMB will require Federal awarding agencies to associate
Federal Assistance Listings with the authorizing statute to make
listings more consistent. This supports implementation of the DATA Act
which requires agencies to report award level Federal Assistance
Listings information for display on www.usaspending.gov.
Part 25 Universal Identifier and System for Award Management
Some commenters expressed concern regarding the proposal to expand
SAM registration requirements to all type of Federal financial
assistance as required by FFATA. Specifically, commenters requested
clarity on who is considered the applicant or recipient in cases when
the intended recipient does not have a direct relationship with the
Federal awarding agency. For instance, for certain loan and loan
guarantee programs, a third-party administers the program on behalf of
the Federal awarding agency. One organization specifically expressed
concern that these third-party administers may not participate in loan
guarantee programs, if they are required to register in SAM. OMB
disagrees that it is overly burdensome for third-party administrators
to register in SAM, however, OMB agreed that it would be inappropriate
to have the intended recipient who does not have a direct relationship
with the Federal awarding agency to register in these instances. In
response to these comments, OMB revised the definitions of applicant
and recipient to clarify that SAM registration requirements apply to
those entities that receive Federal awards directly from a Federal
awarding agency and that applicants and recipients also include those
entities that administer Federal awards on behalf of Federal awarding
agencies.
25.110 Exceptions to This Part
Some commenters supported raising the threshold for foreign
organizations or foreign public entities to $100,000 in 2 CFR 25.110.
Other commenters expressed concerns that a thorough pre-award Federal
review would not be conducted for foreign entity recipients under this
higher threshold and it would be a disservice to the American taxpayer
to raise the threshold. OMB also received comments that requiring
Federal awarding agencies to only grant exemptions to foreign
organizations or foreign public entities on a case-by-case basis to be
overly burdensome.
OMB does not think that requiring Federal awarding agencies to
determine whether to grant exemptions to foreign organizations or
foreign public entities on a case-by-case basis is overly burdensome.
Considering the comments received, OMB decided to retain the current
threshold of $25,000.
Based on feedback provided by agencies and in light of the COVID-19
emergency and past emergency
[[Page 49518]]
situations where this requirement has been waived, OMB added an
exception in Sec. 25.110 allowing agencies to waive the requirement to
register in SAM when there are exigent circumstances that would prevent
an applicant from registering prior to the submission of an
application. Federal awarding agencies are responsible for the
determination on whether there are exigent circumstances that prevent
an applicant from registering in SAM and are no longer required to
request a waiver from OMB in these instances.
Part 170 Reporting Subaward and Executive Compensation Information
170 Definitions
Several commenters mentioned the difference between the term non-
Federal entity in part 170 and part 200 and requested that part 170
reference part 200 for this definition. Related comments also were
provided to the definitions of foreign organizations and foreign public
entity. The definition of non-Federal entity in part 170 intentionally
includes foreign organizations, foreign public entities, and for-profit
organizations, which is not included in the definition of non-Federal
entity in part 200. Part 200 only applies to these organization types
when a Federal awarding agency chooses to apply the requirements in
their adoption of part 200. Part 170 applies to foreign and for-profit
organizations because of the Federal Funding Accountability and
Transparency Act (Pub. L. 109-282, hereafter cited as ``Transparency
Act'') requirements. Thus, the definition for non-Federal entity in
part 200 and part 170 will remain different.
170.110 Types of Entities to Which This Part Applies
Several commenters requested clarification on the language
surrounding ``non-Federal'' and ``Federal agencies.'' OMB concurred
with these comments and made the corresponding changes to ensure
clarity. Further, OMB also agreed with comments that suggested
clarification to Sec. 170.110(b) in relation to Title IV funds and
made the subsequent edits in the final language.
170.115 Deviations
OMB concurred with comments asking to define ``deviation'' to
differentiate between exceptions by removing ``deviation'' and adding
paragraph (c) to ``Types of Exemptions.''
170.200 Federal Awarding Agency Reporting
OMB received several comments suggesting that a reference to the
definition for micro-purchase in Sec. 200.1 be added to the end of the
section. OMB concurred and made this change in the final language.
Further, OMB received comments relating to the grammatical structuring
of this section. After further review, OMB retained the existing
language.
170.210 Requirements for Notices of Funding Opportunities, Regulations,
and Application Instructions
OMB concurred with a comment that suggested including the
information on the requirements for Notice of Funding Opportunity found
in 2 CFR 200.204 and appendix I to part 200. OMB made the suggested
changes to appendix I to include these references. Further, comments
inquired if OMB has considered collecting the assurance from applicants
when they register and renew in beta.SAM.gov. OMB would like to note
that this is already part of the requirements for award terms and
conditions, and the needed assurance should go into the Compliance
Supplement for auditors to check that the assurance is received from
the recipient. Therefore, no changes related to obtaining assurances
were made to the language in this section.
170.220 Award Term
Several commenters referenced the thresholds discussed in part 25.
OMB would like to point out that the thresholds in part 25 are
unrelated to the threshold in Sec. 170.220. Additionally, several
comments suggested changes that were outside of the scope of this
revision. OMB concurred with a suggestion to remove a reference to the
Recovery Act in appendix A. Further, a comment suggested the deletion
of the insertion of ``and Federal agency'' in paragraph (a) of this
section. OMB notes that some agencies can make awards to other
agencies, dependent on the authority. Therefore, it is necessary to
keep the language that was used in the proposed version. One commenter
noted that raising the subaward reporting threshold from $25,000 to
$30,000 is unlikely to result in greater efficiencies or ease
administrative requirements and recommended for the threshold to be
increased to at least $75,000 or $100,000. OMB disagrees with this
commenter's recommendation, as the purpose of this change was to
further align implementation of FFATA, as amended by DATA Act, between
the Federal financial assistance and acquisition communities.
170.305 Federal Award
Commenters had questions relating to how this definition differs
from part 200. OMB would like to note that the definition differs
because this section is discussing Federal awards in the context of
``direct'' federal awards. Federal award in part 200 includes is more
expansive to include caveats depending on which section it is applied
to, so the definition cannot be the same. As such, the proposed
language remains.
170.315 Executive
One comment suggested clarifying this definition as many recipients
of Federal awards are state and local governments with elected
officials. OMB rejected this change as this is already covered within
the ``Exceptions'' to this section. Further, one comment requested that
this definition be included in part 200. OMB aims to eliminate
duplicative definitions and thus respectfully declines this comment to
also include the definition in part 200.
170.320 Federal Financial Assistance Subject to the Transparency Act
A commenter noted that the term Federal financial assistance
subject to the Transparency Act is not defined in part 200. OMB
concurred with this comment and made edits to the definition in Sec.
170.320 to clarify that the term includes Federal financial assistance
as defined in part 200, with some limited exceptions.
170.325 Subaward
Commenters recommended deleting the definition for ``Subaward'' and
including a reference to the definition used in part 200 to reduce
duplication. OMB concurred with this recommendation and made the
subsequent change.
E. Aligning 2 CFR With Authoritative Sources
OMB revises 2 CFR 200.431 to allow states to conform with Generally
Accepted Accounting Principles (GAAP), specifically Governmental
Accounting Standards Board (GASB) Statement 68, and to continue to
claim pension costs that are both actual and funded. OMB has made this
revision because GASB issued Statement 68, Accounting and Financial
Reporting for Pensions which amends GASB Statement 27 and allows non-
Federal entities (NFE) to claim only estimated pension costs in their
financial
[[Page 49519]]
statements. OMB's revision will allow non-Federal entities to continue
to claim pension costs that are both actual and funded.
200.431 Compensation
OMB appreciated the comments in support of the proposed changes. In
response to several comments that asked for clarification, OMB is
revising the final language to require state and local governments to
be compliant with GASB #68 for pension costs. OMB would like to note
that the cost associated with each fiscal year should be determined in
accordance with GAAP.
The definition for ``Improper Payment'' has been revised to refer
to the authoritative source for clarity, OMB Circular A-123--
Management's Responsibility for Internal Control in Federal Agencies,
Appendix C--Requirements for Payment Integrity Improvement. See above
Section I for additional information on the changes to ``Improper
Payment.''
Some commenters expressed that the reference to OMB Circular A-123
for the definition of ``Improper Payment'' added confusion and
suggested retaining the original language. OMB considered this request
and respectfully declined the comment in keeping with the practice to
align the guidance with source documents, if possible.
III. Clarifying Requirements Regarding Areas of Misinterpretation
Following the publication of 2 CFR part 200, OMB received a
substantial amount of questions from stakeholders requesting
clarifications about key aspects of the guidance. In other instances,
it has come to OMB's attention that the interpretation of certain
provisions was not consistent with the intent of 2 CFR part 200. In
response, OMB is publishing clarifications that are aimed at reducing
recipient administration burden and ensuring consistent interpretation
of guidance.
A. Responsibilities of the Pass-Through Entity To Address Only a
Subrecipient's Audit Findings Related to Their Subaward
To clarify requirements regarding responsibility for audit
findings, OMB revises 2 CFR 200.332 Requirements for pass-through
entities to clarify that pass-through entities (PTE) are responsible
for addressing only a subrecipient's audit findings that are
specifically related to their subaward. For example, a PTE is not
required to address all of the subrecipient's audit findings. In
addition, the PTE may rely on the subrecipient's auditors and cognizant
agency's oversight for routine audit follow-up and management
decisions. These changes reduce the burden for PTEs by allowing a PTE
to rely on the cognizant agency to address a subrecipient's entity-wide
issues.
200.332 Requirements for Pass-Through Entities
OMB received substantial feedback relating to the changes made in
this section. The two main changes for this section are related to the
clarification of the pass-through entities responsibilities toward the
establishment of the subrecipient indirect cost rates and the pass-
through entities responsibilities for resolving the sub recipient's
audit findings (Sec. 200.332(d)).
Although most commenters approved of the proposed changes regarding
the pass-through entities responsibilities for the subrecipient
indirect cost rates, some requested clarification on specific
situations:
Where the subrecipient has a federally approved indirect cost
rate
where the subrecipient receives funds from multiple pass-
through entities from which it may be already established an indirect
cost rate with one of the pass-through entity; or
where the subrecipient decides to use the direct allocation
method instead of the use of indirect cost rate for cost reimbursement.
OMB provides clarifications in the final language for all of the three
situations above.
Most commenters supported the proposed changes to clarify the pass-
through entities responsibility in the resolution of audit findings
reported by the subrecipients and the required management decision
letters to address the audit findings. Some commenters questioned the
use of the term ``systemic findings'' to describe the findings that
impact the whole organization. This section has been revised to
streamline and clarify the original intent of the revision which limits
the pass-through entity to review and resolve the audit findings that
are specifically related to the subaward. OMB replaced the term
``systemic findings'' with ``cross-cutting findings.'' OMB also added
that written confirmation by the subrecipients for corrective actions
on audit findings can be used as a means for follow-up and monitoring
of the subrecipient's performance.
B. Reducing Burden on Universities by Clarifying Timing of the
Disclosure Statement
OMB is adding language to the timing of submission of the
disclosure statement (DS-2), which is only required for institutions of
higher education that meet certain thresholds as defined in 48 CFR
9903.202-1(f). This revision reduces burden while maintaining the
requirement for institutions of higher education to implement policies
that are in compliance with 2 CFR.
200.419 Cost Accounting Standards and Disclosure Statement
OMB received several comments in response to 2 CFR 200.419 that
focused on concerns with the legal instruments that were subject to
this part. In response to these concerns, the language was revised to
provide clarification.
C. Response to Frequently Asked Questions Related to the Prior Release
of 2 CFR
In July 2017, OMB developed and posted Frequently Asked Questions
(FAQs) on the Chief Financial Officers Council website in response to
stakeholder requests for clarification on the first publication of 2
CFR (https://cfo.gov//wp-content/uploads/2017/08/July2017-UniformGuidanceFrequentlyAskedQuestions.pdf). Due to the volume of
questions related to these topics, OMB is including revisions to
clarify the following: The meaning of the words ``must'' and ``may'' as
they pertain to requirements; applicability and documentation
requirements when a non-Federal entity elects to charge the de minimis
indirect cost rate of MTDC; PTE responsibilities related to indirect
cost rates and audits; and applicability of 2 CFR to FAR based
contracts. These proposed revisions are intended to improve clarity and
reduce recipient burden by providing guidance on implementing 2 CFR.
The Words ``must'' and ``may'' as They Pertain to Requirements
All commenters that provided feedback on this section were in favor
of incorporating the meaning of ``must'' and ``may'' within the
guidance. One commenter suggested that the location for this change
within the guidance could be within its own section. After
consideration, OMB disagrees with the commenter and has determined that
this change should remain in the applicability section of the guidance
under the stated sub title.
[[Page 49520]]
De Minimis Indirect Cost Rate of MTDC Applicability and Documentation
See Section I (K) for additional information on the comments
received.
PTE Responsibilities Related to Indirect Cost Rates and Audits
See Section III or additional information on the comments received.
Applicability of 2 CFR to FAR Based Contracts
Many commenters expressed confusion regarding the changes to this
section. The intent of the changes to this section are to make clear
that the FAR applies to Federal contracts awarded to non-Federal
entities, and that these requirements supersede the requirements of 2
CFR part 200 in a Federal contract. Clarification was requested from a
commenter to confirm if an audit conducted for a Cost Accounting
Standards (CAS) applicable contract will take the place of a Single
Audit and how an entity with multiple grants and only one CAS-contract
would meet the requirements of the Single Audit Act.
The language clarified in Sec. 200.101(c) to state that for CAS
covered contracts, the CAS requirements regarding audit would supersede
the audit requirements in subpart F. In addition, in the case where an
entity receives many grants and one CAS covered contracts, the entity
must comply to both the Single Audits for its grants and the CAS audit
requirements for the CAS covered contract.
D. Applicability of Guidance to Federal Agencies
OMB is making changes to 2 CFR 200.101 Applicability to clarify
that Federal awarding agencies may apply the requirements of 2 CFR part
200 to other Federal agencies, to the extent permitted by law. This
change recognizes that there are instances when Federal awarding
agencies or pass-through entities have the authority to issue Federal
awards to Federal agencies and in these instances, the provisions of 2
CFR part 200 may be applied, as appropriate. This change is consistent
with how for-profit entities, foreign public entities, or foreign
organizations are treated in the Uniform Guidance.
200.101 Applicability
Several comments expressed concerns as to whether or not it is
appropriate to include awards to Federal agencies in the scope of 2
CFR. It was determined that it was appropriate to include Federal
agencies in the scope of 2 CFR as some Federal agencies are authorized
to receive grants or cooperative agreements as direct recipients or
subrecipients. This addition clarifies that subparts A through E of 2
CFR part 200 is applicable when determined by the Federal awarding
agency. There will be no change from the proposed version.
E. Other Clarifications
Parts 25 and 170
Many commenters expressed concerns that parts 25 and 170 were
confusing, inconsistent and needed to be edited for clarity. In
response to these comments, parts 25 and 170 have been revised
throughout with many technical corrections to add clarity and
consistency.
200.110 Effective/Applicability Date
A number of comments, particularly from Federal agencies, expressed
concern about the effective date for negotiated indirect cost rate
agreements (NICRAs) in paragraph (b). The intent of this section is to
retain the existing NICRAs until they are renegotiated and incorporate
the requirements from the revision to 2 CFR upon renegotiation. Non-
Federal entities with a NIRCA are expected to work with their cognizant
agency for indirect costs as appropriate. OMB clarified the intent for
2 CFR 200.110(b). One Federal agency commenter stated that OMB should
specify if the applicability date is for the entire guidance or for the
revisions. OMB accepted this comment and made revisions accordingly.
200.200 Purpose
All commenters provided recommendations to revise this section to
better align the terms ``competitive'' and ``non-competitive'' with the
new terms ``discretionary'' and ``non-discretionary.'' OMB concurs with
the recommendation to revise this section to align with other changes
within the guidance. In response to commenters, OMB has removed 2 CFR
200.200(b) and made other technical corrections accordingly.
200.207 Standard Application Requirements
OMB received one comment on this section that was out of scope for
the current set of revisions, and therefore the proposed language
remains the same.
Out of Scope Comments
Many commenters submitted comments that were either not part of the
scope of the effort, were not relevant to the revisions proposed,
pertained to sections of the guidance that were not proposed to be
revised, or would be a change too drastic that would warrant a need for
the public to have an opportunity to provide input before finalizing.
All comments within these categories were not accepted by OMB.
Changes From the Proposed Revisions Not Recommended
Comments received for several provisions within 2 CFR were
reviewed, deliberated, and determined that no changes were needed from
the proposed revisions. Some of these provisions within 2 CFR include
the following:
200.201 Use of grant agreements (including fixed amount
awards), cooperative agreements, and contracts
200.207 Standard application requirements
200.311 Real property
200.312 Federally-owned and exempt property
200.313 Equipment
200.314 Supplies
200.331 Subrecipient and contractor determinations
200.430 Compensation--personal services
400.458 Pre-award costs
200.402 Composition of Costs
Some commenters requested clarity and noted that the use of
``approved budget period'' is specific to Federal financial assistance
when 2 CFR 200.402 would apply to both contracts and Federal financial
assistance awarded to non-Federal entities. Another commenter suggested
that further clarification is needed for what ``cost principle'' and
``budget period'' mean. Based on the vast array of comments received
and the revised definitions for finalization, OMB decided to remove the
language proposed for 2 CFR 200.402.
200.449 Interest
One comment was received for this provision. The commenter
suggested that OMB provide a different example within 2 CFR 200.449
because lease contracts that transfer ownership are essentially debt
financing. The commenter explains that the example is comparing debt
financing to debt financing, which doesn't work for the intent. The
commenter provided a suggested edit that would enable the example to
remain and retain the original intent. OMB concurred with the commenter
and made the suggested edit accordingly.
200.461 Publication and Printing Costs
All commenters requested clarity and suggested revisions to this
provision. One commenter objected to specifying that costs must be
charged to the last budget period, citing that printing costs
[[Page 49521]]
are historically charged at various stages of the award. One commenter
noted that these costs have historically been allowable up until the
closeout of the award. Edits were suggest to provide additional clarity
in Sec. 200.461(b)(3) to specify that The non-Federal entity may
charge the Federal award during closeout. OMB concurs with this
suggested revision and made the change accordingly.
200.507 Program-Specific Audits
One comment was received for 2 CFR 200.507. The commenter requested
a clarification on the first phase to indicate ``in some cases'' rather
than ``in many cases'' because Appendix VI of the 2019 Compliance
Supplement only shows two current program specific audit guides. OMB
concurred with the commenter and made the revision accordingly. The
commenter provided a second recommendation to remove the 2014 beginning
date and instead include the current reference to the Compliance
Supplement appendix. OMB also concurs with this suggestion from the
commenter and made the revisions.
200.515 Audit Reporting
The comments submitted for 2 CFR 200.515 provided suggestions for
clarity. One commenter suggested reviewing this subsection against what
the Federal Audit Clearinghouse is collecting in Part III: Information
from the Schedule of Findings and Questioned Costs, Item 2. Financial
Statements, to ensure an appropriate alignment between the regulation
and the Form. Another commenter inquired about the intent of the
revisions to this provision. OMB considered and discussed all the
comments for clarity and made revisions accordingly.
Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). The
revision of 2 CFR is not a significant regulatory action under
Executive Order 12866.
Regulatory Flexibilities Act
The Regulatory Flexibility Act 5 U.S.C. 601, et seq., requires a
regulatory flexibility analysis or a certification that the rule will
not have a significant economic impact on a substantial number of small
entities. OMB expects this guidance to have a significant economic
impact on a substantial number of such entities. There are some
proposed revisions that may impose burden, however, there are more
proposed revisions that reduce burden to small entities. When reviewing
all the revisions, the burden that will be reduced for recipients is
much greater than the burden imposed.
The revisions to 2 CFR are not applicable to Federal financial
assistance awards issued prior to the effective dates provided in the
Dates section of this Notice of Final Guidance, including financial
assistance awards issued prior to those dates under the Coronavirus
Aid, Relief, and Economic Support (CARES) Act of 2020 (Pub. L. 116-
136). OMB plans to consult with applicable agencies to provide
regulatory flexibility analyses in future revisions to 2 CFR and its
subcomponents.
The applicability of Federal financial assistance in 2 CFR part 25
will be expanded beyond grants and cooperative agreements to include
other types of financial assistance such as loans and insurance. This
revision ensures compliance with FFATA, as amended by the DATA Act, and
will impact small entities that voluntarily seek financial assistance.
It will not have a significant impact on a substantial number of U.S.
small entities as approximately 69,185 small entities who received
awards for other types of financial assistance did not have a unique
entity identifier in FY 2019, while the Small Business Administration's
Office of Advocacy reported 30.7 million U.S. small businesses in that
same calendar year. Currently, 2 CFR part 25 requires all non-Federal
entities that apply for grants and cooperative agreements to register
in the SAM. In alignment with FFATA, the guidance provides that all
entities that apply directly to a Federal program for financial
assistance such as loans and insurance must register in SAM, which
requires the establishment of a unique entity identifier. Individuals
who receive Federal financial assistance as a natural person remain
exempt from this requirement. In practice, some Federal awarding
agencies already require SAM registration for all types of Federal
financial assistance and the change would make this practice consistent
among agencies. OMB recognizes that this new requirement may be
burdensome to small entities and there may be instances where it is
appropriate for Federal awarding agencies to request an exception or
delay implementation of this requirement for their programs. In
response, Federal awarding agencies may exercise the flexibility
provided in 2 CFR 25.110 to either exempt an applicant or recipient
from this requirement or request an exception from OMB on a case-by-
case for a class applicants or recipients, particularly in situations
of national emergency such as natural disasters and pandemics.
As noted in the Paperwork Reduction Act section, as of July 1,
2020, there were 159,477 unique Federal financial assistance
registrants in the SAM. According to data accessed from
USASpending.gov, in FY 2018, approximately 2,952 small entities who
received awards for other types of financial assistance did not have a
unique entity identifier. Assuming that non-Federal entities with a
unique entity identifier reported to USASpending.gov are already
registered in SAM, this change will impact approximately 2,952 small
entities annually. SAM registration is estimated to take 2.5 hours per
response, which results in 7,380 burden hours annually.
The guidance also provides consistency among definitions and terms
and proposes several provisions to increase transparency regarding
Federal spending. These revisions are intended to reduce recipient
burden and will not have a significant economic impact on a substantial
number of small entities because they will affect Federal awarding
agencies; they do not include any new requirements for non-Federal
entities.
The guidance introduces a new provision to align with section 889
of the NDAA 2019, prohibition on certain telecommunication and video
surveillance services or equipment. This statutory requirement will
introduce burden to small entities that are prohibited from obligating
or expending grant or loan funds to procure or obtain, extend or renew
a contract to procure or obtain, or enter in a contract with, as
identified in the NDAA 2019. Since this is a new legal requirement, the
burden estimate is difficult to calculate. It will impact all unique
entities awarded Federal financial assistance, of which 69,185 are
small entities.
The guidance implements a new statute that requires applicants of
Federal assistance to provide information on their owner, predecessor
and subsidiary, including the Commercial and Government Entity (CAGE)
Code and name of all predecessors, if applicable. This will not have a
significant economic impact on a substantial number of small entities
because small entities typically do not have a complex corporate
structure requiring them to report information on their owner,
predecessor, and
[[Page 49522]]
subsidiary. Further, the burden is minimal for a non-Federal entity to
provide the name of its immediate owner and highest-level owner.
The NDAA for FY2018 increased the micro-purchase threshold from
$3,500 to $10,000 and increased the simplified acquisition threshold
from $100,000 to $250,000 for all recipients. OMB's revisions reduces
burden and will not have a significant economic impact on a substantial
number of small entities because it is likely to reduce burden for all
non-Federal entities.
Paperwork Reduction Act
Consistent with the Regulatory Flexibility Act analysis discussion,
the Paperwork Reduction Act (44 U.S.C. chapter 35) applies. The
guidance contains information collection requirements and will impact
the current Information Collection Requests approved under OMB control
number 3090-0290 managed by GSA. Accordingly, GSA will submit a request
for approval to amend the existing Information Collection Requests for
SAM registration requirements for Federal financial assistance
recipients.
Annual Reporting Burden
The estimated annual reporting burden includes all possible
entities for Federal financial assistance that may be required to
register in SAM. The estimated annual reporting burden also includes
entities that receive Federal financial assistance reported in
USASpending.gov and either may or may not be required to register in
SAM.
Previously, SAM only requires that applicants and recipients of
Federal financial assistance in the form of grants register in the
system. However, applicants and recipients are required to maintain
accurate SAM registration at all times during which they have an active
Federal award, an application, or a plan under consideration by a
Federal awarding agency.
The burden estimates are approximations based on the best available
data.
As of July 7, 2019, there were 159,477 unique Federal financial
assistance registrants in SAM. However, not all registrants ultimately
apply for, or receive, Federal financial assistance. OMB aggregated SAM
data with Federal financial assistance recipient data from
USASpending.gov, excluding grants, to determine the anticipated number
of additional Federal financial assistance in SAM. OMB ran reports in
USASpending.gov to identify the number of unique recipients of Federal
financial assistance other than grants to isolate the total number of
potential registrants in SAM as a result of the updates to the proposed
guidance.
OMB removed duplicate recipients based on recipient Data Universal
Numbering System Number (DUNS) numbers, from Dun & Bradstreet (D&B). At
this time all Federal financial assistance recipients are required to
register for DUNS numbers.
In FY 2019 there were 1,751 loan and 8,915 other Federal financial
assistance recipients with unique DUNS numbers reported in
USASpending.gov. Therefore, based on the number of entities with unique
DUNS numbers that are registered in SAM (159,477), plus entities that
receive loans (122) or other Federal financial assistance (8,915)
reported in USASpending.gov that may not be reflected in SAM, the total
number of entities that may be impacted by the proposed guidance
associated Information Collection Requests under OMB control number
3090-0290 could be 172,084 registrants.
Public reporting burden for Information Collection Requests under
OMB control number 3090-0290 is managed by the GSA and estimated to
average 2.5 hours per response, including the time for reviewing
instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information.
The annual reporting burden is estimated as follows:
Respondents: 172,084.
Responses per Respondent: 1.
Total annual responses: 172,084.
Hours per Response: 2.5.
Total response Burden Hours: 430,210.
The guidance also requires that registrants for Federal financial
assistance provide information on their owner, predecessor, and
subsidiary, including the CAGE code and name of all predecessors, if
applicable. This information is required to implement Sec. 852 of the
NDAA of FY 2013, which requires that the FAPIIS include information on
a non-Federal entity's parent, subsidiary, or successor entities. Non-
Federal entities are already required to obtain a CAGE code for
purposes of SAM registration. It is anticipated that including this
information as part of SAM registration or for a renewal should not
result in significant additional time. Public reporting burden for this
collection of information is estimated to average 0.1 hours per
response. Based on the burden estimates for the total number of SAM
registrants indicated in the previous section, the annual reporting
burden for this proposal is estimated as follows:
Respondents: 172,084.
Responses per respondent: 1.
Total annual responses: 172,084.
Preparation hours per response: 0.1.
Total response Burden Hours: 17,208.
List of Subjects
2 CFR Part 25
Administrative practice and procedure, Grant programs, Grants
administration, Loan programs.
2 CFR Part 170
Colleges and universities, Grant programs, Hospitals, International
organizations, Loan programs, Reporting and recordkeeping requirements.
2 CFR Part 183
Foreign aid, Grant programs, Grants administration, International
organizations, Reporting and recordkeeping requirements.
2 CFR Part 200
Accounting, Colleges and universities, Grant programs, Grants
administration, Hospitals, Indians, Nonprofit organizations, Reporting
and recordkeeping requirements, State and local governments.
Timothy F. Soltis,
Deputy Controller.
For the reasons stated in the preamble, the Office of Management
and Budget amends 2 CFR chapters I and II as set forth below:
PART 25--UNIVERSAL IDENTIFIER AND SYSTEM FOR AWARD MANAGEMENT
0
1. The authority citation for part 25 continues to read as follows:
Authority: Pub. L. 109-282; 31 U.S.C. 6102.
0
2. Amend Sec. 25.100 by revising the introductory text and paragraph
(a) to read as follows:
Sec. 25.100 Purposes of this part.
This part provides guidance to Federal awarding agencies to
establish:
(a) The unique entity identifier as a universal identifier for
Federal financial assistance applicants, as well as recipients and
their direct subrecipients, and;
* * * * *
0
3. Revise Sec. 25.105 to read as follows:
Sec. 25.105 Types of awards to which this part applies.
This part applies to a Federal awarding agency's grants,
cooperative agreements, loans, and other types of Federal financial
assistance as defined in Sec. 25.406.
[[Page 49523]]
0
4. Revise Sec. 25.110 to read as follows:
Sec. 25.110 Exceptions to this part.
(a) General. Through a Federal awarding agency's implementation of
the guidance in this part, this part applies to all applicants and
recipients of Federal awards, other than those exempted by statute or
exempted in paragraphs (b) and (c) of this section that apply for or
receive agency awards.
(b) Exceptions for individuals. None of the requirements in this
part apply to an individual who applies for or receives Federal
financial assistance as a natural person (i.e., unrelated to any
business or nonprofit organization he or she may own or operate in his
or her name).
(c) Other exceptions. (1) Under a condition identified in paragraph
(c)(2) of this section, a Federal awarding agency may exempt an
applicant or recipient from an applicable requirement to obtain a
unique entity identifier and register in the SAM, or both.
(i) In that case, the Federal awarding agency must use a generic
unique entity identifier in data it reports to USAspending.gov if
reporting for a prime award to the recipient is required by the Federal
Funding Accountability and Transparency Act (Pub. L. 109-282, hereafter
cited as ``Transparency Act'').
(ii) Federal awarding agency use of a generic unique entity
identifier should be used rarely for prime award reporting because it
prevents prime awardees from being able to fulfill the subaward or
executive compensation reporting required by the Transparency Act.
(2) The conditions under which a Federal awarding agency may exempt
an applicant or recipient are--
(i) For any applicant or recipient, if the Federal awarding agency
determines that it must protect information about the entity from
disclosure if it is in the national security or foreign policy
interests of the United States, or to avoid jeopardizing the personal
safety of the applicant or recipient's staff or clients.
(ii) For a foreign organization or foreign public entity applying
for or receiving a Federal award or subaward for a project or program
performed outside the United States valued at less than $25,000, if the
Federal awarding agency deems it to be impractical for the entity to
comply with the requirement(s). This exemption must be determined by
the Federal awarding agency on a case-by-case basis while utilizing a
risk-based approach and does not apply if subawards are anticipated.
(iii) For an applicant, if the Federal awarding agency makes a
determination that there are exigent circumstances that prohibit the
applicant from receiving a unique entity identifier and completing SAM
registration prior to receiving a Federal award. In these instances,
Federal awarding agencies must require the recipient to obtain a unique
entity identifier and complete SAM registration within 30 days of the
Federal award date.
(3) Federal awarding agencies' use of generic unique entity
identifier, as described in paragraphs (c)(1) and (2) of this section,
should be rare. Having a generic unique entity identifier limits a
recipient's ability to use Governmentwide systems that are needed to
comply with some reporting requirements.
(d) Class exceptions. OMB may allow exceptions for classes of
Federal awards, applicants, and recipients subject to the requirements
of this part when exceptions are not prohibited by statute.
Sec. 25.115 [Removed]
0
5. Remove Sec. 25.115.
0
6. Revise Sec. 25.200 to read as follows:
Sec. 25.200 Requirements for notice of funding opportunities,
regulations, and application instructions.
(a) Each Federal awarding agency that awards the types of Federal
financial assistance defined in Sec. 25.406 must include the
requirements described in paragraph (b) of this section in each notice
of funding opportunity, regulation, or other issuance containing
instructions for applicants that is issued on or after August 13, 2020.
(b) The notice of funding opportunity, regulation, or other
issuance must require each applicant that applies and does not have an
exemption under Sec. 25.110 to:
(1) Be registered in the SAM prior to submitting an application or
plan;
(2) Maintain an active SAM registration with current information,
including information on a recipient's immediate and highest level
owner and subsidiaries, as well as on all predecessors that have been
awarded a Federal contract or grant within the last three years, if
applicable, at all times during which it has an active Federal award or
an application or plan under consideration by a Federal awarding
agency; and
(3) Provide its unique entity identifier in each application or
plan it submits to the Federal awarding agency.
(c) For purposes of this policy:
(1) The applicant meets the Federal awarding agency's eligibility
criteria and has the legal authority to apply and to receive the
Federal award. For example, if a consortium applies for a Federal award
to be made to the consortium as the recipient, the consortium must have
a unique entity identifier. If a consortium is eligible to receive
funding under a Federal awarding agency program but the agency's policy
is to make the Federal award to a lead entity for the consortium, the
unique entity identifier of the lead applicant will be used.
(2) A notice of funding opportunity is any paper or electronic
issuance that an agency uses to announce a funding opportunity, whether
it is called a ``program announcement,'' ``notice of funding
availability,'' ``broad agency announcement,'' ``research
announcement,'' ``solicitation,'' or some other term.
(3) To remain registered in the SAM database after the initial
registration, the applicant is required to review and update its
information in the SAM database on an annual basis from the date of
initial registration or subsequent updates to ensure it is current,
accurate and complete.
0
7. Revise Sec. 25.205 to read as follows:
Sec. 25.205 Effect of noncompliance with a requirement to obtain a
unique entity identifier or register in the SAM.
(a) A Federal awarding agency may not make a Federal award or
financial modification to an existing Federal award to an applicant or
recipient until the entity has complied with the requirements described
in Sec. 25.200 to provide a valid unique entity identifier and
maintain an active SAM registration with current information (other
than any requirement that is not applicable because the entity is
exempted under Sec. 25.110).
(b) At the time a Federal awarding agency is ready to make a
Federal award, if the intended recipient has not complied with an
applicable requirement to provide a unique entity identifier or
maintain an active SAM registration with current information, the
Federal awarding agency:
(1) May determine that the applicant is not qualified to receive a
Federal award; and
(2) May use that determination as a basis for making a Federal
award to another applicant.
0
8. Revise Sec. 25.210 to read as follows:
Sec. 25.210 Authority to modify agency application forms or formats.
To implement the policies in Sec. Sec. 25.200 and 25.205, a
Federal awarding agency may add a unique entity identifier field to
information collections previously approved by OMB, without having to
obtain further approval to add the field.
[[Page 49524]]
0
9. Revise Sec. 25.215 to read as follows:
Sec. 25.215 Requirements for agency information systems.
Each Federal awarding agency that awards Federal financial
assistance (as defined in Sec. 25.406) must ensure that systems
processing information related to the Federal awards, and other systems
as appropriate, are able to accept and use the unique entity identifier
as the universal identifier for Federal financial assistance applicants
and recipients.
0
10. Revise Sec. 25.220 to read as follows:
Sec. 25.220 Use of award term.
(a) To accomplish the purposes described in Sec. 25.100, a Federal
awarding agency must include in each Federal award (as defined in Sec.
25.405) the award term in appendix A to this part.
(b) A Federal awarding agency may use different letters and numbers
than those in appendix A to this part to designate the paragraphs of
the Federal award term, if necessary, to conform the system of
paragraph designations with the one used in other terms and conditions
in the Federal awarding agency's Federal awards.
0
11. Revise subpart C to read as follows:
Subpart C--Recipient Requirements of Subrecipients
Sec. 25.300 Requirement for recipients to ensure subrecipients have
a unique entity identifier.
(a) A recipient may not make a subaward to a subrecipient unless
that subrecipient has obtained and provided to the recipient a unique
entity identifier. Subrecipients are not required to complete full SAM
registration to obtain a unique entity identifier.
(b) A recipient must notify any potential subrecipients that the
recipient cannot make a subaward unless the subrecipient has obtained a
unique entity identifier as described in paragraph (a) of this section.
0
12. Add subpart D to read as follows:
Subpart D--Definitions
Sec
25.400 Applicant.
25.401 Federal Awarding Agency.
25.405 Federal Award.
25.406 Federal financial assistance.
25.407 Recipient.
25.410 System for Award Management (SAM).
25.415 Unique entity identifier.
25.425 For-profit organization.
25.430 Foreign organization.
25.431 Foreign public entity.
25.432 Highest level owner.
25.433 Indian Tribe (or ``Federally recognized Indian Tribe'').
25.440 Local government.
25.443 Non-Federal entity.
25.445 Nonprofit organization.
25.447 Predecessor.
25.450 State.
25.455 Subaward.
25.460 Subrecipient.
25.462 Subsidiary.
25.465 Successor.
Subpart D--Definitions
Sec. 25.400 Applicant.
Applicant, for the purposes of this part, means a non-Federal
entity or Federal agency that applies for Federal awards.
Sec. 25.401 Federal Awarding Agency.
Federal Awarding Agency has the meaning given in 2 CFR 200.1.
Sec. 25.405 Federal Award.
Federal Award, for the purposes of this part, means an award of
Federal financial assistance that a non-Federal entity or Federal
agency received from a Federal awarding agency.
Sec. 25.406 Federal financial assistance.
(a) Federal financial assistance, for the purposes of this part,
means assistance that entities received or administer in the form of:
(1) Grant;
(2) Cooperative agreements (which does not include a cooperative
research and development agreement pursuant to the Federal Technology
Transfer Act of 1986, as amended (15 U.S.C. 3710a));
(3) Loans;
(4) Loan guarantees;
(5) Subsidies;
(6) Insurance;
(7) Food commodities;
(8) Direct appropriations;
(9) Assessed or voluntary contributions; or
(10) Any other financial assistance transaction that authorizes the
non-Federal entity's expenditure of Federal funds.
(b) Federal financial assistance, for the purposes of this part,
does not include:
(1) Technical assistance, which provides services in lieu of money;
and
(2) A transfer of title to federally owned property provided in
lieu of money, even if the award is called a grant.
Sec. 25.407 Recipient.
Recipient, for the purposes of this part, means a non-Federal
entity or Federal agency that received a Federal award. This term also
includes a non-Federal entity who administers Federal financial
assistance awards on behalf of a Federal agency.
Sec. 25.410 System for Award Management (SAM).
System for Award Management (SAM) has the meaning given in
paragraph C.1 of the award term in appendix A to this part.
Sec. 25.415 Unique entity identifier.
Unique entity identifier has the meaning given in paragraph C.2 of
the award term in appendix A to this part.
Sec. 25.425 For-profit organization.
For-profit organization means a non-Federal entity organized for
profit. It includes, but is not limited to:
(a) An ``S corporation'' incorporated under Subchapter S of the
Internal Revenue Code;
(b) A corporation incorporated under another authority;
(c) A partnership;
(d) A limited liability corporation or partnership; and
(e) A sole proprietorship.
Sec. 25.430 Foreign organization.
Foreign organization has the meaning given in 2 CFR 200.1.
Sec. 25.431 Foreign public entity.
Foreign public entity has the meaning given in 2 CFR 200.1.
Sec. 25.432 Highest level owner.
Highest level owner has the meaning given in 2 CFR 200.1.
Sec. 25.433 Indian Tribe (or ``federally recognized Indian Tribe'').
Indian Tribe (or ``federally recognized Indian Tribe'') has the
meaning given in 2 CFR 200.1.
Sec. 25.440 Local government.
Local government has the meaning given in 2 CFR 200.1.
Sec. 25.443 Non-Federal entity.
Non-Federal entity, as it is used in this part, has the meaning
given in paragraph C.3 of the award term in appendix A to this part.
Sec. 25.445 Nonprofit organization.
Non-Federal organization, has the meaning given in 2 CFR 200.1.
Sec. 25.447 Predecessor.
Predecessor means a non-Federal entity that is replaced by a
successor and includes any predecessors of the predecessor.
Sec. 25.450 State.
State has the meaning given in 2 CFR 200.1.
Sec. 25.455 Subaward.
Subaward has the meaning given in 2 CFR 200.1.
[[Page 49525]]
Sec. 25.460 Subrecipient.
Subrecipient has the meaning given in 2 CR 200.1.
Sec. 25.462 Subsidiary.
Subsidiary has the meaning given in 2 CFR 200.1.
Sec. 25.465 Successor.
Successor means a non-Federal entity that has replaced a
predecessor by acquiring the assets and carrying out the affairs of the
predecessor under a new name (often through acquisition or merger). The
term ``successor'' does not include new offices or divisions of the
same company or a company that only changes its name.
0
13. Revise appendix A to part 25 to read as follows:
Appendix A to Part 25--Award Term
I. System for Award Management and Universal Identifier Requirements
A. Requirement for System for Award Management
Unless you are exempted from this requirement under 2 CFR 25.110,
you as the recipient must maintain current information in the SAM. This
includes information on your immediate and highest level owner and
subsidiaries, as well as on all of your predecessors that have been
awarded a Federal contract or Federal financial assistance within the
last three years, if applicable, until you submit the final financial
report required under this Federal award or receive the final payment,
whichever is later. This requires that you review and update the
information at least annually after the initial registration, and more
frequently if required by changes in your information or another
Federal award term.
B. Requirement for Unique Entity Identifier
If you are authorized to make subawards under this Federal award,
you:
1. Must notify potential subrecipients that no entity (see
definition in paragraph C of this award term) may receive a subaward
from you until the entity has provided its Unique Entity Identifier to
you.
2. May not make a subaward to an entity unless the entity has
provided its Unique Entity Identifier to you. Subrecipients are not
required to obtain an active SAM registration, but must obtain a Unique
Entity Identifier.
C. Definitions
For purposes of this term:
1. System for Award Management (SAM) means the Federal repository
into which a recipient must provide information required for the
conduct of business as a recipient. Additional information about
registration procedures may be found at the SAM internet site
(currently at https://www.sam.gov).
2. Unique Entity Identifier means the identifier assigned by SAM to
uniquely identify business entities.
3. Entity includes non-Federal entities as defined at 2 CFR 200.1
and also includes all of the following, for purposes of this part:
a. A foreign organization;
b. A foreign public entity;
c. A domestic for-profit organization; and
d. A domestic or foreign for-profit organization; and
d. A Federal agency.
4. Subaward has the meaning given in 2 CFR 200.1.
5. Subrecipient has the meaning given in 2 CFR 200.1.
PART 170--REPORTING SUBAWARD AND EXECUTIVE COMPENSATION INFORMATION
0
14. The authority citation for part 170 continues to read as follows:
Authority: Pub. L. 109-282; 31 U.S.C. 6102.
0
15. Revise Sec. 170.100 read as follows:
Sec. 170.100 Purposes of this part.
This part provides guidance to Federal awarding agencies on
reporting Federal awards to establish requirements for recipients'
reporting of information on subawards and executive total compensation,
as required by the Federal Funding Accountability and Transparency Act
of 2006 (Pub. L. 109-282), as amended by section 6202 of Public Law
110-252, hereafter referred to as ``the Transparency Act''.
0
16. Revise Sec. 170.105 to read as follows:
Sec. 170.105 Types of awards to which this part applies.
This part applies to Federal awarding agency's grants, cooperative
agreements, loans, and other forms of Federal financial assistance
subject to the Transparency Act, as defined in Sec. 170.320.
0
17. Revise Sec. 170.110 to read as follows:
Sec. 170.110 Exceptions to which this part applies.
(a) General. Through a Federal awarding agency's implementation of
the guidance in this part, this part applies to recipients, other than
those exempted by law or excepted in accordance with paragraphs (b) and
(c) of this section, that--
(1) Apply for or receive Federal awards; or
(2) Receive subawards under Federal awards.
(b) Exceptions. (1) None of the requirements in this part apply to
an individual who applies for or receives a Federal award as a natural
person (i.e., unrelated to any business or nonprofit organization he or
she may own or operate in his or her name).
(2) None of the requirements regarding reporting names and total
compensation of a non-Federal entity's five most highly compensated
executives apply unless in the non-Federal entity's preceding fiscal
year, it received--
(i) 80 percent or more of its annual gross revenue in Federal
procurement contracts (and subcontracts) and Federal financial
assistance awards subject to the Transparency Act, as defined at Sec.
170.320 (and subawards); and
(ii) $25,000,000 or more in annual gross revenue from Federal
procurement contracts (and subcontracts) and Federal financial
assistance awards subject to the Transparency Act, as defined at Sec.
170.320; and
(3) The public does not have access to information about the
compensation of senior executives, unless otherwise publicly available,
through periodic reports filed under section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section
6104 of the Internal Revenue Code of 1986.
(c) Exceptions for classes of Federal awards or recipients. OMB may
allow exceptions for classes of Federal awards or recipients subject to
the requirements of this part when exceptions are not prohibited by
statute.
Sec. 170.115 [Removed]
0
18. Remove Sec. 170.115.
0
19. Revise Sec. 170.200 to read as follows:
Sec. 170.200 Federal awarding agency reporting requirements.
(a) Federal awarding agencies are required to publicly report
Federal awards that equal or exceed the micro-purchase threshold and
publish the required information on a public-facing, OMB-designated,
governmentwide website and follow OMB guidance to support Transparency
Act implementation.
(b) Federal awarding agencies that obtain post-award data on
subaward obligations outside of this policy should take the necessary
steps to ensure that
[[Page 49526]]
their recipients are not required, due to the combination of agency-
specific and Transparency Act reporting requirements, to submit the
same or similar data multiple times during a given reporting period.
0
20. Add Sec. 170.210 to read as follows:
Sec. 170.210 Requirements for notices of funding opportunities,
regulations, and application instructions.
(a) Each Federal awarding agency that makes awards of Federal
financial assistance subject to the Transparency Act must include the
requirements described in paragraph (b) of this section in each notice
of funding opportunity, regulation, or other issuance containing
instructions for applicants under which Federal awards may be made that
are subject to Transparency Act reporting requirements, and is issued
on or after the effective date of this part.
(b) The notice of funding opportunity, regulation, or other
issuance must require each non-Federal entity that applies for Federal
financial assistance and that does not have an exception under Sec.
170.110(b) to have the necessary processes and systems in place to
comply with the reporting requirements should they receive Federal
funding.
0
21. Revise Sec. 170.220 to read as follows:
Sec. 170.220 Award term.
(a) To accomplish the purposes described in Sec. 170.100, a
Federal awarding agency must include the award term in appendix A to
this part in each Federal award to a recipient under which the total
funding is anticipated to equal or exceed $30,000 in Federal funding.
(b) A Federal awarding agency, consistent with paragraph (a) of
this section, is not required to include the award term in appendix A
to this part if it determines that there is no possibility that the
total amount of Federal funding under the Federal award will equal or
exceed $30,000. However, the Federal awarding agency must subsequently
modify the award to add the award term if changes in circumstances
increase the total Federal funding under the award is anticipated to
equal or exceed $30,000 during the period of performance.
0
22. Revise Sec. 170.300 to read as follows:
Sec. 170.300 Federal agency.
Federal agency means a Federal agency as defined at 5 U.S.C. 551(1)
and further clarified by 5 U.S.C. 552(f).
0
23. Add Sec. 170.301 to read as follows:
Sec. 170.301 Federal awarding agency.
Federal awarding agency has the meaning given in 2 CFR 200.1.
0
24. Revise Sec. 170.305 to read as follows:
Sec. 170.305 Federal award.
Federal award, for the purposes of this part, means an award of
Federal financial assistance that a recipient receives directly from a
Federal awarding agency.
0
25. Add Sec. 170.307 to read as follows:
Sec. 170.307 Foreign organization.
Foreign organization has the meaning given in 2 CFR 200.1.
0
26. Add Sec. 170.308 to read as follows:
Sec. 170.308 Foreign public entity.
Foreign public entity has the meaning given in 2 CFR 200.1.
0
27. Revise Sec. 170.310 to read as follows:
Sec. 170.310 Non-Federal entity.
Non-Federal entity has the meaning given in 2 CFR 200.1 and also
includes all of the following, for the purposes of this part:
(a) A foreign organization;
(b) A foreign public entity; and
(c) A domestic or foreign for-profit organization.
0
28. Amend Sec. 170.320 by correctly designating the paragraph (b) that
follows paragraph (j) as paragraph (k) and by revising paragraphs (k)
introductory text and (k)(2) to read as follows:
Sec. 170.320 Federal financial assistance subject to the Transparency
Act.
* * * * *
(k) Federal financial assistance subject to the Transparency Act,
does not include--
* * * * *
(2) A transfer of title to federally-owned property provided in
lieu of money, even if the award is called a grant;
* * * * *
0
29. Add Sec. 170.322 to read as follows:
Sec. 170.322 Recipient.
Recipient, for the purposes of this part, means a non-Federal
entity or Federal agency that received a Federal award.
0
30. Revise Sec. 170.325 to read as follows:
Sec. 170.325 Subaward.
Subaward has the meaning given in 2 CFR 200.1.
0
31. Revise appendix A to part 170 to read as follows:
Appendix A to Part 170--Award Term
I. Reporting Subawards and Executive Compensation
a. Reporting of first-tier subawards.
Applicability. Unless you are exempt as provided in paragraph d. of
this award term, you must report each action that equals or exceeds
$30,000 in Federal funds for a subaward to a non-Federal entity or
Federal agency (see definitions in paragraph e. of this award term).
2. Where and when to report.
i. The non-Federal entity or Federal agency must report each
obligating action described in paragraph a.1. of this award term to
http://www.fsrs.gov.
ii. For subaward information, report no later than the end of the
month following the month in which the obligation was made. (For
example, if the obligation was made on November 7, 2010, the obligation
must be reported by no later than December 31, 2010.)
3. What to report. You must report the information about each
obligating action that the submission instructions posted at http://www.fsrs.gov specify.
b. Reporting total compensation of recipient executives for non-
Federal entities.
1. Applicability and what to report. You must report total
compensation for each of your five most highly compensated executives
for the preceding completed fiscal year, if--
i. The total Federal funding authorized to date under this Federal
award equals or exceeds $30,000 as defined in 2 CFR 170.320;
ii. in the preceding fiscal year, you received--
(A) 80 percent or more of your annual gross revenues from Federal
procurement contracts (and subcontracts) and Federal financial
assistance subject to the Transparency Act, as defined at 2 CFR 170.320
(and subawards), and
(B) $25,000,000 or more in annual gross revenues from Federal
procurement contracts (and subcontracts) and Federal financial
assistance subject to the Transparency Act, as defined at 2 CFR 170.320
(and subawards); and,
iii. The public does not have access to information about the
compensation of the executives through periodic reports filed under
section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15
U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of
1986. (To determine if the public has access to the compensation
information, see the U.S. Security and Exchange Commission total
compensation filings at http://www.sec.gov/answers/execomp.htm.)
[[Page 49527]]
2. Where and when to report. You must report executive total
compensation described in paragraph b.1. of this award term:
i. As part of your registration profile at https://www.sam.gov.
ii. By the end of the month following the month in which this award
is made, and annually thereafter.
c. Reporting of Total Compensation of Subrecipient Executives.
1. Applicability and what to report. Unless you are exempt as
provided in paragraph d. of this award term, for each first-tier non-
Federal entity subrecipient under this award, you shall report the
names and total compensation of each of the subrecipient's five most
highly compensated executives for the subrecipient's preceding
completed fiscal year, if--
i. in the subrecipient's preceding fiscal year, the subrecipient
received--
(A) 80 percent or more of its annual gross revenues from Federal
procurement contracts (and subcontracts) and Federal financial
assistance subject to the Transparency Act, as defined at 2 CFR 170.320
(and subawards) and,
(B) $25,000,000 or more in annual gross revenues from Federal
procurement contracts (and subcontracts), and Federal financial
assistance subject to the Transparency Act (and subawards); and
ii. The public does not have access to information about the
compensation of the executives through periodic reports filed under
section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15
U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of
1986. (To determine if the public has access to the compensation
information, see the U.S. Security and Exchange Commission total
compensation filings at http://www.sec.gov/answers/execomp.htm.)
2. Where and when to report. You must report subrecipient executive
total compensation described in paragraph c.1. of this award term:
i. To the recipient.
ii. By the end of the month following the month during which you
make the subaward. For example, if a subaward is obligated on any date
during the month of October of a given year (i.e., between October 1
and 31), you must report any required compensation information of the
subrecipient by November 30 of that year.
d. Exemptions.
If, in the previous tax year, you had gross income, from all
sources, under $300,000, you are exempt from the requirements to
report:
i. Subawards, and
ii. The total compensation of the five most highly compensated
executives of any subrecipient.
e. Definitions. For purposes of this award term:
1. Federal Agency means a Federal agency as defined at 5 U.S.C.
551(1) and further clarified by 5 U.S.C. 552(f).
2. Non-Federal entity means all of the following, as defined in 2
CFR part 25:
i. A Governmental organization, which is a State, local government,
or Indian tribe;
ii. A foreign public entity;
iii. A domestic or foreign nonprofit organization; and,
iv. A domestic or foreign for-profit organization
3. Executive means officers, managing partners, or any other
employees in management positions.
4. Subaward:
i. This term means a legal instrument to provide support for the
performance of any portion of the substantive project or program for
which you received this award and that you as the recipient award to an
eligible subrecipient.
ii. The term does not include your procurement of property and
services needed to carry out the project or program (for further
explanation, see 2 CFR 200.331).
iii. A subaward may be provided through any legal agreement,
including an agreement that you or a subrecipient considers a contract.
5. Subrecipient means a non-Federal entity or Federal agency that:
i. Receives a subaward from you (the recipient) under this award;
and
ii. Is accountable to you for the use of the Federal funds provided
by the subaward.
6. Total compensation means the cash and noncash dollar value
earned by the executive during the recipient's or subrecipient's
preceding fiscal year and includes the following (for more information
see 17 CFR 229.402(c)(2)).
0
31a. Add part 183 to read as follows:
PART 183--NEVER CONTRACT WITH THE ENEMY
Sec.
183.5 Purpose of this part.
183.10 Applicability.
183.15 Responsibilities of Federal awarding agencies.
183.20 Reporting responsibilities of Federal awarding agencies.
183.25 Responsibilities of recipients.
183.30 Access to records.
183.35 Definitions.
APPENDIX A TO PART 183--CLAUSES FOR AWARD AGREEMENTS
Authority: Pub. L. 113-291.
Sec. 183.5 Purpose of this part.
This part provides guidance to Federal awarding agencies on the
implementation of the Never Contract with the Enemy requirements
applicable to certain grants and cooperative agreements, as specified
in subtitle E, title VIII of the National Defense Authorization Act
(NDAA) for Fiscal Year (FY) 2015 (Pub. L. 113-291), as amended by Sec.
822 of the National Defense Authorization Act for Fiscal Year 2020
(Pub. L. 116-92).
Sec. 183.10 Applicability.
(a) This part applies only to grants and cooperative agreements
that are expected to exceed $50,000 and that are performed outside the
United States, including U.S. territories, and that are in support of a
contingency operation in which members of the Armed Forces are actively
engaged in hostilities. It does not apply to the authorized
intelligence or law enforcement activities of the Federal Government.
(b) All elements of this part are applicable until the date of
expiration as provided in law.
Sec. 183.15 Responsibilities of Federal awarding agencies.
(a) Prior to making an award for a covered grant or cooperative
agreement (see also Sec. 183.35), the Federal awarding agency must
check the current list of prohibited or restricted persons or entities
in the System Award Management (SAM) Exclusions.
(b) The Federal awarding agency may include the award term provided
in appendix A of this part in all covered grant and cooperative
agreement awards in accordance with Never Contract with the Enemy.
(c) A Federal awarding agency may become aware of a person or
entity that:
(1) Provides funds, including goods and services, received under a
covered grant or cooperative agreement of an executive agency directly
or indirectly to covered persons or entities; or
(2) Fails to exercise due diligence to ensure that none of the
funds, including goods and services, received under a covered grant or
cooperative agreement of an executive agency are provided directly or
indirectly to covered persons or entities.
(d) When a Federal awarding agency becomes aware of such a person
or entity, it may do any of the following actions:
(1) Restrict the future award of all Federal contracts, grants, and
cooperative agreements to the person or entity based upon concerns that
Federal awards to the entity would provide
[[Page 49528]]
grant funds directly or indirectly to a covered person or entity.
(2) Terminate any contract, grant, or cooperative agreement to a
covered person or entity upon becoming aware that the recipient has
failed to exercise due diligence to ensure that none of the award funds
are provided directly or indirectly to a covered person or entity.
(3) Void in whole or in part any grant, cooperative agreement or
contracts of the executive agency concerned upon a written
determination by the head of contracting activity or other appropriate
official that the grant or cooperative agreement provides funds
directly or indirectly to a covered person or entity.
(e) The Federal awarding agency must notify recipients in writing
regarding its decision to restrict all future awards and/or to
terminate or void a grant or cooperative agreement. The agency must
also notify the recipient in writing about the recipient's right to
request an administrative review (using the agency's procedures) of the
restriction, termination, or void of the grant or cooperative agreement
within 30 days of receiving notification.
Sec. 183.20 Reporting responsibilities of Federal awarding agencies.
(a) If a Federal awarding agency restricts all future awards to a
covered person or entity, it must enter information on the ineligible
person or entity into SAM Exclusions as a prohibited or restricted
source pursuant to Subtitle E, Title VIII of the NDAA for FY 2015 (Pub.
L. 113-291).
(b) When a Federal awarding agency terminates or voids a grant or
cooperative agreement due to Never Contract with the Enemy, it must
report the termination as a Termination for Material Failure to Comply
in the Office of Management and Budget (OMB)-designated integrity and
performance system accessible through SAM (currently the Federal
Awardee Performance and Integrity Information System (FAPIIS)).
(c) The Federal awarding agency shall document and report to the
head of the executive agency concerned (or the designee of such head)
and the commander of the covered combatant command concerned (or
specific deputies):
(1) Any action to restrict all future awards or to terminate or
void an award with a covered person or entity.
(2) Any decision not to restrict all future awards, terminate, or
void an award along with the agency's reasoning for not taking one of
these actions after the agency became aware that a person or entity is
a prohibited or restricted source.
(d) Each report referenced in paragraph (c)(1) of this section
shall include:
(1) The executive agency taking such action.
(2) An explanation of the basis for the action taken.
(3) The value of the terminated or voided grant or cooperative
agreement.
(4) The value of all grants and cooperative agreements of the
executive agency with the person or entity concerned at the time the
grant or cooperative agreement was terminated or voided.
(e) Each report referenced in paragraph (c)(2) of this section
shall include:
(1) The executive agency concerned.
(2) An explanation of the basis for not taking the action.
(f) For each instance in which an executive agency exercised the
additional authority to examine recipient and lower tier entity (e.g.,
subrecipient or contractor) records, the agency must report in writing
to the head of the executive agency concerned (or the designee of such
head) and the commander of the covered combatant command concerned (or
specific deputies) the following:
(1) An explanation of the basis for the action taken; and
(2) A summary of the results of any examination of records.
Sec. 183.25 Responsibilities of recipients.
(a) Recipients of covered grants or cooperative agreements must
fulfill the requirements outlined in the award term provided in
appendix A to this part.
(b) Recipients must also flow down the provisions in award terms
covered in appendix A to this part to all contracts and subawards under
the award.
Sec. 183.30 Access to records.
In addition to any other existing examination-of-records authority,
the Federal Government is authorized to examine any records of the
recipient and its subawards, to the extent necessary, to ensure that
funds, including supplies and services, received under a covered grant
or cooperative agreement (see Sec. 183.35) are not provided directly
or indirectly to a covered person or entity in accordance with Never
Contract with the Enemy. The Federal awarding agency may only exercise
this authority upon a written determination by the Federal awarding
agency that relies on a finding by the commander of a covered combatant
command that there is reason to believe that funds, including supplies
and services, received under the grant or cooperative agreement may
have been provided directly or indirectly to a covered person or
entity.
Sec. 183.35 Definitions.
Terms used in this part are defined as follows:
Contingency operation, as defined in 10 U.S.C. 101a, means a
military operation that--
(1) Is designated by the Secretary of Defense as an operation in
which members of the armed forces are or may become involved in
military actions, operations, or hostilities against an enemy of the
United States or against an opposing military force; or
(2) Results in the call or order to, or retention on, active duty
of members of the uniformed services under 10 U.S.C. 688, 12301a,
12302, 12304, 12304a, 12305, 12406 of 10 U.S.C. chapter 15, 14 U.S.C.
712 or any other provision of law during a war or during a national
emergency declared by the President or Congress.
Covered combatant command means the following:
(1) The United States Africa Command.
(2) The United States Central Command.
(3) The United States European Command.
(4) The United States Pacific Command.
(5) The United States Southern Command.
(6) The United States Transportation Command.
Covered grant or cooperative agreement means a grant or cooperative
agreement, as defined in 2 CFR 200.1 with an estimated value in excess
of $50,000 that is performed outside the United States, including its
possessions and territories, in support of a contingency operation in
which members of the Armed Forces are actively engaged in hostilities.
Except for U.S. Department of Defense grants and cooperative agreements
that were awarded on or before December 19, 2017, that will be
performed in the United States Central Command, where the estimated
value is in excess of $100,000.
Covered person or entity means a person or entity that is actively
opposing United States or coalition forces involved in a contingency
operation in which members of the Armed Forces are actively engaged in
hostilities.
Appendix A to Part 183--Award Terms for Never Contract With the Enemy
Federal awarding agencies may include the following award terms in
all
[[Page 49529]]
awards for covered grants and cooperative agreements in accordance with
Never Contract with the Enemy:
Term 1
Prohibition on Providing Funds to the Enemy
(a) The recipient must--
(1) Exercise due diligence to ensure that none of the funds,
including supplies and services, received under this grant or
cooperative agreement are provided directly or indirectly (including
through subawards or contracts) to a person or entity who is actively
opposing the United States or coalition forces involved in a
contingency operation in which members of the Armed Forces are actively
engaged in hostilities, which must be completed through 2 CFR 180.300
prior to issuing a subaward or contract and;
(2) Terminate or void in whole or in part any subaward or contract
with a person or entity listed in SAM as a prohibited or restricted
source pursuant to subtitle E of Title VIII of the NDAA for FY 2015,
unless the Federal awarding agency provides written approval to
continue the subaward or contract.
(b) The recipient may include the substance of this clause,
including paragraph (a) of this clause, in subawards under this grant
or cooperative agreement that have an estimated value over $50,000 and
will be performed outside the United States, including its outlying
areas.
(c) The Federal awarding agency has the authority to terminate or
void this grant or cooperative agreement, in whole or in part, if the
Federal awarding agency becomes aware that the recipient failed to
exercise due diligence as required by paragraph (a) of this clause or
if the Federal awarding agency becomes aware that any funds received
under this grant or cooperative agreement have been provided directly
or indirectly to a person or entity who is actively opposing coalition
forces involved in a contingency operation in which members of the
Armed Forces are actively engaged in hostilities.
(End of term)
Term 2
Additional Access to Recipient Records
(a) In addition to any other existing examination-of-records
authority, the Federal Government is authorized to examine any records
of the recipient and its subawards or contracts to the extent necessary
to ensure that funds, including supplies and services, available under
this grant or cooperative agreement are not provided, directly or
indirectly, to a person or entity that is actively opposing United
States or coalition forces involved in a contingency operation in which
members of the Armed Forces are actively engaged in hostilities, except
for awards awarded by the Department of Defense on or before Dec 19,
2017 that will be performed in the United States Central Command
(USCENTCOM) theater of operations.
(b) The substance of this clause, including this paragraph (b), is
required to be included in subawards or contracts under this grant or
cooperative agreement that have an estimated value over $50,000 and
will be performed outside the United States, including its outlying
areas.
(End of term)
PART 200--UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND
AUDIT REQUIREMENTS FOR FEDERAL AWARDS
0
32. The authority citation for part 200 continues to read as follows:
Authority: 31 U.S.C. 503
0
33. Amend Sec. 200.0 by removing the acronym CFDA, revising the
acronym MTDC, adding in alphabetical order the acronym NFE, and
revising the acronym SAM to read as follows:
Sec. 200.0 Acronyms.
* * * * *
MTDC Modified Total Direct Cost
NFE Non-Federal Entity
* * * * *
SAM System for Award Management
* * * * *
0
34. Revise Sec. 200.1 to read as follows:
Sec. 200.1 Definitions.
These are the definitions for terms used in this part. Different
definitions may be found in Federal statutes or regulations that apply
more specifically to particular programs or activities. These
definitions could be supplemented by additional instructional
information provided in governmentwide standard information
collections. For purposes of this part, the following definitions
apply:
Acquisition cost means the cost of the asset including the cost to
ready the asset for its intended use. Acquisition cost for equipment,
for example, means the net invoice price of the equipment, including
the cost of any modifications, attachments, accessories, or auxiliary
apparatus necessary to make it usable for the purpose for which it is
acquired. Acquisition costs for software includes those development
costs capitalized in accordance with generally accepted accounting
principles (GAAP). Ancillary charges, such as taxes, duty, protective
in transit insurance, freight, and installation may be included in or
excluded from the acquisition cost in accordance with the non-Federal
entity's regular accounting practices.
Advance payment means a payment that a Federal awarding agency or
pass-through entity makes by any appropriate payment mechanism,
including a predetermined payment schedule, before the non-Federal
entity disburses the funds for program purposes.
Allocation means the process of assigning a cost, or a group of
costs, to one or more cost objective(s), in reasonable proportion to
the benefit provided or other equitable relationship. The process may
entail assigning a cost(s) directly to a final cost objective or
through one or more intermediate cost objectives.
Assistance listings refers to the publicly available listing of
Federal assistance programs managed and administered by the General
Services Administration, formerly known as the Catalog of Federal
Domestic Assistance (CFDA).
Assistance listing number means a unique number assigned to
identify a Federal Assistance Listings, formerly known as the CFDA
Number.
Assistance listing program title means the title that corresponds
to the Federal Assistance Listings Number, formerly known as the CFDA
program title.
Audit finding means deficiencies which the auditor is required by
Sec. 200.516(a) to report in the schedule of findings and questioned
costs.
Auditee means any non-Federal entity that expends Federal awards
which must be audited under subpart F of this part.
Auditor means an auditor who is a public accountant or a Federal,
State, local government, or Indian tribe audit organization, which
meets the general standards specified for external auditors in
generally accepted government auditing standards (GAGAS). The term
auditor does not include internal auditors of nonprofit organizations.
Budget means the financial plan for the Federal award that the
Federal awarding agency or pass-through entity approves during the
Federal award process or in subsequent amendments to the Federal award.
It may include the Federal and non-Federal share or only the Federal
share, as determined by the Federal awarding agency or pass-through
entity.
Budget period means the time interval from the start date of a
funded portion
[[Page 49530]]
of an award to the end date of that funded portion during which
recipients are authorized to expend the funds awarded, including any
funds carried forward or other revisions pursuant to Sec. 200.308.
Capital assets means:
(1) Tangible or intangible assets used in operations having a
useful life of more than one year which are capitalized in accordance
with GAAP. Capital assets include:
(i) Land, buildings (facilities), equipment, and intellectual
property (including software) whether acquired by purchase,
construction, manufacture, exchange, or through a lease accounted for
as financed purchase under Government Accounting Standards Board (GASB)
standards or a finance lease under Financial Accounting Standards Board
(FASB) standards; and
(ii) Additions, improvements, modifications, replacements,
rearrangements, reinstallations, renovations or alterations to capital
assets that materially increase their value or useful life (not
ordinary repairs and maintenance).
(2) For purpose of this part, capital assets do not include
intangible right-to-use assets (per GASB) and right-to-use operating
lease assets (per FASB). For example, assets capitalized that recognize
a lessee's right to control the use of property and/or equipment for a
period of time under a lease contract. See also Sec. 200.465.
Capital expenditures means expenditures to acquire capital assets
or expenditures to make additions, improvements, modifications,
replacements, rearrangements, reinstallations, renovations, or
alterations to capital assets that materially increase their value or
useful life.
Central service cost allocation plan means the documentation
identifying, accumulating, and allocating or developing billing rates
based on the allowable costs of services provided by a State or local
government or Indian tribe on a centralized basis to its departments
and agencies. The costs of these services may be allocated or billed to
users.
Claim means, depending on the context, either:
(1) A written demand or written assertion by one of the parties to
a Federal award seeking as a matter of right:
(i) The payment of money in a sum certain;
(ii) The adjustment or interpretation of the terms and conditions
of the Federal award; or
(iii) Other relief arising under or relating to a Federal award.
(2) A request for payment that is not in dispute when submitted.
Class of Federal awards means a group of Federal awards either
awarded under a specific program or group of programs or to a specific
type of non-Federal entity or group of non-Federal entities to which
specific provisions or exceptions may apply.
Closeout means the process by which the Federal awarding agency or
pass-through entity determines that all applicable administrative
actions and all required work of the Federal award have been completed
and takes actions as described in Sec. 200.344.
Cluster of programs means a grouping of closely related programs
that share common compliance requirements. The types of clusters of
programs are research and development (R&D), student financial aid
(SFA), and other clusters. ``Other clusters'' are as defined by OMB in
the compliance supplement or as designated by a State for Federal
awards the State provides to its subrecipients that meet the definition
of a cluster of programs. When designating an ``other cluster,'' a
State must identify the Federal awards included in the cluster and
advise the subrecipients of compliance requirements applicable to the
cluster, consistent with Sec. 200.332(a). A cluster of programs must
be considered as one program for determining major programs, as
described in Sec. 200.518, and, with the exception of R&D as described
in Sec. 200.501(c), whether a program-specific audit may be elected.
Cognizant agency for audit means the Federal agency designated to
carry out the responsibilities described in Sec. 200.513(a). The
cognizant agency for audit is not necessarily the same as the cognizant
agency for indirect costs. A list of cognizant agencies for audit can
be found on the Federal Audit Clearinghouse (FAC) website.
Cognizant agency for indirect costs means the Federal agency
responsible for reviewing, negotiating, and approving cost allocation
plans or indirect cost proposals developed under this part on behalf of
all Federal agencies. The cognizant agency for indirect cost is not
necessarily the same as the cognizant agency for audit. For assignments
of cognizant agencies see the following:
(1) For Institutions of Higher Education (IHEs): Appendix III to
this part, paragraph C.11.
(2) For nonprofit organizations: Appendix IV to this part,
paragraph C.2.a.
(3) For State and local governments: Appendix V to this part,
paragraph F.1.
(4) For Indian tribes: Appendix VII to this part, paragraph D.1.
Compliance supplement means an annually updated authoritative
source for auditors that serves to identify existing important
compliance requirements that the Federal Government expects to be
considered as part of an audit. Auditors use it to understand the
Federal program's objectives, procedures, and compliance requirements,
as well as audit objectives and suggested audit procedures for
determining compliance with the relevant Federal program.
Computing devices means machines used to acquire, store, analyze,
process, and publish data and other information electronically,
including accessories (or ``peripherals'') for printing, transmitting
and receiving, or storing electronic information. See also the
definitions of supplies and information technology systems in this
section.
Contract means, for the purpose of Federal financial assistance, a
legal instrument by which a recipient or subrecipient purchases
property or services needed to carry out the project or program under a
Federal award. For additional information on subrecipient and
contractor determinations, see Sec. 200.331. See also the definition
of subaward in this section.
Contractor means an entity that receives a contract as defined in
this section.
Cooperative agreement means a legal instrument of financial
assistance between a Federal awarding agency and a recipient or a pass-
through entity and a subrecipient that, consistent with 31 U.S.C. 6302-
6305:
(1) Is used to enter into a relationship the principal purpose of
which is to transfer anything of value to carry out a public purpose
authorized by a law of the United States (see 31 U.S.C. 6101(3)); and
not to acquire property or services for the Federal Government or pass-
through entity's direct benefit or use;
(2) Is distinguished from a grant in that it provides for
substantial involvement of the Federal awarding agency in carrying out
the activity contemplated by the Federal award.
(3) The term does not include:
(i) A cooperative research and development agreement as defined in
15 U.S.C. 3710a; or
(ii) An agreement that provides only:
(A) Direct United States Government cash assistance to an
individual;
(B) A subsidy;
(C) A loan;
(D) A loan guarantee; or
[[Page 49531]]
(E) Insurance.
Cooperative audit resolution means the use of audit follow-up
techniques which promote prompt corrective action by improving
communication, fostering collaboration, promoting trust, and developing
an understanding between the Federal agency and the non-Federal entity.
This approach is based upon:
(1) A strong commitment by Federal agency and non-Federal entity
leadership to program integrity;
(2) Federal agencies strengthening partnerships and working
cooperatively with non-Federal entities and their auditors; and non-
Federal entities and their auditors working cooperatively with Federal
agencies;
(3) A focus on current conditions and corrective action going
forward;
(4) Federal agencies offering appropriate relief for past
noncompliance when audits show prompt corrective action has occurred;
and
(5) Federal agency leadership sending a clear message that
continued failure to correct conditions identified by audits which are
likely to cause improper payments, fraud, waste, or abuse is
unacceptable and will result in sanctions.
Corrective action means action taken by the auditee that:
(1) Corrects identified deficiencies;
(2) Produces recommended improvements; or
(3) Demonstrates that audit findings are either invalid or do not
warrant auditee action.
Cost allocation plan means central service cost allocation plan or
public assistance cost allocation plan.
Cost objective means a program, function, activity, award,
organizational subdivision, contract, or work unit for which cost data
are desired and for which provision is made to accumulate and measure
the cost of processes, products, jobs, capital projects, etc. A cost
objective may be a major function of the non-Federal entity, a
particular service or project, a Federal award, or an indirect
(Facilities & Administrative (F&A)) cost activity, as described in
subpart E of this part. See also the definitions of final cost
objective and intermediate cost objective in this section.
Cost sharing or matching means the portion of project costs not
paid by Federal funds or contributions (unless otherwise authorized by
Federal statute). See also Sec. 200.306.
Cross-cutting audit finding means an audit finding where the same
underlying condition or issue affects all Federal awards (including
Federal awards of more than one Federal awarding agency or pass-through
entity).
Disallowed costs means those charges to a Federal award that the
Federal awarding agency or pass-through entity determines to be
unallowable, in accordance with the applicable Federal statutes,
regulations, or the terms and conditions of the Federal award.
Discretionary award means an award in which the Federal awarding
agency, in keeping with specific statutory authority that enables the
agency to exercise judgment (``discretion''), selects the recipient
and/or the amount of Federal funding awarded through a competitive
process or based on merit of proposals. A discretionary award may be
selected on a non-competitive basis, as appropriate.
Equipment means tangible personal property (including information
technology systems) having a useful life of more than one year and a
per-unit acquisition cost which equals or exceeds the lesser of the
capitalization level established by the non-Federal entity for
financial statement purposes, or $5,000. See also the definitions of
capital assets, computing devices, general purpose equipment,
information technology systems, special purpose equipment, and supplies
in this section.
Expenditures means charges made by a non-Federal entity to a
project or program for which a Federal award was received.
(1) The charges may be reported on a cash or accrual basis, as long
as the methodology is disclosed and is consistently applied.
(2) For reports prepared on a cash basis, expenditures are the sum
of:
(i) Cash disbursements for direct charges for property and
services;
(ii) The amount of indirect expense charged;
(iii) The value of third-party in-kind contributions applied; and
(iv) The amount of cash advance payments and payments made to
subrecipients.
(3) For reports prepared on an accrual basis, expenditures are the
sum of:
(i) Cash disbursements for direct charges for property and
services;
(ii) The amount of indirect expense incurred;
(iii) The value of third-party in-kind contributions applied; and
(iv) The net increase or decrease in the amounts owed by the non-
Federal entity for:
(A) Goods and other property received;
(B) Services performed by employees, contractors, subrecipients,
and other payees; and
(C) Programs for which no current services or performance are
required such as annuities, insurance claims, or other benefit
payments.
Federal agency means an ``agency'' as defined at 5 U.S.C. 551(1)
and further clarified by 5 U.S.C. 552(f).
Federal Audit Clearinghouse (FAC) means the clearinghouse
designated by OMB as the repository of record where non-Federal
entities are required to transmit the information required by subpart F
of this part.
Federal award has the meaning, depending on the context, in either
paragraph (1) or (2) of this definition:
(1)(i) The Federal financial assistance that a recipient receives
directly from a Federal awarding agency or indirectly from a pass-
through entity, as described in Sec. 200.101; or
(ii) The cost-reimbursement contract under the Federal Acquisition
Regulations that a non-Federal entity receives directly from a Federal
awarding agency or indirectly from a pass-through entity, as described
in Sec. 200.101.
(2) The instrument setting forth the terms and conditions. The
instrument is the grant agreement, cooperative agreement, other
agreement for assistance covered in paragraph (2) of the definition of
Federal financial assistance in this section, or the cost-reimbursement
contract awarded under the Federal Acquisition Regulations.
(3) Federal award does not include other contracts that a Federal
agency uses to buy goods or services from a contractor or a contract to
operate Federal Government owned, contractor operated facilities
(GOCOs).
(4) See also definitions of Federal financial assistance, grant
agreement, and cooperative agreement.
Federal award date means the date when the Federal award is signed
by the authorized official of the Federal awarding agency.
Federal financial assistance means
(1) Assistance that non-Federal entities receive or administer in
the form of:
(i) Grants;
(ii) Cooperative agreements;
(iii) Non-cash contributions or donations of property (including
donated surplus property);
(iv) Direct appropriations;
(v) Food commodities; and
(vi) Other financial assistance (except assistance listed in
paragraph (2) of this definition).
(2) For Sec. 200.203 and subpart F of this part, Federal financial
assistance also includes assistance that non-Federal entities receive
or administer in the form of:
(i) Loans;
(ii) Loan Guarantees;
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(iii) Interest subsidies; and
(iv) Insurance.
(3) For Sec. 200.216, Federal financial assistance includes
assistance that non-Federal entities receive or administer in the form
of:
(i) Grants;
(ii) Cooperative agreements;
(iii) Loans; and
(iv) Loan Guarantees.
(4) Federal financial assistance does not include amounts received
as reimbursement for services rendered to individuals as described in
Sec. 200.502(h) and (i).
Federal interest means, for purposes of Sec. 200.330 or when used
in connection with the acquisition or improvement of real property,
equipment, or supplies under a Federal award, the dollar amount that is
the product of the:
(1) The percentage of Federal participation in the total cost of
the real property, equipment, or supplies; and
(2) Current fair market value of the property, improvements, or
both, to the extent the costs of acquiring or improving the property
were included as project costs.
Federal program means:
(1) All Federal awards which are assigned a single Assistance
Listings Number.
(2) When no Assistance Listings Number is assigned, all Federal
awards from the same agency made for the same purpose must be combined
and considered one program.
(3) Notwithstanding paragraphs (1) and (2) of this definition, a
cluster of programs. The types of clusters of programs are:
(i) Research and development (R&D);
(ii) Student financial aid (SFA); and
(iii) ``Other clusters,'' as described in the definition of cluster
of programs in this section.
Federal share means the portion of the Federal award costs that are
paid using Federal funds.
Final cost objective means a cost objective which has allocated to
it both direct and indirect costs and, in the non-Federal entity's
accumulation system, is one of the final accumulation points, such as a
particular award, internal project, or other direct activity of a non-
Federal entity. See also the definitions of cost objective and
intermediate cost objective in this section.
Financial obligations, when referencing a recipient's or
subrecipient's use of funds under a Federal award, means orders placed
for property and services, contracts and subawards made, and similar
transactions that require payment.
Fixed amount awards means a type of grant or cooperative agreement
under which the Federal awarding agency or pass-through entity provides
a specific level of support without regard to actual costs incurred
under the Federal award. This type of Federal award reduces some of the
administrative burden and record-keeping requirements for both the non-
Federal entity and Federal awarding agency or pass-through entity.
Accountability is based primarily on performance and results. See
Sec. Sec. 200.102(c), 200.201(b), and 200.333.
Foreign organization means an entity that is:
(1) A public or private organization located in a country other
than the United States and its territories that is subject to the laws
of the country in which it is located, irrespective of the citizenship
of project staff or place of performance;
(2) A private nongovernmental organization located in a country
other than the United States that solicits and receives cash
contributions from the general public;
(3) A charitable organization located in a country other than the
United States that is nonprofit and tax exempt under the laws of its
country of domicile and operation, and is not a university, college,
accredited degree-granting institution of education, private
foundation, hospital, organization engaged exclusively in research or
scientific activities, church, synagogue, mosque or other similar
entities organized primarily for religious purposes; or
(4) An organization located in a country other than the United
States not recognized as a foreign public entity.
Foreign public entity means:
(1) A foreign government or foreign governmental entity;
(2) A public international organization, which is an organization
entitled to enjoy privileges, exemptions, and immunities as an
international organization under the International Organizations
Immunities Act (22 U.S.C. 288-288f);
(3) An entity owned (in whole or in part) or controlled by a
foreign government; or
(4) Any other entity consisting wholly or partially of one or more
foreign governments or foreign governmental entities.
General purpose equipment means equipment which is not limited to
research, medical, scientific or other technical activities. Examples
include office equipment and furnishings, modular offices, telephone
networks, information technology equipment and systems, air
conditioning equipment, reproduction and printing equipment, and motor
vehicles. See also the definitions of equipment and special purpose
equipment in this section.
Generally accepted accounting principles (GAAP) has the meaning
specified in accounting standards issued by the GASB and the FASB.
Generally accepted government auditing standards (GAGAS), also
known as the Yellow Book, means generally accepted government auditing
standards issued by the Comptroller General of the United States, which
are applicable to financial audits.
Grant agreement means a legal instrument of financial assistance
between a Federal awarding agency or pass-through entity and a non-
Federal entity that, consistent with 31 U.S.C. 6302, 6304:
(1) Is used to enter into a relationship the principal purpose of
which is to transfer anything of value to carry out a public purpose
authorized by a law of the United States (see 31 U.S.C. 6101(3)); and
not to acquire property or services for the Federal awarding agency or
pass-through entity's direct benefit or use;
(2) Is distinguished from a cooperative agreement in that it does
not provide for substantial involvement of the Federal awarding agency
in carrying out the activity contemplated by the Federal award.
(3) Does not include an agreement that provides only:
(i) Direct United States Government cash assistance to an
individual;
(ii) A subsidy;
(iii) A loan;
(vi) A loan guarantee; or
(v) Insurance.
Highest level owner means the entity that owns or controls an
immediate owner of the offeror, or that owns or controls one or more
entities that control an immediate owner of the offeror. No entity owns
or exercises control of the highest-level owner as defined in the
Federal Acquisition Regulations (FAR) (48 CFR 52.204-17).
Hospital means a facility licensed as a hospital under the law of
any state or a facility operated as a hospital by the United States, a
state, or a subdivision of a state.
Improper payment means:
(1) Any payment that should not have been made or that was made in
an incorrect amount under statutory, contractual, administrative, or
other legally applicable requirements.
(i) Incorrect amounts are overpayments or underpayments that are
made to eligible recipients (including inappropriate denials of payment
or service, any payment that does not account for credit for applicable
discounts, payments that are
[[Page 49533]]
for an incorrect amount, and duplicate payments). An improper payment
also includes any payment that was made to an ineligible recipient or
for an ineligible good or service, or payments for goods or services
not received (except for such payments authorized by law).
Note 1 to paragraph (1)(i) of this definition. Applicable discounts
are only those discounts where it is both advantageous and within the
agency's control to claim them.
(ii) When an agency's review is unable to discern whether a payment
was proper as a result of insufficient or lack of documentation, this
payment should also be considered an improper payment. When
establishing documentation requirements for payments, agencies should
ensure that all documentation requirements are necessary and should
refrain from imposing additional burdensome documentation requirements.
(iii) Interest or other fees that may result from an underpayment
by an agency are not considered an improper payment if the interest was
paid correctly. These payments are generally separate transactions and
may be necessary under certain statutory, contractual, administrative,
or other legally applicable requirements.
(iv) A ``questioned cost'' (as defined in this section) should not
be considered an improper payment until the transaction has been
completely reviewed and is confirmed to be improper.
(v) The term ``payment'' in this definition means any disbursement
or transfer of Federal funds (including a commitment for future
payment, such as cash, securities, loans, loan guarantees, and
insurance subsidies) to any non-Federal person, non-Federal entity, or
Federal employee, that is made by a Federal agency, a Federal
contractor, a Federal grantee, or a governmental or other organization
administering a Federal program or activity.
(vi) The term ``payment'' includes disbursements made pursuant to
prime contracts awarded under the Federal Acquisition Regulation and
Federal awards subject to this part that are expended by recipients.
(2) See definition of improper payment in OMB Circular A-123
appendix C, part I A (1) ``What is an improper payment?'' Questioned
costs, including those identified in audits, are not an improper
payment until reviewed and confirmed to be improper as defined in OMB
Circular A-123 appendix C.
Indian tribe means any Indian tribe, band, nation, or other
organized group or community, including any Alaska Native village or
regional or village corporation as defined in or established pursuant
to the Alaska Native Claims Settlement Act (43 U.S.C. Chapter 33),
which is recognized as eligible for the special programs and services
provided by the United States to Indians because of their status as
Indians (25 U.S.C. 450b(e)). See annually published Bureau of Indian
Affairs list of Indian Entities Recognized and Eligible to Receive
Services.
Institutions of Higher Education (IHEs) is defined at 20 U.S.C.
1001.
Indirect (facilities & administrative (F&A)) costs means those
costs incurred for a common or joint purpose benefitting more than one
cost objective, and not readily assignable to the cost objectives
specifically benefitted, without effort disproportionate to the results
achieved. To facilitate equitable distribution of indirect expenses to
the cost objectives served, it may be necessary to establish a number
of pools of indirect (F&A) costs. Indirect (F&A) cost pools must be
distributed to benefitted cost objectives on bases that will produce an
equitable result in consideration of relative benefits derived.
Indirect cost rate proposal means the documentation prepared by a
non-Federal entity to substantiate its request for the establishment of
an indirect cost rate as described in appendices III through VII and
appendix IX to this part.
Information technology systems means computing devices, ancillary
equipment, software, firmware, and similar procedures, services
(including support services), and related resources. See also the
definitions of computing devices and equipment in this section.
Intangible property means property having no physical existence,
such as trademarks, copyrights, patents and patent applications and
property, such as loans, notes and other debt instruments, lease
agreements, stock and other instruments of property ownership (whether
the property is tangible or intangible).
Intermediate cost objective means a cost objective that is used to
accumulate indirect costs or service center costs that are subsequently
allocated to one or more indirect cost pools or final cost objectives.
See also the definitions of cost objective and final cost objective in
this section.
Internal controls for non-Federal entities means:
(1) Processes designed and implemented by non-Federal entities to
provide reasonable assurance regarding the achievement of objectives in
the following categories:
(i) Effectiveness and efficiency of operations;
(ii) Reliability of reporting for internal and external use; and
(iii) Compliance with applicable laws and regulations.
(2) Federal awarding agencies are required to follow internal
control compliance requirements in OMB Circular No. A-123, Management's
Responsibility for Enterprise Risk Management and Internal Control.
Loan means a Federal loan or loan guarantee received or
administered by a non-Federal entity, except as used in the definition
of program income in this section.
(1) The term ``direct loan'' means a disbursement of funds by the
Federal Government to a non-Federal borrower under a contract that
requires the repayment of such funds with or without interest. The term
includes the purchase of, or participation in, a loan made by another
lender and financing arrangements that defer payment for more than 90
days, including the sale of a Federal Government asset on credit terms.
The term does not include the acquisition of a federally guaranteed
loan in satisfaction of default claims or the price support loans of
the Commodity Credit Corporation.
(2) The term ``direct loan obligation'' means a binding agreement
by a Federal awarding agency to make a direct loan when specified
conditions are fulfilled by the borrower.
(3) The term ``loan guarantee'' means any Federal Government
guarantee, insurance, or other pledge with respect to the payment of
all or a part of the principal or interest on any debt obligation of a
non-Federal borrower to a non-Federal lender, but does not include the
insurance of deposits, shares, or other withdrawable accounts in
financial institutions.
(4) The term ``loan guarantee commitment'' means a binding
agreement by a Federal awarding agency to make a loan guarantee when
specified conditions are fulfilled by the borrower, the lender, or any
other party to the guarantee agreement.
Local government means any unit of government within a state,
including a:
(1) County;
(2) Borough;
(3) Municipality;
(4) City;
(5) Town;
(6) Township;
(7) Parish;
(8) Local public authority, including any public housing agency
under the United States Housing Act of 1937;
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(9) Special district;
(10) School district;
(11) Intrastate district;
(12) Council of governments, whether or not incorporated as a
nonprofit corporation under State law; and
(13) Any other agency or instrumentality of a multi-, regional, or
intra-State or local government.
Major program means a Federal program determined by the auditor to
be a major program in accordance with Sec. 200.518 or a program
identified as a major program by a Federal awarding agency or pass-
through entity in accordance with Sec. 200.503(e).
Management decision means the Federal awarding agency's or pass-
through entity's written determination, provided to the auditee, of the
adequacy of the auditee's proposed corrective actions to address the
findings, based on its evaluation of the audit findings and proposed
corrective actions.
Micro-purchase means a purchase of supplies or services, the
aggregate amount of which does not exceed the micro-purchase threshold.
Micro-purchases comprise a subset of a non-Federal entity's small
purchases as defined in Sec. 200.320.
Micro-purchase threshold means the dollar amount at or below which
a non-Federal entity may purchase property or services using micro-
purchase procedures (see Sec. 200.320). Generally, the micro-purchase
threshold for procurement activities administered under Federal awards
is not to exceed the amount set by the FAR at 48 CFR part 2, subpart
2.1, unless a higher threshold is requested by the non-Federal entity
and approved by the cognizant agency for indirect costs.
Modified Total Direct Cost (MTDC) means all direct salaries and
wages, applicable fringe benefits, materials and supplies, services,
travel, and up to the first $25,000 of each subaward (regardless of the
period of performance of the subawards under the award). MTDC excludes
equipment, capital expenditures, charges for patient care, rental
costs, tuition remission, scholarships and fellowships, participant
support costs and the portion of each subaward in excess of $25,000.
Other items may only be excluded when necessary to avoid a serious
inequity in the distribution of indirect costs, and with the approval
of the cognizant agency for indirect costs.
Non-discretionary award means an award made by the Federal awarding
agency to specific recipients in accordance with statutory, eligibility
and compliance requirements, such that in keeping with specific
statutory authority the agency has no ability to exercise judgement
(``discretion''). A non-discretionary award amount could be determined
specifically or by formula.
Non-Federal entity (NFE) means a State, local government, Indian
tribe, Institution of Higher Education (IHE), or nonprofit organization
that carries out a Federal award as a recipient or subrecipient.
Nonprofit organization means any corporation, trust, association,
cooperative, or other organization, not including IHEs, that:
(1) Is operated primarily for scientific, educational, service,
charitable, or similar purposes in the public interest;
(2) Is not organized primarily for profit; and
(3) Uses net proceeds to maintain, improve, or expand the
operations of the organization.
Notice of funding opportunity means a formal announcement of the
availability of Federal funding through a financial assistance program
from a Federal awarding agency. The notice of funding opportunity
provides information on the award, who is eligible to apply, the
evaluation criteria for selection of an awardee, required components of
an application, and how to submit the application. The notice of
funding opportunity is any paper or electronic issuance that an agency
uses to announce a funding opportunity, whether it is called a
``program announcement,'' ``notice of funding availability,'' ``broad
agency announcement,'' ``research announcement,'' ``solicitation,'' or
some other term.
Office of Management and Budget (OMB) means the Executive Office of
the President, Office of Management and Budget.
Oversight agency for audit means the Federal awarding agency that
provides the predominant amount of funding directly (direct funding)
(as listed on the schedule of expenditures of Federal awards, see Sec.
200.510(b)) to a non-Federal entity unless OMB designates a specific
cognizant agency for audit. When the direct funding represents less
than 25 percent of the total Federal expenditures (as direct and sub-
awards) by the non-Federal entity, then the Federal agency with the
predominant amount of total funding is the designated cognizant agency
for audit. When there is no direct funding, the Federal awarding agency
which is the predominant source of pass-through funding must assume the
oversight responsibilities. The duties of the oversight agency for
audit and the process for any reassignments are described in Sec.
200.513(b).
Participant support costs means direct costs for items such as
stipends or subsistence allowances, travel allowances, and registration
fees paid to or on behalf of participants or trainees (but not
employees) in connection with conferences, or training projects.
Pass-through entity (PTE) means a non-Federal entity that provides
a subaward to a subrecipient to carry out part of a Federal program.
Performance goal means a target level of performance expressed as a
tangible, measurable objective, against which actual achievement can be
compared, including a goal expressed as a quantitative standard, value,
or rate. In some instances (e.g., discretionary research awards), this
may be limited to the requirement to submit technical performance
reports (to be evaluated in accordance with agency policy).
Period of performance means the total estimated time interval
between the start of an initial Federal award and the planned end date,
which may include one or more funded portions, or budget periods.
Identification of the period of performance in the Federal award per
Sec. 200.211(b)(5) does not commit the awarding agency to fund the
award beyond the currently approved budget period.
Personal property means property other than real property. It may
be tangible, having physical existence, or intangible.
Personally Identifiable Information (PII) means information that
can be used to distinguish or trace an individual's identity, either
alone or when combined with other personal or identifying information
that is linked or linkable to a specific individual. Some information
that is considered to be PII is available in public sources such as
telephone books, public websites, and university listings. This type of
information is considered to be Public PII and includes, for example,
first and last name, address, work telephone number, email address,
home telephone number, and general educational credentials. The
definition of PII is not anchored to any single category of information
or technology. Rather, it requires a case-by-case assessment of the
specific risk that an individual can be identified. Non-PII can become
PII whenever additional information is made publicly available, in any
medium and from any source, that, when combined with other available
information, could be used to identify an individual.
Program income means gross income earned by the non-Federal entity
that is directly generated by a supported activity or earned as a
result of the Federal award during the period of
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performance except as provided in Sec. 200.307(f). (See the definition
of period of performance in this section.) Program income includes but
is not limited to income from fees for services performed, the use or
rental or real or personal property acquired under Federal awards, the
sale of commodities or items fabricated under a Federal award, license
fees and royalties on patents and copyrights, and principal and
interest on loans made with Federal award funds. Interest earned on
advances of Federal funds is not program income. Except as otherwise
provided in Federal statutes, regulations, or the terms and conditions
of the Federal award, program income does not include rebates, credits,
discounts, and interest earned on any of them. See also Sec. 200.407.
See also 35 U.S.C. 200-212 ``Disposition of Rights in Educational
Awards'' applies to inventions made under Federal awards.
Project cost means total allowable costs incurred under a Federal
award and all required cost sharing and voluntary committed cost
sharing, including third-party contributions.
Property means real property or personal property. See also the
definitions of real property and personal property in this section.
Protected Personally Identifiable Information (Protected PII) means
an individual's first name or first initial and last name in
combination with any one or more of types of information, including,
but not limited to, social security number, passport number, credit
card numbers, clearances, bank numbers, biometrics, date and place of
birth, mother's maiden name, criminal, medical and financial records,
educational transcripts. This does not include PII that is required by
law to be disclosed. See also the definition of Personally Identifiable
Information (PII) in this section.
Questioned cost means a cost that is questioned by the auditor
because of an audit finding:
(1) Which resulted from a violation or possible violation of a
statute, regulation, or the terms and conditions of a Federal award,
including for funds used to match Federal funds;
(2) Where the costs, at the time of the audit, are not supported by
adequate documentation; or
(3) Where the costs incurred appear unreasonable and do not reflect
the actions a prudent person would take in the circumstances.
(4) Questioned costs are not an improper payment until reviewed and
confirmed to be improper as defined in OMB Circular A-123 appendix C.
(See also the definition of Improper payment in this section).
Real property means land, including land improvements, structures
and appurtenances thereto, but excludes moveable machinery and
equipment.
Recipient means an entity, usually but not limited to non-Federal
entities that receives a Federal award directly from a Federal awarding
agency. The term recipient does not include subrecipients or
individuals that are beneficiaries of the award.
Renewal award means an award made subsequent to an expiring Federal
award for which the start date is contiguous with, or closely follows,
the end of the expiring Federal award. A renewal award's start date
will begin a distinct period of performance.
Research and Development (R&D) means all research activities, both
basic and applied, and all development activities that are performed by
non-Federal entities. The term research also includes activities
involving the training of individuals in research techniques where such
activities utilize the same facilities as other research and
development activities and where such activities are not included in
the instruction function. ``Research'' is defined as a systematic study
directed toward fuller scientific knowledge or understanding of the
subject studied. ``Development'' is the systematic use of knowledge and
understanding gained from research directed toward the production of
useful materials, devices, systems, or methods, including design and
development of prototypes and processes.
Simplified acquisition threshold means the dollar amount below
which a non-Federal entity may purchase property or services using
small purchase methods (see Sec. 200.320). Non-Federal entities adopt
small purchase procedures in order to expedite the purchase of items at
or below the simplified acquisition threshold. The simplified
acquisition threshold for procurement activities administered under
Federal awards is set by the FAR at 48 CFR part 2, subpart 2.1. The
non-Federal entity is responsible for determining an appropriate
simplified acquisition threshold based on internal controls, an
evaluation of risk, and its documented procurement procedures. However,
in no circumstances can this threshold exceed the dollar value
established in the FAR (48 CFR part 2, subpart 2.1) for the simplified
acquisition threshold. Recipients should determine if local government
laws on purchasing apply.
Special purpose equipment means equipment which is used only for
research, medical, scientific, or other technical activities. Examples
of special purpose equipment include microscopes, x-ray machines,
surgical instruments, and spectrometers. See also the definitions of
equipment and general purpose equipment in this section.
State means any state of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, U.S. Virgin Islands, Guam,
American Samoa, the Commonwealth of the Northern Mariana Islands, and
any agency or instrumentality thereof exclusive of local governments.
Student Financial Aid (SFA) means Federal awards under those
programs of general student assistance, such as those authorized by
Title IV of the Higher Education Act of 1965, as amended, (20 U.S.C.
1070-1099d), which are administered by the U.S. Department of
Education, and similar programs provided by other Federal agencies. It
does not include Federal awards under programs that provide fellowships
or similar Federal awards to students on a competitive basis, or for
specified studies or research.
Subaward means an award provided by a pass-through entity to a
subrecipient for the subrecipient to carry out part of a Federal award
received by the pass-through entity. It does not include payments to a
contractor or payments to an individual that is a beneficiary of a
Federal program. A subaward may be provided through any form of legal
agreement, including an agreement that the pass-through entity
considers a contract.
Subrecipient means an entity, usually but not limited to non-
Federal entities, that receives a subaward from a pass-through entity
to carry out part of a Federal award; but does not include an
individual that is a beneficiary of such award. A subrecipient may also
be a recipient of other Federal awards directly from a Federal awarding
agency.
Subsidiary means an entity in which more than 50 percent of the
entity is owned or controlled directly by a parent corporation or
through another subsidiary of a parent corporation.
Supplies means all tangible personal property other than those
described in the definition of equipment in this section. A computing
device is a supply if the acquisition cost is less than the lesser of
the capitalization level established by the non-Federal entity for
financial statement purposes or $5,000, regardless of the length of its
useful life. See also the definitions of computing devices and
equipment in this section.
[[Page 49536]]
Telecommunications cost means the cost of using communication and
telephony technologies such as mobile phones, land lines, and internet.
Termination means the ending of a Federal award, in whole or in
part at any time prior to the planned end of period of performance. A
lack of available funds is not a termination.
Third-party in-kind contributions means the value of non-cash
contributions (i.e., property or services) that--
(1) Benefit a federally-assisted project or program; and
(2) Are contributed by non-Federal third parties, without charge,
to a non-Federal entity under a Federal award.
Unliquidated financial obligations means, for financial reports
prepared on a cash basis, financial obligations incurred by the non-
Federal entity that have not been paid (liquidated). For reports
prepared on an accrual expenditure basis, these are financial
obligations incurred by the non-Federal entity for which an expenditure
has not been recorded.
Unobligated balance means the amount of funds under a Federal award
that the non-Federal entity has not obligated. The amount is computed
by subtracting the cumulative amount of the non-Federal entity's
unliquidated financial obligations and expenditures of funds under the
Federal award from the cumulative amount of the funds that the Federal
awarding agency or pass-through entity authorized the non-Federal
entity to obligate.
Voluntary committed cost sharing means cost sharing specifically
pledged on a voluntary basis in the proposal's budget on the part of
the non-Federal entity and that becomes a binding requirement of
Federal award. See also Sec. 200.306.
0
35. Amend Sec. 200.100 by revising paragraphs (a)(1), (c), (d), and
(e) to read as follows:
Sec. 200.100 Purpose.
(a) Purpose. (1) This part establishes uniform administrative
requirements, cost principles, and audit requirements for Federal
awards to non-Federal entities, as described in Sec. 200.101. Federal
awarding agencies must not impose additional or inconsistent
requirements, except as provided in Sec. Sec. 200.102 and 200.211, or
unless specifically required by Federal statute, regulation, or
Executive order.
* * * * *
(c) Cost principles. Subpart E of this part establishes principles
for determining the allowable costs incurred by non-Federal entities
under Federal awards. The principles are for the purpose of cost
determination and are not intended to identify the circumstances or
dictate the extent of Federal Government participation in the financing
of a particular program or project. The principles are designed to
provide that Federal awards bear their fair share of cost recognized
under these principles except where restricted or prohibited by
statute.
(d) Single Audit Requirements and Audit Follow-up. Subpart F of
this part is issued pursuant to the Single Audit Act Amendments of
1996, (31 U.S.C. 7501-7507). It sets forth standards for obtaining
consistency and uniformity among Federal agencies for the audit of non-
Federal entities expending Federal awards. These provisions also
provide the policies and procedures for Federal awarding agencies and
pass-through entities when using the results of these audits.
(e) Guidance on challenges and prizes. For OMB guidance to Federal
awarding agencies on challenges and prizes, please see memo M-10-11
Guidance on the Use of Challenges and Prizes to Promote Open
Government, issued March 8, 2010, or its successor.
0
36. Revise Sec. 200.101 to read as follows:
Sec. 200.101 Applicability.
(a) General applicability to Federal agencies. (1) The requirements
established in this part apply to Federal agencies that make Federal
awards to non-Federal entities. These requirements are applicable to
all costs related to Federal awards.
(2) Federal awarding agencies may apply subparts A through E of
this part to Federal agencies, for-profit entities, foreign public
entities, or foreign organizations, except where the Federal awarding
agency determines that the application of these subparts would be
inconsistent with the international responsibilities of the United
States or the statutes or regulations of a foreign government.
(b) Applicability to different types of Federal awards. (1)
Throughout this part when the word ``must'' is used it indicates a
requirement. Whereas, use of the word ``should'' or ``may'' indicates a
best practice or recommended approach rather than a requirement and
permits discretion.
(2) The following table describes what portions of this part apply
to which types of Federal awards. The terms and conditions of Federal
awards (including this part) flow down to subawards to subrecipients
unless a particular section of this part or the terms and conditions of
the Federal award specifically indicate otherwise. This means that non-
Federal entities must comply with requirements in this part regardless
of whether the non-Federal entity is a recipient or subrecipient of a
Federal award. Pass-through entities must comply with the requirements
described in subpart D of this part, Sec. Sec. 200.331 through
200.333, but not any requirements in this part directed towards Federal
awarding agencies unless the requirements of this part or the terms and
conditions of the Federal award indicate otherwise.
Table 1 to Paragraph (b)
------------------------------------------------------------------------
Are applicable to
the following types
of Federal Awards Are NOT applicable
and Fixed-Price to the following
The following portions of Contracts and types of Federal
this Part Subcontracts (except Awards and Fixed-
as noted in Price Contracts and
paragraphs (d) and Subcontracts:
(e) of this
section):
------------------------------------------------------------------------
Subpart A--Acronyms and --All...............
Definitions.
Subpart B--General --All...............
Provisions, except for Sec.
Sec. 200.111 English
Language, 200.112 Conflict
of Interest, 200.113
Mandatory Disclosures.
Sec. Sec. 200.111 English --Grant Agreements --Agreements for
Language, 200.112 Conflict and cooperative loans, loan
of Interest, 200.113 agreements. guarantees,
Mandatory Disclosures. interest subsidies
and insurance.
--Procurement
contracts awarded
by Federal Agencies
under the Federal
Acquisition
Regulation and
subcontracts under
those contracts.
[[Page 49537]]
Subparts C-D, except for --Grant Agreements --Agreements for
Sec. Sec. 200.203 and cooperative loans, loan
Requirement to provide agreements. guarantees,
public notice of Federal interest subsidies
financial assistance and insurance.
programs, 200.303 Internal --Procurement
controls, 200.331-333 contracts awarded
Subrecipient Monitoring and by Federal Agencies
Management. under the Federal
Acquisition
Regulation and
subcontracts under
those contracts.
Sec. 200.203 Requirement --Grant Agreements --Procurement
to provide public notice of and cooperative contracts awarded
Federal financial agreements. by Federal Agencies
assistance programs. --Agreements for under the Federal
loans, loan Acquisition
guarantees, Regulation and
interest subsidies subcontracts under
and insurance. those contracts.
Sec. Sec. 200.303 --All...............
Internal controls, 200.331-
333 Subrecipient Monitoring
and Management.
Subpart E--Cost Principles.. --Grant Agreements --Grant agreements
and cooperative and cooperative
agreements, except agreements
those providing providing foods
food commodities. commodities.
--All procurement --Fixed amount
contracts under the awards.
Federal Acquisition --Agreements for
Regulations except loans, loans
those that are not guarantees,
negotiated. interest subsidies
and insurance.
--Federal awards to
hospitals (see
Appendix IX
Hospital Cost
Principles).
Subpart F--Audit --Grant Agreements --Fixed-price
Requirements. and cooperative contracts and
agreements. subcontracts
--Contracts and awarded under the
subcontracts, Federal Acquisition
except for fixed Regulation.
price contacts and
subcontracts,
awarded under the
Federal Acquisition
Regulation.
--Agreements for
loans, loans
guarantees,
interest subsidies
and insurance and
other forms of
Federal Financial
Assistance as
defined by the
Single Audit Act
Amendment of 1996.
------------------------------------------------------------------------
(c) Federal award of cost-reimbursement contract under the FAR to a
non-Federal entity. When a non-Federal entity is awarded a cost-
reimbursement contract, only subpart D, Sec. Sec. 200.331 through
200.333, and subparts E and F of this part are incorporated by
reference into the contract, but the requirements of subparts D, E, and
F are supplementary to the FAR and the contract. When the Cost
Accounting Standards (CAS) are applicable to the contract, they take
precedence over the requirements of this part, including subpart F of
this part, which are supplementary to the CAS requirements. In
addition, costs that are made unallowable under 10 U.S.C. 2324(e) and
41 U.S.C. 4304(a) as described in the FAR 48 CFR part 31, subpart 31.2,
and 48 CFR 31.603 are always unallowable. For requirements other than
those covered in subpart D, Sec. Sec. 200.331 through 200.333, and
subparts E and F of this part, the terms of the contract and the FAR
apply. Note that when a non-Federal entity is awarded a FAR contract,
the FAR applies, and the terms and conditions of the contract shall
prevail over the requirements of this part.
(d) Governing provisions. With the exception of subpart F of this
part, which is required by the Single Audit Act, in any circumstances
where the provisions of Federal statutes or regulations differ from the
provisions of this part, the provision of the Federal statutes or
regulations govern. This includes, for agreements with Indian tribes,
the provisions of the Indian Self-Determination and Education and
Assistance Act (ISDEAA), as amended, 25 U.S.C 450-458ddd-2.
(e) Program applicability. Except for Sec. Sec. 200.203 and
200.331 through 200.333, the requirements in subparts C, D, and E of
this part do not apply to the following programs:
(1) The block grant awards authorized by the Omnibus Budget
Reconciliation Act of 1981 (including Community Services), except to
the extent that subpart E of this part apply to subrecipients of
Community Services Block Grant funds pursuant to 42 U.S.C.
9916(a)(1)(B);
(2) Federal awards to local education agencies under 20 U.S.C.
7702-7703b, (portions of the Impact Aid program);
(3) Payments under the Department of Veterans Affairs' State Home
Per Diem Program (38 U.S.C. 1741); and
(4) Federal awards authorized under the Child Care and Development
Block Grant Act of 1990, as amended:
(i) Child Care and Development Block Grant (42 U.S.C. 9858).
(ii) Child Care Mandatory and Matching Funds of the Child Care and
Development Fund (42 U.S.C. 9858).
(f) Additional program applicability. Except for Sec. 200.203, the
guidance in subpart C of this part does not apply to the following
programs:
(1) Entitlement Federal awards to carry out the following programs
of the Social Security Act:
(i) Temporary Assistance for Needy Families (title IV-A of the
Social Security Act, 42 U.S.C. 601-619);
(ii) Child Support Enforcement and Establishment of Paternity
(title IV-D of the Social Security Act, 42 U.S.C. 651-669b);
(iii) Foster Care and Adoption Assistance (title IV-E of the Act,
42 U.S.C. 670-679c);
(iv) Aid to the Aged, Blind, and Disabled (titles I, X, XIV, and
XVI-AABD of the Act, as amended);
(v) Medical Assistance (Medicaid) (title XIX of the Act, 42 U.S.C.
1396-1396w-5) not including the State Medicaid Fraud Control program
authorized by section 1903(a)(6)(B) of the Social Security Act (42
U.S.C. 1396b(a)(6)(B)); and
[[Page 49538]]
(vi) Children's Health Insurance Program (title XXI of the Act, 42
U.S.C. 1397aa-1397mm).
(2) A Federal award for an experimental, pilot, or demonstration
project that is also supported by a Federal award listed in paragraph
(f)(1) of this section.
(3) Federal awards under subsection 412(e) of the Immigration and
Nationality Act and subsection 501(a) of the Refugee Education
Assistance Act of 1980 (Pub. L. 96-422, 94 Stat. 1809), for cash
assistance, medical assistance, and supplemental security income
benefits to refugees and entrants and the administrative costs of
providing the assistance and benefits (8 U.S.C. 1522(e)).
(4) Entitlement awards under the following programs of The National
School Lunch Act:
(i) National School Lunch Program (section 4 of the Act, 42 U.S.C.
1753);
(ii) Commodity Assistance (section 6 of the Act, 42 U.S.C. 1755);
(iii) Special Meal Assistance (section 11 of the Act, 42 U.S.C.
1759a);
(iv) Summer Food Service Program for Children (section 13 of the
Act, 42 U.S.C. 1761); and
(v) Child and Adult Care Food Program (section 17 of the Act, 42
U.S.C. 1766).
(5) Entitlement awards under the following programs of The Child
Nutrition Act of 1966:
(i) Special Milk Program (section 3 of the Act, 42 U.S.C. 1772);
(ii) School Breakfast Program (section 4 of the Act, 42 U.S.C.
1773); and
(iii) State Administrative Expenses (section 7 of the Act, 42
U.S.C. 1776).
(6) Entitlement awards for State Administrative Expenses under The
Food and Nutrition Act of 2008 (section 16 of the Act, 7 U.S.C. 2025).
(7) Non-discretionary Federal awards under the following non-
entitlement programs:
(i) Special Supplemental Nutrition Program for Women, Infants and
Children (section 17 of the Child Nutrition Act of 1966) 42 U.S.C.
1786;
(ii) The Emergency Food Assistance Programs (Emergency Food
Assistance Act of 1983) 7 U.S.C. 7501 note; and
(iii) Commodity Supplemental Food Program (section 5 of the
Agriculture and Consumer Protection Act of 1973) 7 U.S.C. 612c note.
0
37. Revise Sec. 200.102 to read as follows:
Sec. 200.102 Exceptions.
(a) With the exception of subpart F of this part, OMB may allow
exceptions for classes of Federal awards or non-Federal entities
subject to the requirements of this part when exceptions are not
prohibited by statute. In the interest of maximum uniformity,
exceptions from the requirements of this part will be permitted as
described in this section.
(b) Exceptions on a case-by-case basis for individual non-Federal
entities may be authorized by the Federal awarding agency or cognizant
agency for indirect costs, except where otherwise required by law or
where OMB or other approval is expressly required by this part.
(c) The Federal awarding agency may apply adjust requirements to a
class of Federal awards or non-Federal entities when approved by OMB,
or when required by Federal statutes or regulations, except for the
requirements in subpart F of this part. A Federal awarding agency may
apply less restrictive requirements when making fixed amount awards as
defined in subpart A of this part, except for those requirements
imposed by statute or in subpart F of this part.
(d) Federal awarding agencies may request exceptions 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. See also Sec. 200.206.
0
38. Revise Sec. 200.103 to read as follows:
Sec. 200.103 Authorities.
This part is issued under the following authorities.
(a) Subparts B through D of this part are authorized under 31
U.S.C. 503 (the Chief Financial Officers Act, Functions of the Deputy
Director for Management), 41 U.S.C. 1101-1131 (the Office of Federal
Procurement Policy Act), Reorganization Plan No. 2 of 1970, and
Executive Order 11541 (``Prescribing the Duties of the Office of
Management and Budget and the Domestic Policy Council in the Executive
Office of the President''), the Single Audit Act Amendments of 1996,
(31 U.S.C. 7501-7507), as well as The Federal Program Information Act
(Pub. L. 95-220 and Pub. L. 98-169, as amended, codified at 31 U.S.C.
6101-6106).
(b) Subpart E of this part is authorized under the Budget and
Accounting Act of 1921, as amended; the Budget and Accounting
Procedures Act of 1950, as amended (31 U.S.C. 1101-1125); the Chief
Financial Officers Act of 1990 (31 U.S.C. 503-504); Reorganization Plan
No. 2 of 1970; and Executive Order 11541, ``Prescribing the Duties of
the Office of Management and Budget and the Domestic Policy Council in
the Executive Office of the President.''
(c) Subpart F of this part is authorized under the Single Audit Act
Amendments of 1996, (31 U.S.C. 7501-7507).
0
39. Amend Sec. 200.104 by revising the introductory text and
paragraphs (g) and (h) to read as follows:
Sec. 200.104 Supersession.
As described in Sec. 200.110, this part supersedes the following
OMB guidance documents and regulations under title 2 of the Code of
Federal Regulations:
* * * * *
(g) A-133, ``Audits of States, Local Governments and Non-Profit
Organizations''; and
(h) Those sections of A-50 related to audits performed under
subpart F of this part.
0
40. Revise Sec. 200.105 to read as follows:
Sec. 200.105 Effect on other issuances.
(a) Superseding inconsistent requirements. For Federal awards
subject to this part, all administrative requirements, program manuals,
handbooks and other non-regulatory materials that are inconsistent with
the requirements of this part must be superseded upon implementation of
this part by the Federal agency, except to the extent they are required
by statute or authorized in accordance with the provisions in Sec.
200.102.
(b) Imposition of requirements on recipients. Agencies may impose
legally binding requirements on recipients only through the notice and
public comment process through an approved agency process, including as
authorized by this part, other statutes or regulations, or as
incorporated into the terms of a Federal award.
0
41. Revise Sec. 200.106 to read as follows:
Sec. 200.106 Agency implementation.
The specific requirements and responsibilities of Federal agencies
and non-Federal entities are set forth in this part. Federal agencies
making Federal awards to non-Federal entities must implement the
language in subparts C through F of this part in codified regulations
unless different provisions are required by Federal statute or are
approved by OMB.
0
42. Revise Sec. 200.110 to read as follows:
Sec. 200.110 Effective/applicability date.
(a) The standards set forth in this part that affect the
administration of Federal awards issued by Federal awarding agencies
become effective once implemented by Federal awarding
[[Page 49539]]
agencies or when any future amendment to this part becomes final.
(b) Existing negotiated indirect cost rates (as of the publication
date of the revisions to the guidance) 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 re-negotiated rate goes into effect
for a specific non-Federal entity's fiscal year. Therefore, for
indirect cost rates and cost allocation plans, the revised Uniform
Guidance (as of the publication date for revisions to the guidance)
become effective in generating proposals and negotiating a new rate
(when the rate is re-negotiated).
0
43. Revise Sec. 200.113 to read as follows:
Sec. 200.113 Mandatory disclosures.
The non-Federal entity or applicant for a Federal award must
disclose, in a timely manner, in writing to the Federal awarding agency
or pass-through entity all violations of Federal criminal law involving
fraud, bribery, or gratuity violations potentially affecting the
Federal award. Non-Federal entities that have received a Federal award
including the term and condition outlined in appendix XII to this part
are required to report certain civil, criminal, or administrative
proceedings to SAM (currently FAPIIS). Failure to make required
disclosures can result in any of the remedies described in Sec.
200.339. (See also 2 CFR part 180, 31 U.S.C. 3321, and 41 U.S.C. 2313.)
0
44. Revise subpart C to read as follows:
Subpart C--Pre-Federal Award Requirements and Contents of Federal
Awards
Sec.
200.200 Purpose.
200.201 Use of grant agreements (including fixed amount awards),
cooperative agreements, and contracts.
200.202 Program planning and design.
200.203 Requirement to provide public notice of Federal financial
assistance programs.
200.204 Notices of funding opportunities.
200.205 Federal awarding agency review of merit of proposals.
200.206 Federal awarding agency review of risk posed by applicants.
200.207 Standard application requirements.
200.208 Specific conditions.
200.209 Certifications and representations.
200.210 Pre-award costs.
200.211 Information contained in a Federal award.
200.212 Public access to Federal award information.
200.213 Reporting a determination that a non-Federal entity is not
qualified for a Federal award.
200.214 Suspension and debarment.
200.215 Never contract with the enemy.
200.216 Prohibition on certain telecommunications and video
surveillance services or equipment.
Subpart C--Pre-Federal Award Requirements and Contents of Federal
Awards
Sec. 200.200 Purpose.
Sections 200.201 through 200.216 prescribe instructions and other
pre-award matters to be used by Federal awarding agencies in the
program planning, announcement, application and award processes.
Sec. 200.201 Use of grant agreements (including fixed amount
awards), cooperative agreements, and contracts.
(a) Federal award instrument. The Federal awarding agency or pass-
through entity must decide on the appropriate instrument for the
Federal award (i.e., grant agreement, cooperative agreement, or
contract) in accordance with the Federal Grant and Cooperative
Agreement Act (31 U.S.C. 6301-08).
(b) Fixed amount awards. In addition to the options described in
paragraph (a) of this section, Federal awarding agencies, or pass-
through entities as permitted in Sec. 200.333, may use fixed amount
awards (see Fixed amount awards in Sec. 200.1) to which the following
conditions apply:
(1) The Federal award amount is negotiated using the cost
principles (or other pricing information) as a guide. The Federal
awarding agency or pass-through entity may use fixed amount awards if
the project scope has measurable goals and objectives and if adequate
cost, historical, or unit pricing data is available to establish a
fixed amount award based on a reasonable estimate of actual cost.
Payments are based on meeting specific requirements of the Federal
award. Accountability is based on performance and results. Except in
the case of termination before completion of the Federal award, there
is no governmental review of the actual costs incurred by the non-
Federal entity in performance of the award. Some of the ways in which
the Federal award may be paid include, but are not limited to:
(i) In several partial payments, the amount of each agreed upon in
advance, and the ``milestone'' or event triggering the payment also
agreed upon in advance, and set forth in the Federal award;
(ii) On a unit price basis, for a defined unit or units, at a
defined price or prices, agreed to in advance of performance of the
Federal award and set forth in the Federal award; or,
(iii) In one payment at Federal award completion.
(2) A fixed amount award cannot be used in programs which require
mandatory cost sharing or match.
(3) The non-Federal entity must certify in writing to the Federal
awarding agency or pass-through entity at the end of the Federal award
that the project or activity was completed or the level of effort was
expended. If the required level of activity or effort was not carried
out, the amount of the Federal award must be adjusted.
(4) Periodic reports may be established for each Federal award.
(5) Changes in principal investigator, project leader, project
partner, or scope of effort must receive the prior written approval of
the Federal awarding agency or pass-through entity.
Sec. 200.202 Program planning and design.
The Federal awarding agency must design a program and create an
Assistance Listing before announcing the Notice of Funding Opportunity.
The program must be designed with clear goals and objectives that
facilitate the delivery of meaningful results consistent with the
Federal authorizing legislation of the program. Program performance
shall be measured based on the goals and objectives developed during
program planning and design. See Sec. 200.301 for more information on
performance measurement. Performance measures may differ depending on
the type of program. The program must align with the strategic goals
and objectives within the Federal awarding agency's performance plan
and should support the Federal awarding agency's performance
measurement, management, and reporting as required by Part 6 of OMB
Circular A-11 (Preparation, Submission, and Execution of the Budget).
The program must also be designed to align with the Program Management
Improvement Accountability Act (Pub. L. 114-264).
Sec. 200.203 Requirement to provide public notice of Federal
financial assistance programs.
(a) The Federal awarding agency must notify the public of Federal
programs in the Federal Assistance Listings maintained by the General
Services Administration (GSA).
(1) The Federal Assistance Listings is the single, authoritative,
governmentwide comprehensive source of Federal financial assistance
program information produced by the executive branch of the Federal
Government.
(2) The information that the Federal awarding agency must submit to
GSA for approval by OMB is listed in
[[Page 49540]]
paragraph (b) of this section. GSA must prescribe the format for the
submission in coordination with OMB.
(3) The Federal awarding agency may not award Federal financial
assistance without assigning it to a program that has been included in
the Federal Assistance Listings as required in this section unless
there are exigent circumstances requiring otherwise, such as timing
requirements imposed by statute.
(b) For each program that awards discretionary Federal awards, non-
discretionary Federal awards, loans, insurance, or any other type of
Federal financial assistance, the Federal awarding agency must, to the
extent practicable, create, update, and manage Assistance Listings
entries based on the authorizing statute for the program and comply
with additional guidance provided by GSA in consultation with OMB to
ensure consistent, accurate information is available to prospective
applicants. Accordingly, Federal awarding agencies must submit the
following information to GSA:
(1) Program Description, Purpose, Goals, and Measurement. A brief
summary of the statutory or regulatory requirements of the program and
its intended outcome. Where appropriate, the Program Description,
Purpose, Goals, and Measurement should align with the strategic goals
and objectives within the Federal awarding agency's performance plan
and should support the Federal awarding agency's performance
measurement, management, and reporting as required by Part 6 of OMB
Circular A-11;
(2) Identification. Identification of whether the program makes
Federal awards on a discretionary basis or the Federal awards are
prescribed by Federal statute, such as in the case of formula grants.
(3) Projected total amount of funds available for the program.
Estimates based on previous year funding are acceptable if current
appropriations are not available at the time of the submission;
(4) Anticipated source of available funds. The statutory authority
for funding the program and, to the extent possible, agency, sub-
agency, or, if known, the specific program unit that will issue the
Federal awards, and associated funding identifier (e.g., Treasury
Account Symbol(s));
(5) General eligibility requirements. The statutory, regulatory or
other eligibility factors or considerations that determine the
applicant's qualification for Federal awards under the program (e.g.,
type of non-Federal entity); and
(6) Applicability of Single Audit Requirements. Applicability of
Single Audit Requirements as required by subpart F of this part.
Sec. 200.204 Notices of funding opportunities.
For discretionary grants and cooperative agreements that are
competed, the Federal awarding agency must announce specific funding
opportunities by providing the following information in a public
notice:
(a) Summary information in notices of funding opportunities. The
Federal awarding agency must display the following information posted
on the OMB-designated governmentwide website for funding and applying
for Federal financial assistance, in a location preceding the full text
of the announcement:
(1) Federal Awarding Agency Name;
(2) Funding Opportunity Title;
(3) Announcement Type (whether the funding opportunity is the
initial announcement of this funding opportunity or a modification of a
previously announced opportunity);
(4) Funding Opportunity Number (required, if applicable). If the
Federal awarding agency has assigned or will assign a number to the
funding opportunity announcement, this number must be provided;
(5) Assistance Listings Number(s);
(6) Key Dates. Key dates include due dates for applications or
Executive Order 12372 submissions, as well as for any letters of intent
or pre-applications. For any announcement issued before a program's
application materials are available, key dates also include the date on
which those materials will be released; and any other additional
information, as deemed applicable by the relevant Federal awarding
agency.
(b) Availability period. The Federal awarding agency must generally
make all funding opportunities available for application for at least
60 calendar days. The Federal awarding agency may make a determination
to have a less than 60 calendar day availability period but no funding
opportunity should be available for less than 30 calendar days unless
exigent circumstances require as determined by the Federal awarding
agency head or delegate.
(c) Full text of funding opportunities. The Federal awarding agency
must include the following information in the full text of each funding
opportunity. For specific instructions on the content required in this
section, refer to appendix I to this part.
(1) Full programmatic description of the funding opportunity.
(2) Federal award information, including sufficient information to
help an applicant make an informed decision about whether to submit an
application. (See also Sec. 200.414(c)(4)).
(3) Specific eligibility information, including any factors or
priorities that affect an applicant's or its application's eligibility
for selection.
(4) Application Preparation and Submission Information, including
the applicable submission dates and time.
(5) Application Review Information including the criteria and
process to be used to evaluate applications. See also Sec. Sec.
200.205 and 200.206.
(6) Federal Award Administration Information. See also Sec.
200.211.
(7) Applicable terms and conditions for resulting awards, including
any exceptions from these standard terms.
Sec. 200.205 Federal awarding agency review of merit of proposals.
For discretionary Federal awards, unless prohibited by Federal
statute, the Federal awarding agency must design and execute a merit
review process for applications, with the objective of selecting
recipients most likely to be successful in delivering results based on
the program objectives outlined in section Sec. 200.202. A merit
review is an objective process of evaluating Federal award applications
in accordance with written standards set forth by the Federal awarding
agency. This process must be described or incorporated by reference in
the applicable funding opportunity (see appendix I to this part.). See
also Sec. 200.204. The Federal awarding agency must also periodically
review its merit review process.
Sec. 200.206 Federal awarding agency review of risk posed by
applicants.
(a) Review of OMB-designated repositories of governmentwide data.
(1) Prior to making a Federal award, the Federal awarding agency is
required by the Improper Payments Elimination and Recovery Improvement
Act of 2012, 31 U.S.C. 3321 note, and 41 U.S.C. 2313 to review
information available through any OMB-designated repositories of
governmentwide eligibility qualification or financial integrity
information as appropriate. See also suspension and debarment
requirements at 2 CFR part 180 as well as individual Federal agency
suspension and debarment regulations in title 2 of the Code of Federal
Regulations.
(2) In accordance 41 U.S.C. 2313, the Federal awarding agency is
required to review the non-public segment of the OMB-designated
integrity and performance system accessible through SAM (currently the
Federal Awardee
[[Page 49541]]
Performance and Integrity Information System (FAPIIS)) prior to making
a Federal award where the Federal share is expected to exceed the
simplified acquisition threshold, defined in 41 U.S.C. 134, over the
period of performance. As required by Public Law 112-239, National
Defense Authorization Act for Fiscal Year 2013, prior to making a
Federal award, the Federal awarding agency must consider all of the
information available through FAPIIS with regard to the applicant and
any immediate highest level owner, predecessor (i.e.; a non-Federal
entity that is replaced by a successor), or subsidiary, identified for
that applicant in FAPIIS, if applicable. At a minimum, the information
in the system for a prior Federal award recipient must demonstrate a
satisfactory record of executing programs or activities under Federal
grants, cooperative agreements, or procurement awards; and integrity
and business ethics. The Federal awarding agency may make a Federal
award to a recipient who does not fully meet these standards, if it is
determined that the information is not relevant to the current Federal
award under consideration or there are specific conditions that can
appropriately mitigate the effects of the non-Federal entity's risk in
accordance with Sec. 200.208.
(b) Risk evaluation. (1) The Federal awarding agency must have in
place a framework for evaluating the risks posed by applicants before
they receive Federal awards. This evaluation may incorporate results of
the evaluation of the applicant's eligibility or the quality of its
application. If the Federal awarding agency determines that a Federal
award will be made, special conditions that correspond to the degree of
risk assessed may be applied to the Federal award. Criteria to be
evaluated must be described in the announcement of funding opportunity
described in Sec. 200.204.
(2) In evaluating risks posed by applicants, the Federal awarding
agency may use a risk-based approach and may consider any items such as
the following:
(i) Financial stability. Financial stability;
(ii) Management systems and standards. Quality of management
systems and ability to meet the management standards prescribed in this
part;
(iii) History of performance. The applicant's record in managing
Federal awards, if it is a prior recipient of Federal awards, including
timeliness of compliance with applicable reporting requirements,
conformance to the terms and conditions of previous Federal awards, and
if applicable, the extent to which any previously awarded amounts will
be expended prior to future awards;
(iv) Audit reports and findings. Reports and findings from audits
performed under subpart F of this part or the reports and findings of
any other available audits; and
(v) Ability to effectively implement requirements. The applicant's
ability to effectively implement statutory, regulatory, or other
requirements imposed on non-Federal entities.
(c) Risk-based requirements adjustment. The Federal awarding agency
may adjust requirements when a risk-evaluation indicates that it may be
merited either pre-award or post-award.
(d) Suspension and debarment compliance. (1) The Federal awarding
agency must comply with the guidelines on governmentwide suspension and
debarment in 2 CFR part 180, and must require non-Federal entities to
comply with these provisions. These provisions restrict Federal awards,
subawards and contracts with certain parties that are debarred,
suspended or otherwise excluded from or ineligible for participation in
Federal programs or activities.
Sec. 200.207 Standard application requirements.
(a) Paperwork clearances. The Federal awarding agency may only use
application information collections approved by OMB under the Paperwork
Reduction Act of 1995 and OMB's implementing regulations in 5 CFR part
1320 and in alignment with OMB-approved, governmentwide data elements
available from the OMB-designated standards lead. Consistent with these
requirements, OMB will authorize additional information collections
only on a limited basis.
(b) Information collection. If applicable, the Federal awarding
agency may inform applicants and recipients that they do not need to
provide certain information otherwise required by the relevant
information collection.
Sec. 200.208 Specific conditions.
(a) Federal awarding agencies are responsible for ensuring that
specific Federal award conditions are consistent with the program
design reflected in Sec. 200.202 and include clear performance
expectations of recipients as required in Sec. 200.301.
(b) The Federal awarding agency or pass-through entity may adjust
specific Federal award conditions as needed, in accordance with this
section, based on an analysis of the following factors:
(1) Based on the criteria set forth in Sec. 200.206;
(2) The applicant or recipient's history of compliance with the
general or specific terms and conditions of a Federal award;
(3) The applicant or recipient's ability to meet expected
performance goals as described in Sec. 200.211; or
(4) A responsibility determination of an applicant or recipient.
(c) Additional Federal award conditions may include items such as
the following:
(1) Requiring payments as reimbursements rather than advance
payments;
(2) Withholding authority to proceed to the next phase until
receipt of evidence of acceptable performance within a given
performance period;
(3) Requiring additional, more detailed financial reports;
(4) Requiring additional project monitoring;
(5) Requiring the non-Federal entity to obtain technical or
management assistance; or
(6) Establishing additional prior approvals.
(d) If the Federal awarding agency or pass-through entity is
imposing additional requirements, they must notify the applicant or
non-Federal entity as to:
(1) The nature of the additional requirements;
(2) The reason why the additional requirements are being imposed;
(3) The nature of the action needed to remove the additional
requirement, if applicable;
(4) The time allowed for completing the actions if applicable; and
(5) The method for requesting reconsideration of the additional
requirements imposed.
(e) Any additional requirements must be promptly removed once the
conditions that prompted them have been satisfied.
Sec. 200.209 Certifications and representations.
Unless prohibited by the U.S. Constitution, Federal statutes or
regulations, each Federal awarding agency or pass-through entity is
authorized to require the non-Federal entity to submit certifications
and representations required by Federal statutes, or regulations on an
annual basis. Submission may be required more frequently if the non-
Federal entity fails to meet a requirement of a Federal award.
Sec. 200.210 Pre-award costs.
For requirements on costs incurred by the applicant prior to the
start date of the period of performance of the Federal award, see Sec.
200.458.
[[Page 49542]]
Sec. 200.211 Information contained in a Federal award.
A Federal award must include the following information:
(a) Federal award performance goals. Performance goals, indicators,
targets, and baseline data must be included in the Federal award, where
applicable. The Federal awarding agency must also specify how
performance will be assessed in the terms and conditions of the Federal
award, including the timing and scope of expected performance. See
Sec. Sec. 200.202 and 200.301 for more information on Federal award
performance goals.
(b) General Federal award information. The Federal awarding agency
must include the following general Federal award information in each
Federal award:
(1) Recipient name (which must match the name associated with its
unique entity identifier as defined at 2 CFR 25.315);
(2) Recipient's unique entity identifier;
(3) Unique Federal Award Identification Number (FAIN);
(4) Federal Award Date (see Federal award date in Sec. 200.201);
(5) Period of Performance Start and End Date;
(6) Budget Period Start and End Date;
(7) Amount of Federal Funds Obligated by this action;
(8) Total Amount of Federal Funds Obligated;
(9) Total Approved Cost Sharing or Matching, where applicable;
(10) Total Amount of the Federal Award including approved Cost
Sharing or Matching;
(11) Budget Approved by the Federal Awarding Agency;
(11) Federal award description, (to comply with statutory
requirements (e.g., FFATA));
(12) Name of Federal awarding agency and contact information for
awarding official,
(13) Assistance Listings Number and Title;
(14) Identification of whether the award is R&D; and
(15) Indirect cost rate for the Federal award (including if the de
minimis rate is charged per Sec. 200.414).
(c) General terms and conditions. (1) Federal awarding agencies
must incorporate the following general terms and conditions either in
the Federal award or by reference, as applicable:
(i) Administrative requirements. Administrative requirements
implemented by the Federal awarding agency as specified in this part.
(ii) National policy requirements. These include statutory,
executive order, other Presidential directive, or regulatory
requirements that apply by specific reference and are not program-
specific. See Sec. 200.300 Statutory and national policy requirements.
(iii) Recipient integrity and performance matters. If the total
Federal share of the Federal award may include more than $500,000 over
the period of performance, the Federal awarding agency must include the
term and condition available in appendix XII of this part. See also
Sec. 200.113.
(iv) Future budget periods. If it is anticipated that the period of
performance will include multiple budget periods, the Federal awarding
agency must indicate that subsequent budget periods are subject to the
availability of funds, program authority, satisfactory performance, and
compliance with the terms and conditions of the Federal award.
(v) Termination provisions. Federal awarding agencies must make
recipients aware, in a clear and unambiguous manner, of the termination
provisions in Sec. 200.340, including the applicable termination
provisions in the Federal awarding agency's regulations or in each
Federal award.
(2) The Federal award must incorporate, by reference, all general
terms and conditions of the award, which must be maintained on the
agency's website.
(3) If a non-Federal entity requests a copy of the full text of the
general terms and conditions, the Federal awarding agency must provide
it.
(4) Wherever the general terms and conditions are publicly
available, the Federal awarding agency must maintain an archive of
previous versions of the general terms and conditions, with effective
dates, for use by the non-Federal entity, auditors, or others.
(d) Federal awarding agency, program, or Federal award specific
terms and conditions. The Federal awarding agency must include with
each Federal award any terms and conditions necessary to communicate
requirements that are in addition to the requirements outlined in the
Federal awarding agency's general terms and conditions. See also Sec.
200.208. Whenever practicable, these specific terms and conditions also
should be shared on the agency's website and in notices of funding
opportunities (as outlined in Sec. 200.204) in addition to being
included in a Federal award. See also Sec. 200.207.
(e) Federal awarding agency requirements. Any other information
required by the Federal awarding agency.
Sec. 200.212 Public access to Federal award information.
(a) In accordance with statutory requirements for Federal spending
transparency (e.g., FFATA), except as noted in this section, for
applicable Federal awards the Federal awarding agency must announce all
Federal awards publicly and publish the required information on a
publicly available OMB-designated governmentwide website.
(b) All information posted in the designated integrity and
performance system accessible through SAM (currently FAPIIS) on or
after April 15, 2011 will be publicly available after a waiting period
of 14 calendar days, except for:
(1) Past performance reviews required by Federal Government
contractors in accordance with the Federal Acquisition Regulation (FAR)
48 CFR part 42, subpart 42.15;
(2) Information that was entered prior to April 15, 2011; or
(3) Information that is withdrawn during the 14-calendar day
waiting period by the Federal Government official.
(c) Nothing in this section may be construed as requiring the
publication of information otherwise exempt under the Freedom of
Information Act (5 U.S.C 552), or controlled unclassified information
pursuant to Executive Order 13556.
Sec. 200.213 Reporting a determination that a non-Federal entity is
not qualified for a Federal award.
(a) If a Federal awarding agency does not make a Federal award to a
non-Federal entity because the official determines that the non-Federal
entity does not meet either or both of the minimum qualification
standards as described in Sec. 200.206(a)(2), the Federal awarding
agency must report that determination to the designated integrity and
performance system accessible through SAM (currently FAPIIS), only if
all of the following apply:
(1) The only basis for the determination described in this
paragraph (a) is the non-Federal entity's prior record of executing
programs or activities under Federal awards or its record of integrity
and business ethics, as described in Sec. 200.206(a)(2) (i.e., the
entity was determined to be qualified based on all factors other than
those two standards); and
(2) The total Federal share of the Federal award that otherwise
would be made to the non-Federal entity is expected to exceed the
simplified
[[Page 49543]]
acquisition threshold over the period of performance.
(b) The Federal awarding agency is not required to report a
determination that a non-Federal entity is not qualified for a Federal
award if they make the Federal award to the non-Federal entity and
include specific award terms and conditions, as described in Sec.
200.208.
(c) If a Federal awarding agency reports a determination that a
non-Federal entity is not qualified for a Federal award, as described
in paragraph (a) of this section, the Federal awarding agency also must
notify the non-Federal entity that--
(1) The determination was made and reported to the designated
integrity and performance system accessible through SAM, and include
with the notification an explanation of the basis for the
determination;
(2) The information will be kept in the system for a period of five
years from the date of the determination, as required by section 872 of
Public Law 110-417, as amended (41 U.S.C. 2313), then archived;
(3) Each Federal awarding agency that considers making a Federal
award to the non-Federal entity during that five year period must
consider that information in judging whether the non-Federal entity is
qualified to receive the Federal award when the total Federal share of
the Federal award is expected to include an amount of Federal funding
in excess of the simplified acquisition threshold over the period of
performance;
(4) The non-Federal entity may go to the awardee integrity and
performance portal accessible through SAM (currently the Contractor
Performance Assessment Reporting System (CPARS)) and comment on any
information the system contains about the non-Federal entity itself;
and
(5) Federal awarding agencies will consider that non-Federal
entity's comments in determining whether the non-Federal entity is
qualified for a future Federal award.
(d) If a Federal awarding agency enters information into the
designated integrity and performance system accessible through SAM
about a determination that a non-Federal entity is not qualified for a
Federal award and subsequently:
(1) Learns that any of that information is erroneous, the Federal
awarding agency must correct the information in the system within three
business days; and
(2) Obtains an update to that information that could be helpful to
other Federal awarding agencies, the Federal awarding agency is
strongly encouraged to amend the information in the system to
incorporate the update in a timely way.
(e) Federal awarding agencies must not post any information that
will be made publicly available in the non-public segment of designated
integrity and performance system that is covered by a disclosure
exemption under the Freedom of Information Act. If the recipient
asserts within seven calendar days to the Federal awarding agency that
posted the information that some or all of the information made
publicly available is covered by a disclosure exemption under the
Freedom of Information Act, the Federal awarding agency that posted the
information must remove the posting within seven calendar days of
receiving the assertion. Prior to reposting the releasable information,
the Federal awarding agency must resolve the issue in accordance with
the agency's Freedom of Information Act procedures.
Sec. 200.214 Suspension and debarment.
Non-Federal entities are subject to the non-procurement debarment
and suspension regulations implementing Executive Orders 12549 and
12689, 2 CFR part 180. The regulations in 2 CFR part 180 restrict
awards, subawards, and contracts with certain parties that are
debarred, suspended, or otherwise excluded from or ineligible for
participation in Federal assistance programs or activities.
Sec. 200.215 Never contract with the enemy.
Federal awarding agencies and recipients are subject to the
regulations implementing Never Contract with the Enemy in 2 CFR part
183. The regulations in 2 CFR part 183 affect covered contracts, grants
and cooperative agreements that are expected to exceed $50,000 within
the period of performance, are performed outside the United States and
its territories, and are in support of a contingency operation in which
members of the Armed Forces are actively engaged in hostilities.
Sec. 200.216 Prohibition on certain telecommunications and video
surveillance services or equipment.
(a) 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 uses covered
telecommunications equipment or services as a substantial or essential
component of any system, or as critical technology as part of any
system. As described in Public Law 115-232, section 889, covered
telecommunications equipment is telecommunications equipment produced
by Huawei Technologies Company or ZTE Corporation (or any subsidiary or
affiliate of such entities).
(i) For the purpose of public safety, security of government
facilities, physical security surveillance of critical infrastructure,
and other national security purposes, video surveillance and
telecommunications equipment produced by Hytera Communications
Corporation, Hangzhou Hikvision Digital Technology Company, or Dahua
Technology Company (or any subsidiary or affiliate of such entities).
(ii) Telecommunications or video surveillance services provided by
such entities or using such equipment.
(iii) Telecommunications or video surveillance equipment or
services produced or provided by an entity that the Secretary of
Defense, in consultation with the Director of the National Intelligence
or the Director of the Federal Bureau of Investigation, reasonably
believes to be an entity owned or controlled by, or otherwise connected
to, the government of a covered foreign country.
(b) In implementing the prohibition under Public Law 115-232,
section 889, subsection (f), paragraph (1), heads of executive agencies
administering loan, grant, or subsidy programs shall prioritize
available funding and technical support to assist affected businesses,
institutions and organizations as is reasonably necessary for those
affected entities to transition from covered communications equipment
and services, to procure replacement equipment and services, and to
ensure that communications service to users and customers is sustained.
(c) See Public Law 115-232, section 889 for additional information.
(d) See also Sec. 200.471.
0
45. Revise subpart D to read as follows:
Subpart D--Post Federal Award Requirements
Sec.
200.300 Statutory and national policy requirements.
200.301 Performance measurement.
200.302 Financial management.
200.303 Internal controls.
200.304 Bonds.
200.305 Federal payment.
200.306 Cost sharing or matching.
200.307 Program income.
200.308 Revision of budget and program plans.
[[Page 49544]]
200.309 Modifications to Period of Performance.
Property Standards
200.310 Insurance coverage.
200.311 Real property.
200.312 Federally-owned and exempt property.
200.313 Equipment.
200.314 Supplies.
200.315 Intangible property.
200.316 Property trust relationship.
Procurement Standards
200.317 Procurements by states.
200.318 General procurement standards.
200.319 Competition.
200.320 Methods of procurement to be followed.
200.321 Contracting with small and minority businesses, women's
business enterprises, and labor surplus area firms.
200.322 Domestic preferences for procurements.
200.323 Procurement of recovered materials.
200.324 Contract cost and price.
200.325 Federal awarding agency or pass-through entity review.
200.326 Bonding requirements.
200.327 Contract provisions.
Performance and Financial Monitoring and Reporting
200.328 Financial reporting.
200.329 Monitoring and reporting program performance.
200. 330 Reporting on real property.
Subrecipient Monitoring and Management
200.331 Subrecipient and contractor determinations.
200.332 Requirements for pass-through entities.
200.333 Fixed amount subawards.
Record Retention and Access
200.334 Retention requirements for records.
200.335 Requests for transfer of records.
200.336 Methods for collection, transmission, and storage of
information.
200.337 Access to records.
200.338 Restrictions on public access to records.
Remedies for Noncompliance
200.339 Remedies for noncompliance.
200.340 Termination.
200.341 Notification of termination requirement.
200.342 Opportunities to object, hearings, and appeals.
200.343 Effects of suspension and termination.
Closeout
200.344 Closeout.
Post-Closeout Adjustments and Continuing Responsibilities
200.345 Post-closeout adjustments and continuing responsibilities.
Collection of Amounts Due
200.346 Collection of amounts due.
Subpart D--Post Federal Award Requirements
Sec. 200.300 Statutory and national policy requirements.
(a) The Federal awarding agency must manage and administer the
Federal award in a manner so as to ensure that Federal funding is
expended and associated programs are implemented in full accordance
with the U.S. Constitution, Federal Law, and public policy
requirements: Including, but not limited to, those protecting free
speech, religious liberty, public welfare, the environment, and
prohibiting discrimination. The Federal awarding agency must
communicate to the non-Federal entity all relevant public policy
requirements, including those in general appropriations provisions, and
incorporate them either directly or by reference in the terms and
conditions of the Federal award.
(b) The non-Federal entity is responsible for complying with all
requirements of the Federal award. For all Federal awards, this
includes the provisions of FFATA, which includes requirements on
executive compensation, and also requirements implementing the Act for
the non-Federal entity at 2 CFR parts 25 and 170. See also statutory
requirements for whistleblower protections at 10 U.S.C. 2409, 41 U.S.C.
4712, and 10 U.S.C. 2324, 41 U.S.C. 4304 and 4310.
Sec. 200.301 Performance measurement.
(a) The Federal awarding agency must measure the recipient's
performance to show achievement of program goals and objectives, share
lessons learned, improve program outcomes, and foster adoption of
promising practices. Program goals and objectives should be derived
from program planning and design. See Sec. 200.202 for more
information. Where appropriate, the Federal award may include specific
program goals, indicators, targets, baseline data, data collection, or
expected outcomes (such as outputs, or services performance or public
impacts of any of these) with an expected timeline for accomplishment.
Where applicable, this should also include any performance measures or
independent sources of data that may be used to measure progress. The
Federal awarding agency will determine how performance progress is
measured, which may differ by program. Performance measurement progress
must be both measured and reported. See Sec. 200.329 for more
information on monitoring program performance. The Federal awarding
agency may include program-specific requirements, as applicable. These
requirements must be aligned, to the extent permitted by law, with the
Federal awarding agency strategic goals, strategic objectives or
performance goals that are relevant to the program. See also OMB
Circular A-11, Preparation, Submission, and Execution of the Budget
Part 6.
(b) The Federal awarding agency should provide recipients with
clear performance goals, indicators, targets, and baseline data as
described in Sec. 200.211. Performance reporting frequency and content
should be established to not only allow the Federal awarding agency to
understand the recipient progress but also to facilitate identification
of promising practices among recipients and build the evidence upon
which the Federal awarding agency's program and performance decisions
are made. See Sec. 200.328 for more information on reporting program
performance.
(c) This provision is designed to operate in tandem with evidence-
related statutes (e.g.; The Foundations for Evidence-Based Policymaking
Act of 2018, which emphasizes collaboration and coordination to advance
data and evidence-building functions in the Federal government). The
Federal awarding agency should also specify any requirements of award
recipients' participation in a federally funded evaluation, and any
evaluation activities required to be conducted by the Federal award.
Sec. 200.302 Financial management.
(a) Each state must expend and account for the Federal award in
accordance with state laws and procedures for expending and accounting
for the state's own funds. In addition, the state's and the other non-
Federal entity's financial management systems, including records
documenting compliance with Federal statutes, regulations, and the
terms and conditions of the Federal award, must be sufficient to permit
the preparation of reports required by general and program-specific
terms and conditions; and the tracing of funds to a level of
expenditures adequate to establish that such funds have been used
according to the Federal statutes, regulations, and the terms and
conditions of the Federal award. See also Sec. 200.450.
(b) The financial management system of each non-Federal entity must
provide for the following (see also Sec. Sec. 200.334, 200.335,
200.336, and 200.337):
(1) Identification, in its accounts, of all Federal awards received
and expended and the Federal programs under which they were received.
Federal program and Federal award
[[Page 49545]]
identification must include, as applicable, the Assistance Listings
title and number, Federal award identification number and year, name of
the Federal agency, and name of the pass-through entity, if any.
(2) Accurate, current, and complete disclosure of the financial
results of each Federal award or program in accordance with the
reporting requirements set forth in Sec. Sec. 200.328 and 200.329. If
a Federal awarding agency requires reporting on an accrual basis from a
recipient that maintains its records on other than an accrual basis,
the recipient must not be required to establish an accrual accounting
system. This recipient may develop accrual data for its reports on the
basis of an analysis of the documentation on hand. Similarly, a pass-
through entity must not require a subrecipient to establish an accrual
accounting system and must allow the subrecipient to develop accrual
data for its reports on the basis of an analysis of the documentation
on hand.
(3) Records that identify adequately the source and application of
funds for federally-funded activities. These records must contain
information pertaining to Federal awards, authorizations, financial
obligations, unobligated balances, assets, expenditures, income and
interest and be supported by source documentation.
(4) Effective control over, and accountability for, all funds,
property, and other assets. The non-Federal entity must adequately
safeguard all assets and assure that they are used solely for
authorized purposes. See Sec. 200.303.
(5) Comparison of expenditures with budget amounts for each Federal
award.
(6) Written procedures to implement the requirements of Sec.
200.305.
(7) Written procedures for determining the allowability of costs in
accordance with subpart E of this part and the terms and conditions of
the Federal award.
Sec. 200.303 Internal controls.
The non-Federal entity must:
(a) Establish and maintain effective internal control over the
Federal award that provides reasonable assurance that the non-Federal
entity is managing the Federal award in compliance with Federal
statutes, regulations, and the terms and conditions of the Federal
award. These internal controls should be in compliance with guidance in
``Standards for Internal Control in the Federal Government'' issued by
the Comptroller General of the United States or the ``Internal Control
Integrated Framework'', issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
(b) Comply with the U.S. Constitution, Federal statutes,
regulations, and the terms and conditions of the Federal awards.
(c) Evaluate and monitor the non-Federal entity's compliance with
statutes, regulations and the terms and conditions of Federal awards.
(d) Take prompt action when instances of noncompliance are
identified including noncompliance identified in audit findings.
(e) Take reasonable measures to safeguard protected personally
identifiable information and other information the Federal awarding
agency or pass-through entity designates as sensitive or the non-
Federal entity considers sensitive consistent with applicable Federal,
State, local, and tribal laws regarding privacy and responsibility over
confidentiality.
Sec. 200.304 Bonds.
The Federal awarding agency may include a provision on bonding,
insurance, or both in the following circumstances:
(a) Where the Federal Government guarantees or insures the
repayment of money borrowed by the recipient, the Federal awarding
agency, at its discretion, may require adequate bonding and insurance
if the bonding and insurance requirements of the non-Federal entity are
not deemed adequate to protect the interest of the Federal Government.
(b) The Federal awarding agency may require adequate fidelity bond
coverage where the non-Federal entity lacks sufficient coverage to
protect the Federal Government's interest.
(c) Where bonds are required in the situations described above, the
bonds must be obtained from companies holding certificates of authority
as acceptable sureties, as prescribed in 31 CFR part 223.
Sec. 200.305 Federal payment.
(a) For states, payments are governed by Treasury-State Cash
Management Improvement Act (CMIA) agreements and default procedures
codified at 31 CFR part 205 and Treasury Financial Manual (TFM) 4A-
2000, ``Overall Disbursing Rules for All Federal Agencies''.
(b) For non-Federal entities other than states, payments methods
must minimize the time elapsing between the transfer of funds from the
United States Treasury or the pass-through entity and the disbursement
by the non-Federal entity whether the payment is made by electronic
funds transfer, or issuance or redemption of checks, warrants, or
payment by other means. See also Sec. 200.302(b)(6). Except as noted
elsewhere in this part, Federal agencies must require recipients to use
only OMB-approved, governmentwide information collection requests to
request payment.
(1) The non-Federal entity must be paid in advance, provided it
maintains or demonstrates the willingness to maintain both written
procedures that minimize the time elapsing between the transfer of
funds and disbursement by the non-Federal entity, and financial
management systems that meet the standards for fund control and
accountability as established in this part. Advance payments to a non-
Federal entity must be limited to the minimum amounts needed and be
timed to be in accordance with the actual, immediate cash requirements
of the non-Federal entity in carrying out the purpose of the approved
program or project. The timing and amount of advance payments must be
as close as is administratively feasible to the actual disbursements by
the non-Federal entity for direct program or project costs and the
proportionate share of any allowable indirect costs. The non-Federal
entity must make timely payment to contractors in accordance with the
contract provisions.
(2) Whenever possible, advance payments must be consolidated to
cover anticipated cash needs for all Federal awards made by the Federal
awarding agency to the recipient.
(i) Advance payment mechanisms include, but are not limited to,
Treasury check and electronic funds transfer and must comply with
applicable guidance in 31 CFR part 208.
(ii) Non-Federal entities must be authorized to submit requests for
advance payments and reimbursements at least monthly when electronic
fund transfers are not used, and as often as they like when electronic
transfers are used, in accordance with the provisions of the Electronic
Fund Transfer Act (15 U.S.C. 1693-1693r).
(3) Reimbursement is the preferred method when the requirements in
this paragraph (b) cannot be met, when the Federal awarding agency sets
a specific condition per Sec. 200.208, or when the non-Federal entity
requests payment by reimbursement. This method may be used on any
Federal award for construction, or if the major portion of the
construction project is accomplished through private market financing
or Federal loans, and the Federal award constitutes a minor portion of
the project. When the reimbursement method is used, the Federal
awarding
[[Page 49546]]
agency or pass-through entity must make payment within 30 calendar days
after receipt of the billing, unless the Federal awarding agency or
pass-through entity reasonably believes the request to be improper.
(4) If the non-Federal entity cannot meet the criteria for advance
payments and the Federal awarding agency or pass-through entity has
determined that reimbursement is not feasible because the non-Federal
entity lacks sufficient working capital, the Federal awarding agency or
pass-through entity may provide cash on a working capital advance
basis. Under this procedure, the Federal awarding agency or pass-
through entity must advance cash payments to the non-Federal entity to
cover its estimated disbursement needs for an initial period generally
geared to the non-Federal entity's disbursing cycle. Thereafter, the
Federal awarding agency or pass-through entity must reimburse the non-
Federal entity for its actual cash disbursements. Use of the working
capital advance method of payment requires that the pass-through entity
provide timely advance payments to any subrecipients in order to meet
the subrecipient's actual cash disbursements. The working capital
advance method of payment must not be used by the pass-through entity
if the reason for using this method is the unwillingness or inability
of the pass-through entity to provide timely advance payments to the
subrecipient to meet the subrecipient's actual cash disbursements.
(5) To the extent available, the non-Federal entity must disburse
funds available from program income (including repayments to a
revolving fund), rebates, refunds, contract settlements, audit
recoveries, and interest earned on such funds before requesting
additional cash payments.
(6) Unless otherwise required by Federal statutes, payments for
allowable costs by non-Federal entities must not be withheld at any
time during the period of performance unless the conditions of Sec.
200.208, subpart D of this part, including Sec. 200.339, or one or
more of the following applies:
(i) The non-Federal entity has failed to comply with the project
objectives, Federal statutes, regulations, or the terms and conditions
of the Federal award.
(ii) The non-Federal entity is delinquent in a debt to the United
States as defined in OMB Circular A-129, ``Policies for Federal Credit
Programs and Non-Tax Receivables.'' Under such conditions, the Federal
awarding agency or pass-through entity may, upon reasonable notice,
inform the non-Federal entity that payments must not be made for
financial obligations incurred after a specified date until the
conditions are corrected or the indebtedness to the Federal Government
is liquidated.
(iii) A payment withheld for failure to comply with Federal award
conditions, but without suspension of the Federal award, must be
released to the non-Federal entity upon subsequent compliance. When a
Federal award is suspended, payment adjustments will be made in
accordance with Sec. 200.343.
(iv) A payment must not be made to a non-Federal entity for amounts
that are withheld by the non-Federal entity from payment to contractors
to assure satisfactory completion of work. A payment must be made when
the non-Federal entity actually disburses the withheld funds to the
contractors or to escrow accounts established to assure satisfactory
completion of work.
(7) Standards governing the use of banks and other institutions as
depositories of advance payments under Federal awards are as follows.
(i) The Federal awarding agency and pass-through entity must not
require separate depository accounts for funds provided to a non-
Federal entity or establish any eligibility requirements for
depositories for funds provided to the non-Federal entity. However, the
non-Federal entity must be able to account for funds received,
obligated, and expended.
(ii) Advance payments of Federal funds must be deposited and
maintained in insured accounts whenever possible.
(8) The non-Federal entity must maintain advance payments of
Federal awards in interest-bearing accounts, unless the following
apply:
(i) The non-Federal entity receives less than $250,000 in Federal
awards per year.
(ii) The best reasonably available interest-bearing account would
not be expected to earn interest in excess of $500 per year on Federal
cash balances.
(iii) The depository would require an average or minimum balance so
high that it would not be feasible within the expected Federal and non-
Federal cash resources.
(iv) A foreign government or banking system prohibits or precludes
interest-bearing accounts.
(9) Interest earned amounts up to $500 per year may be retained by
the non-Federal entity for administrative expense. Any additional
interest earned on Federal advance payments deposited in interest-
bearing accounts must be remitted annually to the Department of Health
and Human Services Payment Management System (PMS) through an
electronic medium using either Automated Clearing House (ACH) network
or a Fedwire Funds Service payment.
(i) For returning interest on Federal awards paid through PMS, the
refund should:
(A) Provide an explanation stating that the refund is for interest;
(B) List the PMS Payee Account Number(s) (PANs);
(C) List the Federal award number(s) for which the interest was
earned; and
(D) Make returns payable to: Department of Health and Human
Services.
(ii) For returning interest on Federal awards not paid through PMS,
the refund should:
(A) Provide an explanation stating that the refund is for interest;
(B) Include the name of the awarding agency;
(C) List the Federal award number(s) for which the interest was
earned; and
(D) Make returns payable to: Department of Health and Human
Services.
(10) Funds, principal, and excess cash returns must be directed to
the original Federal agency payment system. The non-Federal entity
should review instructions from the original Federal agency payment
system. Returns should include the following information:
(i) Payee Account Number (PAN), if the payment originated from PMS,
or Agency information to indicate whom to credit the funding if the
payment originated from ASAP, NSF, or another Federal agency payment
system.
(ii) PMS document number and subaccount(s), if the payment
originated from PMS, or relevant account numbers if the payment
originated from another Federal agency payment system.
(iii) The reason for the return (e.g., excess cash, funds not
spent, interest, part interest part other, etc.)
(11) When returning funds or interest to PMS you must include the
following as applicable:
(i) For ACH Returns:
Routing Number: 051036706
Account number: 303000
Bank Name and Location: Credit Gateway--ACH Receiver St. Paul, MN
(ii) For Fedwire Returns \1\:
Routing Number: 021030004
Account number: 75010501
Bank Name and Location: Federal Reserve Bank Treas NYC/Funds Transfer
Division New York, NY
\1\ Please note that the organization initiating payment is likely
to incur a charge from their Financial Institution for this type of
payment.
[[Page 49547]]
(iii) For International ACH Returns:
Beneficiary Account: Federal Reserve Bank of New York/ITS (FRBNY/ITS)
Bank: Citibank N.A. (New York)
Swift Code: CITIUS33
Account Number: 36838868
Bank Address: 388 Greenwich Street, New York, NY 10013 USA
Payment Details (Line 70): Agency Locator Code (ALC): 75010501
Name (abbreviated when possible) and ALC Agency POC
(iv) For recipients that do not have electronic remittance
capability, please make check \2\ payable to: ``The Department of
Health and Human Services.''
Mail Check to Treasury approved lockbox:
HHS Program Support Center, P.O. Box 530231, Atlanta, GA 30353-0231
\2\ Please allow 4-6 weeks for processing of a payment by check to
be applied to the appropriate PMS account.
(v) Questions can be directed to PMS at 877-614-5533 or
[email protected].
Sec. 200.306 Cost sharing or matching.
(a) Under Federal research proposals, voluntary committed cost
sharing is not expected. It cannot be used as a factor during the merit
review of applications or proposals, but may be considered if it is
both in accordance with Federal awarding agency regulations and
specified in a notice of funding opportunity. Criteria for considering
voluntary committed cost sharing and any other program policy factors
that may be used to determine who may receive a Federal award must be
explicitly described in the notice of funding opportunity. See also
Sec. Sec. 200.414 and 200.204 and appendix I to this part.
(b) For all Federal awards, any shared costs or matching funds and
all contributions, including cash and third-party in-kind
contributions, must be accepted as part of the non-Federal entity's
cost sharing or matching when such contributions meet all of the
following criteria:
(1) Are verifiable from the non-Federal entity's records;
(2) Are not included as contributions for any other Federal award;
(3) Are necessary and reasonable for accomplishment of project or
program objectives;
(4) Are allowable under subpart E of this part;
(5) Are not paid by the Federal Government under another Federal
award, except where the Federal statute authorizing a program
specifically provides that Federal funds made available for such
program can be applied to matching or cost sharing requirements of
other Federal programs;
(6) Are provided for in the approved budget when required by the
Federal awarding agency; and
(7) Conform to other provisions of this part, as applicable.
(c) Unrecovered indirect costs, including indirect costs on cost
sharing or matching may be included as part of cost sharing or matching
only with the prior approval of the Federal awarding agency.
Unrecovered indirect cost means the difference between the amount
charged to the Federal award and the amount which could have been
charged to the Federal award under the non-Federal entity's approved
negotiated indirect cost rate.
(d) Values for non-Federal entity contributions of services and
property must be established in accordance with the cost principles in
subpart E of this part. If a Federal awarding agency authorizes the
non-Federal entity to donate buildings or land for construction/
facilities acquisition projects or long-term use, the value of the
donated property for cost sharing or matching must be the lesser of
paragraph (d)(1) or (2) of this section.
(1) The value of the remaining life of the property recorded in the
non-Federal entity's accounting records at the time of donation.
(2) The current fair market value. However, when there is
sufficient justification, the Federal awarding agency may approve the
use of the current fair market value of the donated property, even if
it exceeds the value described in paragraph (d)(1) of this section at
the time of donation.
(e) Volunteer services furnished by third-party professional and
technical personnel, consultants, and other skilled and unskilled labor
may be counted as cost sharing or matching if the service is an
integral and necessary part of an approved project or program. Rates
for third-party volunteer services must be consistent with those paid
for similar work by the non-Federal entity. In those instances in which
the required skills are not found in the non-Federal entity, rates must
be consistent with those paid for similar work in the labor market in
which the non-Federal entity competes for the kind of services
involved. In either case, paid fringe benefits that are reasonable,
necessary, allocable, and otherwise allowable may be included in the
valuation.
(f) When a third-party organization furnishes the services of an
employee, these services must be valued at the employee's regular rate
of pay plus an amount of fringe benefits that is reasonable, necessary,
allocable, and otherwise allowable, and indirect costs at either the
third-party organization's approved federally-negotiated indirect cost
rate or, a rate in accordance with Sec. 200.414(d) provided these
services employ the same skill(s) for which the employee is normally
paid. Where donated services are treated as indirect costs, indirect
cost rates will separate the value of the donated services so that
reimbursement for the donated services will not be made.
(g) Donated property from third parties may include such items as
equipment, office supplies, laboratory supplies, or workshop and
classroom supplies. Value assessed to donated property included in the
cost sharing or matching share must not exceed the fair market value of
the property at the time of the donation.
(h) The method used for determining cost sharing or matching for
third-party-donated equipment, buildings and land for which title
passes to the non-Federal entity may differ according to the purpose of
the Federal award, if paragraph (h)(1) or (2) of this section applies.
(1) If the purpose of the Federal award is to assist the non-
Federal entity in the acquisition of equipment, buildings or land, the
aggregate value of the donated property may be claimed as cost sharing
or matching.
(2) If the purpose of the Federal award is to support activities
that require the use of equipment, buildings or land, normally only
depreciation charges for equipment and buildings may be made. However,
the fair market value of equipment or other capital assets and fair
rental charges for land may be allowed, provided that the Federal
awarding agency has approved the charges. See also Sec. 200.420.
(i) The value of donated property must be determined in accordance
with the usual accounting policies of the non-Federal entity, with the
following qualifications:
(1) The value of donated land and buildings must not exceed its
fair market value at the time of donation to the non-Federal entity as
established by an independent appraiser (e.g., certified real property
appraiser or General Services Administration representative) and
certified by a responsible official of the non-Federal entity as
required by the Uniform Relocation Assistance and Real Property
Acquisition Policies Act of 1970, as amended, (42 U.S.C. 4601-4655)
(Uniform Act) except as provided in the implementing regulations at 49
CFR part 24, ``Uniform Relocation Assistance And Real Property
[[Page 49548]]
Acquisition For Federal And Federally-Assisted Programs''.
(2) The value of donated equipment must not exceed the fair market
value of equipment of the same age and condition at the time of
donation.
(3) The value of donated space must not exceed the fair rental
value of comparable space as established by an independent appraisal of
comparable space and facilities in a privately-owned building in the
same locality.
(4) The value of loaned equipment must not exceed its fair rental
value.
(j) For third-party in-kind contributions, the fair market value of
goods and services must be documented and to the extent feasible
supported by the same methods used internally by the non-Federal
entity.
(k) For IHEs, see also OMB memorandum M-01-06, dated January 5,
2001, Clarification of OMB A-21 Treatment of Voluntary Uncommitted Cost
Sharing and Tuition Remission Costs.
Sec. 200.307 Program income.
(a) General. Non-Federal entities are encouraged to earn income to
defray program costs where appropriate.
(b) Cost of generating program income. If authorized by Federal
regulations or the Federal award, costs incidental to the generation of
program income may be deducted from gross income to determine program
income, provided these costs have not been charged to the Federal
award.
(c) Governmental revenues. Taxes, special assessments, levies,
fines, and other such revenues raised by a non-Federal entity are not
program income unless the revenues are specifically identified in the
Federal award or Federal awarding agency regulations as program income.
(d) Property. Proceeds from the sale of real property, equipment,
or supplies are not program income; such proceeds will be handled in
accordance with the requirements of the Property Standards Sec. Sec.
200.311, 200.313, and 200.314, or as specifically identified in Federal
statutes, regulations, or the terms and conditions of the Federal
award.
(e) Use of program income. If the Federal awarding agency does not
specify in its regulations or the terms and conditions of the Federal
award, or give prior approval for how program income is to be used,
paragraph (e)(1) of this section must apply. For Federal awards made to
IHEs and nonprofit research institutions, if the Federal awarding
agency does not specify in its regulations or the terms and conditions
of the Federal award how program income is to be used, paragraph (e)(2)
of this section must apply. In specifying alternatives to paragraphs
(e)(1) and (2) of this section, the Federal awarding agency may
distinguish between income earned by the recipient and income earned by
subrecipients and between the sources, kinds, or amounts of income.
When the Federal awarding agency authorizes the approaches in
paragraphs (e)(2) and (3) of this section, program income in excess of
any amounts specified must also be deducted from expenditures.
(1) Deduction. Ordinarily program income must be deducted from
total allowable costs to determine the net allowable costs. Program
income must be used for current costs unless the Federal awarding
agency authorizes otherwise. Program income that the non-Federal entity
did not anticipate at the time of the Federal award must be used to
reduce the Federal award and non-Federal entity contributions rather
than to increase the funds committed to the project.
(2) Addition. With prior approval of the Federal awarding agency
(except for IHEs and nonprofit research institutions, as described in
this paragraph (e)) program income may be added to the Federal award by
the Federal agency and the non-Federal entity. The program income must
be used for the purposes and under the conditions of the Federal award.
(3) Cost sharing or matching. With prior approval of the Federal
awarding agency, program income may be used to meet the cost sharing or
matching requirement of the Federal award. The amount of the Federal
award remains the same.
(f) Income after the period of performance. There are no Federal
requirements governing the disposition of income earned after the end
of the period of performance for the Federal award, unless the Federal
awarding agency regulations or the terms and conditions of the Federal
award provide otherwise. The Federal awarding agency may negotiate
agreements with recipients regarding appropriate uses of income earned
after the period of performance as part of the grant closeout process.
See also Sec. 200.344.
(g) License fees and royalties. Unless the Federal statute,
regulations, or terms and conditions for the Federal award provide
otherwise, the non-Federal entity is not accountable to the Federal
awarding agency with respect to program income earned from license fees
and royalties for copyrighted material, patents, patent applications,
trademarks, and inventions made under a Federal award to which 37 CFR
part 401 is applicable.
Sec. 200.308 Revision of budget and program plans.
(a) The approved budget for the Federal award summarizes the
financial aspects of the project or program as approved during the
Federal award process. It may include either the Federal and non-
Federal share (see definition for Federal share in Sec. 200.1) or only
the Federal share, depending upon Federal awarding agency requirements.
The budget and program plans include considerations for performance and
program evaluation purposes whenever required in accordance with the
terms and conditions of the award.
(b) Recipients are required to report deviations from budget or
project scope or objective, and request prior approvals from Federal
awarding agencies for budget and program plan revisions, in accordance
with this section.
(c) For non-construction Federal awards, recipients must request
prior approvals from Federal awarding agencies for the following
program or budget-related reasons:
(1) Change in the scope or the objective of the project or program
(even if there is no associated budget revision requiring prior written
approval).
(2) Change in a key person specified in the application or the
Federal award.
(3) The disengagement from the project for more than three months,
or a 25 percent reduction in time devoted to the project, by the
approved project director or principal investigator.
(4) The inclusion, unless waived by the Federal awarding agency, of
costs that require prior approval in accordance with subpart E of this
part as applicable.
(5) The transfer of funds budgeted for participant support costs to
other categories of expense.
(6) Unless described in the application and funded in the approved
Federal awards, the subawarding, transferring or contracting out of any
work under a Federal award, including fixed amount subawards as
described in Sec. 200.333. This provision does not apply to the
acquisition of supplies, material, equipment or general support
services.
(7) Changes in the approved cost-sharing or matching provided by
the non-Federal entity.
(8) The need arises for additional Federal funds to complete the
project.
(d) No other prior approval requirements for specific items may be
imposed unless an exception has been approved by OMB. See also
Sec. Sec. 200.102 and 200.407.
(e) Except for requirements listed in paragraphs (c)(1) through (8)
of this section, the Federal awarding agency is
[[Page 49549]]
authorized, at its option, to waive other cost-related and
administrative prior written approvals contained in subparts D and E of
this part. Such waivers may include authorizing recipients to do any
one or more of the following:
(1) Incur project costs 90 calendar days before the Federal
awarding agency makes the Federal award. Expenses more than 90 calendar
days pre-award require prior approval of the Federal awarding agency.
All costs incurred before the Federal awarding agency makes the Federal
award are at the recipient's risk (i.e., the Federal awarding agency is
not required to reimburse such costs if for any reason the recipient
does not receive a Federal award or if the Federal award is less than
anticipated and inadequate to cover such costs). See also Sec.
200.458.
(2) Initiate a one-time extension of the period of performance by
up to 12 months unless one or more of the conditions outlined in
paragraphs (e)(2)(i) through (iii) of this section apply. For one-time
extensions, the recipient must notify the Federal awarding agency in
writing with the supporting reasons and revised period of performance
at least 10 calendar days before the end of the period of performance
specified in the Federal award. This one-time extension must not be
exercised merely for the purpose of using unobligated balances.
Extensions require explicit prior Federal awarding agency approval
when:
(i) The terms and conditions of the Federal award prohibit the
extension.
(ii) The extension requires additional Federal funds.
(iii) The extension involves any change in the approved objectives
or scope of the project.
(3) Carry forward unobligated balances to subsequent budget
periods.
(4) For Federal awards that support research, unless the Federal
awarding agency provides otherwise in the Federal award or in the
Federal awarding agency's regulations, the prior approval requirements
described in this paragraph (e) are automatically waived (i.e.,
recipients need not obtain such prior approvals) unless one of the
conditions included in paragraph (e)(2) of this section applies.
(f) The Federal awarding agency may, at its option, restrict the
transfer of funds among direct cost categories or programs, functions
and activities for Federal awards in which the Federal share of the
project exceeds the simplified acquisition threshold and the cumulative
amount of such transfers exceeds or is expected to exceed 10 percent of
the total budget as last approved by the Federal awarding agency. The
Federal awarding agency cannot permit a transfer that would cause any
Federal appropriation to be used for purposes other than those
consistent with the appropriation.
(g) All other changes to non-construction budgets, except for the
changes described in paragraph (c) of this section, do not require
prior approval (see also Sec. 200.407).
(h) For construction Federal awards, the recipient must request
prior written approval promptly from the Federal awarding agency for
budget revisions whenever paragraph (h)(1), (2), or (3) of this section
applies:
(1) The revision results from changes in the scope or the objective
of the project or program.
(2) The need arises for additional Federal funds to complete the
project.
(3) A revision is desired which involves specific costs for which
prior written approval requirements may be imposed consistent with
applicable OMB cost principles listed in subpart E.
(4) No other prior approval requirements for budget revisions may
be imposed unless an exception has been approved by OMB.
(5) When a Federal awarding agency makes a Federal award that
provides support for construction and non-construction work, the
Federal awarding agency may require the recipient to obtain prior
approval from the Federal awarding agency before making any fund or
budget transfers between the two types of work supported.
(i) When requesting approval for budget revisions, the recipient
must use the same format for budget information that was used in the
application, unless the Federal awarding agency indicates a letter of
request suffices.
(j) Within 30 calendar days from the date of receipt of the request
for budget revisions, the Federal awarding agency must review the
request and notify the recipient whether the budget revisions have been
approved. If the revision is still under consideration at the end of 30
calendar days, the Federal awarding agency must inform the recipient in
writing of the date when the recipient may expect the decision.
Sec. 200.309 Modifications to Period of Performance.
If a Federal awarding agency or pass-through entity approves an
extension, or if a recipient extends under Sec. 200.308(e)(2), the
Period of Performance will be amended to end at the completion of the
extension. If a termination occurs, the Period of Performance will be
amended to end upon the effective date of termination. If a renewal
award is issued, a distinct Period of Performance will begin.
Property Standards
Sec. 200.310 Insurance coverage.
The non-Federal entity must, at a minimum, provide the equivalent
insurance coverage for real property and equipment acquired or improved
with Federal funds as provided to property owned by the non-Federal
entity. Federally-owned property need not be insured unless required by
the terms and conditions of the Federal award.
Sec. 200.311 Real property.
(a) Title. Subject to the requirements and conditions set forth in
this section, title to real property acquired or improved under a
Federal award will vest upon acquisition in the non-Federal entity.
(b) Use. Except as otherwise provided by Federal statutes or by the
Federal awarding agency, real property will be used for the originally
authorized purpose as long as needed for that purpose, during which
time the non-Federal entity must not dispose of or encumber its title
or other interests.
(c) Disposition. When real property is no longer needed for the
originally authorized purpose, the non-Federal entity must obtain
disposition instructions from the Federal awarding agency or pass-
through entity. The instructions must provide for one of the following
alternatives:
(1) Retain title after compensating the Federal awarding agency.
The amount paid to the Federal awarding agency will be computed by
applying the Federal awarding agency's percentage of participation in
the cost of the original purchase (and costs of any improvements) to
the fair market value of the property. However, in those situations
where the non-Federal entity is disposing of real property acquired or
improved with a Federal award and acquiring replacement real property
under the same Federal award, the net proceeds from the disposition may
be used as an offset to the cost of the replacement property.
(2) Sell the property and compensate the Federal awarding agency.
The amount due to the Federal awarding agency will be calculated by
applying the Federal awarding agency's percentage of participation in
the cost of the original purchase (and cost of any improvements) to the
proceeds of the sale after deduction of any actual and reasonable
selling and fixing-up expenses. If the Federal award has not been
closed out, the net proceeds from sale may be offset against the
original cost of the property. When the non-
[[Page 49550]]
Federal entity is directed to sell property, sales procedures must be
followed that provide for competition to the extent practicable and
result in the highest possible return.
(3) Transfer title to the Federal awarding agency or to a third
party designated/approved by the Federal awarding agency. The non-
Federal entity is entitled to be paid an amount calculated by applying
the non-Federal entity's percentage of participation in the purchase of
the real property (and cost of any improvements) to the current fair
market value of the property.
Sec. 200.312 Federally-owned and exempt property.
(a) Title to federally-owned property remains vested in the Federal
Government. The non-Federal entity must submit annually an inventory
listing of federally-owned property in its custody to the Federal
awarding agency. Upon completion of the Federal award or when the
property is no longer needed, the non-Federal entity must report the
property to the Federal awarding agency for further Federal agency
utilization.
(b) If the Federal awarding agency has no further need for the
property, it must declare the property excess and report it for
disposal to the appropriate Federal disposal authority, unless the
Federal awarding agency has statutory authority to dispose of the
property by alternative methods (e.g., the authority provided by the
Federal Technology Transfer Act (15 U.S.C. 3710 (i)) to donate research
equipment to educational and nonprofit organizations in accordance with
Executive Order 12999, ``Educational Technology: Ensuring Opportunity
for All Children in the Next Century.''). The Federal awarding agency
must issue appropriate instructions to the non-Federal entity.
(c) Exempt property means property acquired under a Federal award
where the Federal awarding agency has chosen to vest title to the
property to the non-Federal entity without further responsibility to
the Federal Government, based upon the explicit terms and conditions of
the Federal award. The Federal awarding agency may exercise this option
when statutory authority exists. Absent statutory authority and
specific terms and conditions of the Federal award, title to exempt
property acquired under the Federal award remains with the Federal
Government.
Sec. 200.313 Equipment.
See also Sec. 200.439.
(a) Title. Subject to the requirements and conditions set forth in
this section, title to equipment acquired under a Federal award will
vest upon acquisition in the non-Federal entity. Unless a statute
specifically authorizes the Federal agency to vest title in the non-
Federal entity without further responsibility to the Federal
Government, and the Federal agency elects to do so, the title must be a
conditional title. Title must vest in the non-Federal entity subject to
the following conditions:
(1) Use the equipment for the authorized purposes of the project
during the period of performance, or until the property is no longer
needed for the purposes of the project.
(2) Not encumber the property without approval of the Federal
awarding agency or pass-through entity.
(3) Use and dispose of the property in accordance with paragraphs
(b), (c), and (e) of this section.
(b) General. A state must use, manage and dispose of equipment
acquired under a Federal award by the state in accordance with state
laws and procedures. Other non-Federal entities must follow paragraphs
(c) through (e) of this section.
(c) Use. (1) Equipment must be used by the non-Federal entity in
the program or project for which it was acquired as long as needed,
whether or not the project or program continues to be supported by the
Federal award, and the non-Federal entity must not encumber the
property without prior approval of the Federal awarding agency. The
Federal awarding agency may require the submission of the applicable
common form for equipment. When no longer needed for the original
program or project, the equipment may be used in other activities
supported by the Federal awarding agency, in the following order of
priority:
(i) Activities under a Federal award from the Federal awarding
agency which funded the original program or project, then
(ii) Activities under Federal awards from other Federal awarding
agencies. This includes consolidated equipment for information
technology systems.
(2) During the time that equipment is used on the project or
program for which it was acquired, the non-Federal entity must also
make equipment available for use on other projects or programs
currently or previously supported by the Federal Government, provided
that such use will not interfere with the work on the projects or
program for which it was originally acquired. First preference for
other use must be given to other programs or projects supported by
Federal awarding agency that financed the equipment and second
preference must be given to programs or projects under Federal awards
from other Federal awarding agencies. Use for non-federally-funded
programs or projects is also permissible. User fees should be
considered if appropriate.
(3) Notwithstanding the encouragement in Sec. 200.307 to earn
program income, the non-Federal entity must not use equipment acquired
with the Federal award to provide services for a fee that is less than
private companies charge for equivalent services unless specifically
authorized by Federal statute for as long as the Federal Government
retains an interest in the equipment.
(4) When acquiring replacement equipment, the non-Federal entity
may use the equipment to be replaced as a trade-in or sell the property
and use the proceeds to offset the cost of the replacement property.
(d) Management requirements. Procedures for managing equipment
(including replacement equipment), whether acquired in whole or in part
under a Federal award, until disposition takes place will, as a
minimum, meet the following requirements:
(1) Property records must be maintained that include a description
of the property, a serial number or other identification number, the
source of funding for the property (including the FAIN), who holds
title, the acquisition date, and cost of the property, percentage of
Federal participation in the project costs for the Federal award under
which the property was acquired, the location, use and condition of the
property, and any ultimate disposition data including the date of
disposal and sale price of the property.
(2) A physical inventory of the property must be taken and the
results reconciled with the property records at least once every two
years.
(3) A control system must be developed to ensure adequate
safeguards to prevent loss, damage, or theft of the property. Any loss,
damage, or theft must be investigated.
(4) Adequate maintenance procedures must be developed to keep the
property in good condition.
(5) If the non-Federal entity is authorized or required to sell the
property, proper sales procedures must be established to ensure the
highest possible return.
(e) Disposition. When original or replacement equipment acquired
under a Federal award is no longer needed for the original project or
program or for other activities currently or previously supported by a
Federal awarding agency, except as otherwise provided in
[[Page 49551]]
Federal statutes, regulations, or Federal awarding agency disposition
instructions, the non-Federal entity must request disposition
instructions from the Federal awarding agency if required by the terms
and conditions of the Federal award. Disposition of the equipment will
be made as follows, in accordance with Federal awarding agency
disposition instructions:
(1) Items of equipment with a current per unit fair market value of
$5,000 or less may be retained, sold or otherwise disposed of with no
further responsibility to the Federal awarding agency.
(2) Except as provided in Sec. 200.312(b), or if the Federal
awarding agency fails to provide requested disposition instructions
within 120 days, items of equipment with a current per-unit fair market
value in excess of $5,000 may be retained by the non-Federal entity or
sold. The Federal awarding agency is entitled to an amount calculated
by multiplying the current market value or proceeds from sale by the
Federal awarding agency's percentage of participation in the cost of
the original purchase. If the equipment is sold, the Federal awarding
agency may permit the non-Federal entity to deduct and retain from the
Federal share $500 or ten percent of the proceeds, whichever is less,
for its selling and handling expenses.
(3) The non-Federal entity may transfer title to the property to
the Federal Government or to an eligible third party provided that, in
such cases, the non-Federal entity must be entitled to compensation for
its attributable percentage of the current fair market value of the
property.
(4) In cases where a non-Federal entity fails to take appropriate
disposition actions, the Federal awarding agency may direct the non-
Federal entity to take disposition actions.
Sec. 200.314 Supplies.
See also Sec. 200.453.
(a) Title to supplies will vest in the non-Federal entity upon
acquisition. If there is a residual inventory of unused supplies
exceeding $5,000 in total aggregate value upon termination or
completion of the project or program and the supplies are not needed
for any other Federal award, the non-Federal entity must retain the
supplies for use on other activities or sell them, but must, in either
case, compensate the Federal Government for its share. The amount of
compensation must be computed in the same manner as for equipment. See
Sec. 200.313 (e)(2) for the calculation methodology.
(b) As long as the Federal Government retains an interest in the
supplies, the non-Federal entity must not use supplies acquired under a
Federal award to provide services to other organizations for a fee that
is less than private companies charge for equivalent services, unless
specifically authorized by Federal statute.
Sec. 200.315 Intangible property.
(a) Title to intangible property (see definition for Intangible
property in Sec. 200.1) acquired under a Federal award vests upon
acquisition in the non-Federal entity. The non-Federal entity must use
that property for the originally-authorized purpose, and must not
encumber the property without approval of the Federal awarding agency.
When no longer needed for the originally authorized purpose,
disposition of the intangible property must occur in accordance with
the provisions in Sec. 200.313(e).
(b) The non-Federal entity may copyright any work that is subject
to copyright and was developed, or for which ownership was acquired,
under a Federal award. The Federal awarding agency reserves a royalty-
free, nonexclusive and irrevocable right to reproduce, publish, or
otherwise use the work for Federal purposes, and to authorize others to
do so.
(c) The non-Federal entity is subject to applicable regulations
governing patents and inventions, including governmentwide regulations
issued by the Department of Commerce at 37 CFR part 401, ``Rights to
Inventions Made by Nonprofit Organizations and Small Business Firms
Under Government Awards, Contracts and Cooperative Agreements.''
(d) The Federal Government has the right to:
(1) Obtain, reproduce, publish, or otherwise use the data produced
under a Federal award; and
(2) Authorize others to receive, reproduce, publish, or otherwise
use such data for Federal purposes.
(e)(1) In response to a Freedom of Information Act (FOIA) request
for research data relating to published research findings produced
under a Federal award that were used by the Federal Government in
developing an agency action that has the force and effect of law, the
Federal awarding agency must request, and the non-Federal entity must
provide, within a reasonable time, the research data so that they can
be made available to the public through the procedures established
under the FOIA. If the Federal awarding agency obtains the research
data solely in response to a FOIA request, the Federal awarding agency
may charge the requester a reasonable fee equaling the full incremental
cost of obtaining the research data. This fee should reflect costs
incurred by the Federal agency and the non-Federal entity. This fee is
in addition to any fees the Federal awarding agency may assess under
the FOIA (5 U.S.C. 552(a)(4)(A)).
(2) Published research findings means when:
(i) Research findings are published in a peer-reviewed scientific
or technical journal; or
(ii) A Federal agency publicly and officially cites the research
findings in support of an agency action that has the force and effect
of law. ``Used by the Federal Government in developing an agency action
that has the force and effect of law'' is defined as when an agency
publicly and officially cites the research findings in support of an
agency action that has the force and effect of law.
(3) Research data means the recorded factual material commonly
accepted in the scientific community as necessary to validate research
findings, but not any of the following: Preliminary analyses, drafts of
scientific papers, plans for future research, peer reviews, or
communications with colleagues. This ``recorded'' material excludes
physical objects (e.g., laboratory samples). Research data also do not
include:
(i) Trade secrets, commercial information, materials necessary to
be held confidential by a researcher until they are published, or
similar information which is protected under law; and
(ii) Personnel and medical information and similar information the
disclosure of which would constitute a clearly unwarranted invasion of
personal privacy, such as information that could be used to identify a
particular person in a research study.
Sec. 200.316 Property trust relationship.
Real property, equipment, and intangible property, that are
acquired or improved with a Federal award must be held in trust by the
non-Federal entity as trustee for the beneficiaries of the project or
program under which the property was acquired or improved. The Federal
awarding agency may require the non-Federal entity to record liens or
other appropriate notices of record to indicate that personal or real
property has been acquired or improved with a Federal award and that
use and disposition conditions apply to the property.
[[Page 49552]]
Procurement Standards
Sec. 200.317 Procurements by states.
When procuring property and services under a Federal award, a State
must follow the same policies and procedures it uses for procurements
from its non-Federal funds. The State will comply with Sec. Sec.
200.321, 200.322, and 200.323 and ensure that every purchase order or
other contract includes any clauses required by Sec. 200.327. All
other non-Federal entities, including subrecipients of a State, must
follow the procurement standards in Sec. Sec. 200.318 through 200.327.
Sec. 200.318 General procurement standards.
(a) The non-Federal entity must have and use documented procurement
procedures, consistent with State, local, and tribal laws and
regulations and the standards of this section, for the acquisition of
property or services required under a Federal award or subaward. The
non-Federal entity's documented procurement procedures must conform to
the procurement standards identified in Sec. Sec. 200.317 through
200.327.
(b) Non-Federal entities must maintain oversight to ensure that
contractors perform in accordance with the terms, conditions, and
specifications of their contracts or purchase orders.
(c)(1) The non-Federal entity must maintain written standards of
conduct covering conflicts of interest and governing the actions of its
employees engaged in the selection, award and administration of
contracts. No employee, officer, or agent may participate in the
selection, award, or administration of a contract supported by a
Federal award if he or she has a real or apparent conflict of interest.
Such a conflict of interest would arise when the employee, officer, or
agent, any member of his or her immediate family, his or her partner,
or an organization which employs or is about to employ any of the
parties indicated herein, has a financial or other interest in or a
tangible personal benefit from a firm considered for a contract. The
officers, employees, and agents of the non-Federal entity may neither
solicit nor accept gratuities, favors, or anything of monetary value
from contractors or parties to subcontracts. However, non-Federal
entities may set standards for situations in which the financial
interest is not substantial or the gift is an unsolicited item of
nominal value. The standards of conduct must provide for disciplinary
actions to be applied for violations of such standards by officers,
employees, or agents of the non-Federal entity.
(2) If the non-Federal entity has a parent, affiliate, or
subsidiary organization that is not a State, local government, or
Indian tribe, the non-Federal entity must also maintain written
standards of conduct covering organizational conflicts of interest.
Organizational conflicts of interest means that because of
relationships with a parent company, affiliate, or subsidiary
organization, the non-Federal entity is unable or appears to be unable
to be impartial in conducting a procurement action involving a related
organization.
(d) The non-Federal entity's procedures must avoid acquisition of
unnecessary or duplicative items. Consideration should be given to
consolidating or breaking out procurements to obtain a more economical
purchase. Where appropriate, an analysis will be made of lease versus
purchase alternatives, and any other appropriate analysis to determine
the most economical approach.
(e) To foster greater economy and efficiency, and in accordance
with efforts to promote cost-effective use of shared services across
the Federal Government, the non-Federal entity is encouraged to enter
into state and local intergovernmental agreements or inter-entity
agreements where appropriate for procurement or use of common or shared
goods and services. Competition requirements will be met with applied
to documented procurement actions using strategic sourcing, shared
services, and other similar procurement arrangements.
(f) The non-Federal entity is encouraged to use Federal excess and
surplus property in lieu of purchasing new equipment and property
whenever such use is feasible and reduces project costs.
(g) The non-Federal entity is encouraged to use value engineering
clauses in contracts for construction projects of sufficient size to
offer reasonable opportunities for cost reductions. Value engineering
is a systematic and creative analysis of each contract item or task to
ensure that its essential function is provided at the overall lower
cost.
(h) The non-Federal entity must award contracts only to responsible
contractors possessing the ability to perform successfully under the
terms and conditions of a proposed procurement. Consideration will be
given to such matters as contractor integrity, compliance with public
policy, record of past performance, and financial and technical
resources. See also Sec. 200.214.
(i) The non-Federal entity must maintain records sufficient to
detail the history of procurement. These records will include, but are
not necessarily limited to, the following: Rationale for the method of
procurement, selection of contract type, contractor selection or
rejection, and the basis for the contract price.
(j)(1) The non-Federal entity may use a time-and-materials type
contract only after a determination that no other contract is suitable
and if the contract includes a ceiling price that the contractor
exceeds at its own risk. Time-and-materials type contract means a
contract whose cost to a non-Federal entity is the sum of:
(i) The actual cost of materials; and
(ii) Direct labor hours charged at fixed hourly rates that reflect
wages, general and administrative expenses, and profit.
(2) Since this formula generates an open-ended contract price, a
time-and-materials contract provides no positive profit incentive to
the contractor for cost control or labor efficiency. Therefore, each
contract must set a ceiling price that the contractor exceeds at its
own risk. Further, the non-Federal entity awarding such a contract must
assert a high degree of oversight in order to obtain reasonable
assurance that the contractor is using efficient methods and effective
cost controls.
(k) The non-Federal entity alone must be responsible, in accordance
with good administrative practice and sound business judgment, for the
settlement of all contractual and administrative issues arising out of
procurements. These issues include, but are not limited to, source
evaluation, protests, disputes, and claims. These standards do not
relieve the non-Federal entity of any contractual responsibilities
under its contracts. The Federal awarding agency will not substitute
its judgment for that of the non-Federal entity unless the matter is
primarily a Federal concern. Violations of law will be referred to the
local, state, or Federal authority having proper jurisdiction.
Sec. 200.319 Competition.
(a) All procurement transactions for the acquisition of property or
services required under a Federal award must be conducted in a manner
providing full and open competition consistent with the standards of
this section and Sec. 200.320.
(b) In order to ensure objective contractor performance and
eliminate unfair competitive advantage, contractors that develop or
draft specifications, requirements, statements of work, or invitations
for bids or requests for proposals must be excluded
[[Page 49553]]
from competing for such procurements. Some of the situations considered
to be restrictive of competition include but are not limited to:
(1) Placing unreasonable requirements on firms in order for them to
qualify to do business;
(2) Requiring unnecessary experience and excessive bonding;
(3) Noncompetitive pricing practices between firms or between
affiliated companies;
(4) Noncompetitive contracts to consultants that are on retainer
contracts;
(5) Organizational conflicts of interest;
(6) Specifying only a ``brand name'' product instead of allowing
``an equal'' product to be offered and describing the performance or
other relevant requirements of the procurement; and
(7) Any arbitrary action in the procurement process.
(c) The non-Federal entity must conduct procurements in a manner
that prohibits the use of statutorily or administratively imposed
state, local, or tribal geographical preferences in the evaluation of
bids or proposals, except in those cases where applicable Federal
statutes expressly mandate or encourage geographic preference. Nothing
in this section preempts state licensing laws. When contracting for
architectural and engineering (A/E) services, geographic location may
be a selection criterion provided its application leaves an appropriate
number of qualified firms, given the nature and size of the project, to
compete for the contract.
(d) The non-Federal entity must have written procedures for
procurement transactions. These procedures must ensure that all
solicitations:
(1) Incorporate a clear and accurate description of the technical
requirements for the material, product, or service to be procured. Such
description must not, in competitive procurements, contain features
which unduly restrict competition. The description may include a
statement of the qualitative nature of the material, product or service
to be procured and, when necessary, must set forth those minimum
essential characteristics and standards to which it must conform if it
is to satisfy its intended use. Detailed product specifications should
be avoided if at all possible. When it is impractical or uneconomical
to make a clear and accurate description of the technical requirements,
a ``brand name or equivalent'' description may be used as a means to
define the performance or other salient requirements of procurement.
The specific features of the named brand which must be met by offers
must be clearly stated; and
(2) Identify all requirements which the offerors must fulfill and
all other factors to be used in evaluating bids or proposals.
(e) The non-Federal entity must ensure that all prequalified lists
of persons, firms, or products which are used in acquiring goods and
services are current and include enough qualified sources to ensure
maximum open and free competition. Also, the non-Federal entity must
not preclude potential bidders from qualifying during the solicitation
period.
(f) Noncompetitive procurements can only be awarded in accordance
with Sec. 200.320(c).
Sec. 200.320 Methods of procurement to be followed.
The non-Federal entity must have and use documented procurement
procedures, consistent with the standards of this section and
Sec. Sec. 200.317, 200.318, and 200.319 for any of the following
methods of procurement used for the acquisition of property or services
required under a Federal award or sub-award.
(a) Informal procurement methods. When the value of the procurement
for property or services under a Federal award does not exceed the
simplified acquisition threshold (SAT), as defined in Sec. 200.1, or a
lower threshold established by a non-Federal entity, formal procurement
methods are not required. The non-Federal entity may use informal
procurement methods to expedite the completion of its transactions and
minimize the associated administrative burden and cost. The informal
methods used for procurement of property or services at or below the
SAT include:
(1) Micro-purchases--(i) Distribution. The acquisition of supplies
or services, the aggregate dollar amount of which does not exceed the
micro-purchase threshold (See the definition of micro-purchase in Sec.
200.1). To the maximum extent practicable, the non-Federal entity
should distribute micro-purchases equitably among qualified suppliers.
(ii) Micro-purchase awards. Micro-purchases may be awarded without
soliciting competitive price or rate quotations if the non-Federal
entity considers the price to be reasonable based on research,
experience, purchase history or other information and documents it
files accordingly. Purchase cards can be used for micro-purchases if
procedures are documented and approved by the non-Federal entity.
(iii) Micro-purchase thresholds. The non-Federal entity is
responsible for determining and documenting an appropriate micro-
purchase threshold based on internal controls, an evaluation of risk,
and its documented procurement procedures. The micro-purchase threshold
used by the non-Federal entity must be authorized or not prohibited
under State, local, or tribal laws or regulations. Non-Federal entities
may establish a threshold higher than the Federal threshold established
in the Federal Acquisition Regulations (FAR) in accordance with
paragraphs (a)(1)(iv) and (v) of this section.
(iv) Non-Federal entity increase to the micro-purchase threshold up
to $50,000. Non-Federal entities may establish a threshold higher than
the micro-purchase threshold identified in the FAR in accordance with
the requirements of this section. The non-Federal entity may self-
certify a threshold up to $50,000 on an annual basis and must maintain
documentation to be made available to the Federal awarding agency and
auditors in accordance with Sec. 200.334. The self-certification must
include a justification, clear identification of the threshold, and
supporting documentation of any of the following:
(A) A qualification as a low-risk auditee, in accordance with the
criteria in Sec. 200.520 for the most recent audit;
(B) An annual internal institutional risk assessment to identify,
mitigate, and manage financial risks; or,
(C) For public institutions, a higher threshold consistent with
State law.
(v) Non-Federal entity increase to the micro-purchase threshold
over $50,000. Micro-purchase thresholds higher than $50,000 must be
approved by the cognizant agency for indirect costs. The non-federal
entity must submit a request with the requirements included in
paragraph (a)(1)(iv) of this section. The increased threshold is valid
until there is a change in status in which the justification was
approved.
(2) Small purchases--(i) Small purchase procedures. The acquisition
of property or services, the aggregate dollar amount of which is higher
than the micro-purchase threshold but does not exceed the simplified
acquisition threshold. If small purchase procedures are used, price or
rate quotations must be obtained from an adequate number of qualified
sources as determined appropriate by the non-Federal entity.
(ii) Simplified acquisition thresholds. The non-Federal entity is
responsible for determining an appropriate simplified acquisition
threshold based on internal controls, an evaluation of risk and its
documented procurement procedures which must not exceed the threshold
established in the FAR. When applicable, a lower simplified
[[Page 49554]]
acquisition threshold used by the non-Federal entity must be authorized
or not prohibited under State, local, or tribal laws or regulations.
(b) Formal procurement methods. When the value of the procurement
for property or services under a Federal financial assistance award
exceeds the SAT, or a lower threshold established by a non-Federal
entity, formal procurement methods are required. Formal procurement
methods require following documented procedures. Formal procurement
methods also require public advertising unless a non-competitive
procurement can be used in accordance with Sec. 200.319 or paragraph
(c) of this section. The following formal methods of procurement are
used for procurement of property or services above the simplified
acquisition threshold or a value below the simplified acquisition
threshold the non-Federal entity determines to be appropriate:
(1) Sealed bids. A procurement method in which bids are publicly
solicited and a firm fixed-price contract (lump sum or unit price) is
awarded to the responsible bidder whose bid, conforming with all the
material terms and conditions of the invitation for bids, is the lowest
in price. The sealed bids method is the preferred method for procuring
construction, if the conditions.
(i) In order for sealed bidding to be feasible, the following
conditions should be present:
(A) A complete, adequate, and realistic specification or purchase
description is available;
(B) Two or more responsible bidders are willing and able to compete
effectively for the business; and
(C) The procurement lends itself to a firm fixed price contract and
the selection of the successful bidder can be made principally on the
basis of price.
(ii) If sealed bids are used, the following requirements apply:
(A) Bids must be solicited from an adequate number of qualified
sources, providing them sufficient response time prior to the date set
for opening the bids, for local, and tribal governments, the invitation
for bids must be publicly advertised;
(B) The invitation for bids, which will include any specifications
and pertinent attachments, must define the items or services in order
for the bidder to properly respond;
(C) All bids will be opened at the time and place prescribed in the
invitation for bids, and for local and tribal governments, the bids
must be opened publicly;
(D) A firm fixed price contract award will be made in writing to
the lowest responsive and responsible bidder. Where specified in
bidding documents, factors such as discounts, transportation cost, and
life cycle costs must be considered in determining which bid is lowest.
Payment discounts will only be used to determine the low bid when prior
experience indicates that such discounts are usually taken advantage
of; and
(E) Any or all bids may be rejected if there is a sound documented
reason.
(2) Proposals. A procurement method in which either a fixed price
or cost-reimbursement type contract is awarded. Proposals are generally
used when conditions are not appropriate for the use of sealed bids.
They are awarded in accordance with the following requirements:
(i) Requests for proposals must be publicized and identify all
evaluation factors and their relative importance. Proposals must be
solicited from an adequate number of qualified offerors. Any response
to publicized requests for proposals must be considered to the maximum
extent practical;
(ii) The non-Federal entity must have a written method for
conducting technical evaluations of the proposals received and making
selections;
(iii) Contracts must be awarded to the responsible offeror whose
proposal is most advantageous to the non-Federal entity, with price and
other factors considered; and
(iv) The non-Federal entity may use competitive proposal procedures
for qualifications-based procurement of architectural/engineering (A/E)
professional services whereby offeror's qualifications are evaluated
and the most qualified offeror is selected, subject to negotiation of
fair and reasonable compensation. The method, where price is not used
as a selection factor, can only be used in procurement of A/E
professional services. It cannot be used to purchase other types of
services though A/E firms that are a potential source to perform the
proposed effort.
(c) Noncompetitive procurement. There are specific circumstances in
which noncompetitive procurement can be used. Noncompetitive
procurement can only be awarded if one or more of the following
circumstances apply:
(1) The acquisition of property or services, the aggregate dollar
amount of which does not exceed the micro-purchase threshold (see
paragraph (a)(1) of this section);
(2) The item is available only from a single source;
(3) The public exigency or emergency for the requirement will not
permit a delay resulting from publicizing a competitive solicitation;
(4) The Federal awarding agency or pass-through entity expressly
authorizes a noncompetitive procurement in response to a written
request from the non-Federal entity; or
(5) After solicitation of a number of sources, competition is
determined inadequate.
Sec. 200.321 Contracting with small and minority businesses, women's
business enterprises, and labor surplus area firms.
(a) The non-Federal entity must take all necessary affirmative
steps to assure that minority businesses, women's business enterprises,
and labor surplus area firms are used when possible.
(b) Affirmative steps must include:
(1) Placing qualified small and minority businesses and women's
business enterprises on solicitation lists;
(2) Assuring that small and minority businesses, and women's
business enterprises are solicited whenever they are potential sources;
(3) Dividing total requirements, when economically feasible, into
smaller tasks or quantities to permit maximum participation by small
and minority businesses, and women's business enterprises;
(4) Establishing delivery schedules, where the requirement permits,
which encourage participation by small and minority businesses, and
women's business enterprises;
(5) Using the services and assistance, as appropriate, of such
organizations as the Small Business Administration and the Minority
Business Development Agency of the Department of Commerce; and
(6) Requiring the prime contractor, if subcontracts are to be let,
to take the affirmative steps listed in paragraphs (b)(1) through (5)
of this section.
Sec. 200.322 Domestic preferences for procurements.
(a) As appropriate and to the extent consistent with law, the non-
Federal entity should, to the greatest extent practicable under a
Federal award, provide a preference for the purchase, acquisition, or
use of goods, products, or materials produced in the United States
(including but not limited to iron, aluminum, steel, cement, and other
manufactured products). The requirements of this section must be
included in all subawards including all contracts and purchase orders
for work or products under this award.
(b) For purposes of this section:
(1) ``Produced in the United States'' means, for iron and steel
products, that
[[Page 49555]]
all manufacturing processes, from the initial melting stage through the
application of coatings, occurred in the United States.
(2) ``Manufactured products'' means items and construction
materials composed in whole or in part of non-ferrous metals such as
aluminum; plastics and polymer-based products such as polyvinyl
chloride pipe; aggregates such as concrete; glass, including optical
fiber; and lumber.
Sec. 200.323 Procurement of recovered materials.
A non-Federal entity that is a state agency or agency of a
political subdivision of a state and its contractors must comply with
section 6002 of the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act. The requirements of Section
6002 include procuring only items designated in guidelines of the
Environmental Protection Agency (EPA) at 40 CFR part 247 that contain
the highest percentage of recovered materials practicable, consistent
with maintaining a satisfactory level of competition, where the
purchase price of the item exceeds $10,000 or the value of the quantity
acquired during the preceding fiscal year exceeded $10,000; procuring
solid waste management services in a manner that maximizes energy and
resource recovery; and establishing an affirmative procurement program
for procurement of recovered materials identified in the EPA
guidelines.
Sec. 200.324 Contract cost and price.
(a) The non-Federal entity must perform a cost or price analysis in
connection with every procurement action in excess of the Simplified
Acquisition Threshold including contract modifications. The method and
degree of analysis is dependent on the facts surrounding the particular
procurement situation, but as a starting point, the non-Federal entity
must make independent estimates before receiving bids or proposals.
(b) The non-Federal entity must negotiate profit as a separate
element of the price for each contract in which there is no price
competition and in all cases where cost analysis is performed. To
establish a fair and reasonable profit, consideration must be given to
the complexity of the work to be performed, the risk borne by the
contractor, the contractor's investment, the amount of subcontracting,
the quality of its record of past performance, and industry profit
rates in the surrounding geographical area for similar work.
(c) Costs or prices based on estimated costs for contracts under
the Federal award are allowable only to the extent that costs incurred
or cost estimates included in negotiated prices would be allowable for
the non-Federal entity under subpart E of this part. The non-Federal
entity may reference its own cost principles that comply with the
Federal cost principles.
(d) The cost plus a percentage of cost and percentage of
construction cost methods of contracting must not be used.
Sec. 200.325 Federal awarding agency or pass-through entity review.
(a) The non-Federal entity must make available, upon request of the
Federal awarding agency or pass-through entity, technical
specifications on proposed procurements where the Federal awarding
agency or pass-through entity believes such review is needed to ensure
that the item or service specified is the one being proposed for
acquisition. This review generally will take place prior to the time
the specification is incorporated into a solicitation document.
However, if the non-Federal entity desires to have the review
accomplished after a solicitation has been developed, the Federal
awarding agency or pass-through entity may still review the
specifications, with such review usually limited to the technical
aspects of the proposed purchase.
(b) The non-Federal entity must make available upon request, for
the Federal awarding agency or pass-through entity pre-procurement
review, procurement documents, such as requests for proposals or
invitations for bids, or independent cost estimates, when:
(1) The non-Federal entity's procurement procedures or operation
fails to comply with the procurement standards in this part;
(2) The procurement is expected to exceed the Simplified
Acquisition Threshold and is to be awarded without competition or only
one bid or offer is received in response to a solicitation;
(3) The procurement, which is expected to exceed the Simplified
Acquisition Threshold, specifies a ``brand name'' product;
(4) The proposed contract is more than the Simplified Acquisition
Threshold and is to be awarded to other than the apparent low bidder
under a sealed bid procurement; or
(5) A proposed contract modification changes the scope of a
contract or increases the contract amount by more than the Simplified
Acquisition Threshold.
(c) The non-Federal entity is exempt from the pre-procurement
review in paragraph (b) of this section if the Federal awarding agency
or pass-through entity determines that its procurement systems comply
with the standards of this part.
(1) The non-Federal entity may request that its procurement system
be reviewed by the Federal awarding agency or pass-through entity to
determine whether its system meets these standards in order for its
system to be certified. Generally, these reviews must occur where there
is continuous high-dollar funding, and third-party contracts are
awarded on a regular basis;
(2) The non-Federal entity may self-certify its procurement system.
Such self-certification must not limit the Federal awarding agency's
right to survey the system. Under a self-certification procedure, the
Federal awarding agency may rely on written assurances from the non-
Federal entity that it is complying with these standards. The non-
Federal entity must cite specific policies, procedures, regulations, or
standards as being in compliance with these requirements and have its
system available for review.
Sec. 200.326 Bonding requirements.
For construction or facility improvement contracts or subcontracts
exceeding the Simplified Acquisition Threshold, the Federal awarding
agency or pass-through entity may accept the bonding policy and
requirements of the non-Federal entity provided that the Federal
awarding agency or pass-through entity has made a determination that
the Federal interest is adequately protected. If such a determination
has not been made, the minimum requirements must be as follows:
(a) A bid guarantee from each bidder equivalent to five percent of
the bid price. The ``bid guarantee'' must consist of a firm commitment
such as a bid bond, certified check, or other negotiable instrument
accompanying a bid as assurance that the bidder will, upon acceptance
of the bid, execute such contractual documents as may be required
within the time specified.
(b) A performance bond on the part of the contractor for 100
percent of the contract price. A ``performance bond'' is one executed
in connection with a contract to secure fulfillment of all the
contractor's requirements under such contract.
(c) A payment bond on the part of the contractor for 100 percent of
the contract price. A ``payment bond'' is one executed in connection
with a contract to assure payment as required by law of
[[Page 49556]]
all persons supplying labor and material in the execution of the work
provided for in the contract.
Sec. 200.327 Contract provisions.
The non-Federal entity's contracts must contain the applicable
provisions described in appendix II to this part.
Performance and Financial Monitoring and Reporting
Sec. 200.328 Financial reporting.
Unless otherwise approved by OMB, the Federal awarding agency must
solicit only the OMB-approved governmentwide data elements for
collection of financial information (at time of publication the Federal
Financial Report or such future, OMB-approved, governmentwide data
elements available from the OMB-designated standards lead. This
information must be collected with the frequency required by the terms
and conditions of the Federal award, but no less frequently than
annually nor more frequently than quarterly except in unusual
circumstances, for example where more frequent reporting is necessary
for the effective monitoring of the Federal award or could
significantly affect program outcomes, and preferably in coordination
with performance reporting. The Federal awarding agency must use OMB-
approved common information collections, as applicable, when providing
financial and performance reporting information.
Sec. 200.329 Monitoring and reporting program performance.
(a) Monitoring by the non-Federal entity. The non-Federal entity is
responsible for oversight of the operations of the Federal award
supported activities. The non-Federal entity must monitor its
activities under Federal awards to assure compliance with applicable
Federal requirements and performance expectations are being achieved.
Monitoring by the non-Federal entity must cover each program, function
or activity. See also Sec. 200.332.
(b) Reporting program performance. The Federal awarding agency must
use OMB-approved common information collections, as applicable, when
providing financial and performance reporting information. As
appropriate and in accordance with above mentioned information
collections, the Federal awarding agency must require the recipient to
relate financial data and accomplishments to performance goals and
objectives of the Federal award. Also, in accordance with above
mentioned common information collections, and when required by the
terms and conditions of the Federal award, recipients must provide cost
information to demonstrate cost effective practices (e.g., through unit
cost data). In some instances (e.g., discretionary research awards),
this will be limited to the requirement to submit technical performance
reports (to be evaluated in accordance with Federal awarding agency
policy). Reporting requirements must be clearly articulated such that,
where appropriate, performance during the execution of the Federal
award has a standard against which non-Federal entity performance can
be measured.
(c) Non-construction performance reports. The Federal awarding
agency must use standard, governmentwide OMB-approved data elements for
collection of performance information including performance progress
reports, Research Performance Progress Reports.
(1) The non-Federal entity must submit performance reports at the
interval required by the Federal awarding agency or pass-through entity
to best inform improvements in program outcomes and productivity.
Intervals must be no less frequent than annually nor more frequent than
quarterly except in unusual circumstances, for example where more
frequent reporting is necessary for the effective monitoring of the
Federal award or could significantly affect program outcomes. Reports
submitted annually by the non-Federal entity and/or pass-through entity
must be due no later than 90 calendar days after the reporting period.
Reports submitted quarterly or semiannually must be due no later than
30 calendar days after the reporting period. Alternatively, the Federal
awarding agency or pass-through entity may require annual reports
before the anniversary dates of multiple year Federal awards. The final
performance report submitted by the non-Federal entity and/or pass-
through entity must be due no later than 120 calendar days after the
period of performance end date. A subrecipient must submit to the pass-
through entity, no later than 90 calendar days after the period of
performance end date, all final performance reports as required by the
terms and conditions of the Federal award. See also Sec. 200.344. If a
justified request is submitted by a non-Federal entity, the Federal
agency may extend the due date for any performance report.
(2) As appropriate in accordance with above mentioned performance
reporting, these reports will contain, for each Federal award, brief
information on the following unless other data elements are approved by
OMB in the agency information collection request:
(i) A comparison of actual accomplishments to the objectives of the
Federal award established for the period. Where the accomplishments of
the Federal award can be quantified, a computation of the cost (for
example, related to units of accomplishment) may be required if that
information will be useful. Where performance trend data and analysis
would be informative to the Federal awarding agency program, the
Federal awarding agency should include this as a performance reporting
requirement.
(ii) The reasons why established goals were not met, if
appropriate.
(iii) Additional pertinent information including, when appropriate,
analysis and explanation of cost overruns or high unit costs.
(d) Construction performance reports. For the most part, onsite
technical inspections and certified percentage of completion data are
relied on heavily by Federal awarding agencies and pass-through
entities to monitor progress under Federal awards and subawards for
construction. The Federal awarding agency may require additional
performance reports only when considered necessary.
(e) Significant developments. Events may occur between the
scheduled performance reporting dates that have significant impact upon
the supported activity. In such cases, the non-Federal entity must
inform the Federal awarding agency or pass-through entity as soon as
the following types of conditions become known:
(1) Problems, delays, or adverse conditions which will materially
impair the ability to meet the objective of the Federal award. This
disclosure must include a statement of the action taken, or
contemplated, and any assistance needed to resolve the situation.
(2) Favorable developments which enable meeting time schedules and
objectives sooner or at less cost than anticipated or producing more or
different beneficial results than originally planned.
(f) Site visits. The Federal awarding agency may make site visits
as warranted by program needs.
(g) Performance report requirement waiver. The Federal awarding
agency may waive any performance report required by this part if not
needed.
Sec. 200. 330 Reporting on real property.
The Federal awarding agency or pass-through entity must require a
non-Federal entity to submit reports at least annually on the status of
real property in which the Federal Government retains an interest,
unless the Federal interest in the real property extends 15
[[Page 49557]]
years or longer. In those instances where the Federal interest attached
is for a period of 15 years or more, the Federal awarding agency or
pass-through entity, at its option, may require the non-Federal entity
to report at various multi-year frequencies (e.g., every two years or
every three years, not to exceed a five-year reporting period; or a
Federal awarding agency or pass-through entity may require annual
reporting for the first three years of a Federal award and thereafter
require reporting every five years).
Subrecipient Monitoring and Management
Sec. 200.331 Subrecipient and contractor determinations.
The non-Federal entity may concurrently receive Federal awards as a
recipient, a subrecipient, and a contractor, depending on the substance
of its agreements with Federal awarding agencies and pass-through
entities. Therefore, a pass-through entity must make case-by-case
determinations whether each agreement it makes for the disbursement of
Federal program funds casts the party receiving the funds in the role
of a subrecipient or a contractor. The Federal awarding agency may
supply and require recipients to comply with additional guidance to
support these determinations provided such guidance does not conflict
with this section.
(a) Subrecipients. A subaward is for the purpose of carrying out a
portion of a Federal award and creates a Federal assistance
relationship with the subrecipient. See definition for Subaward in
Sec. 200.1 of this part. Characteristics which support the
classification of the non-Federal entity as a subrecipient include when
the non-Federal entity:
(1) Determines who is eligible to receive what Federal assistance;
(2) Has its performance measured in relation to whether objectives
of a Federal program were met;
(3) Has responsibility for programmatic decision-making;
(4) Is responsible for adherence to applicable Federal program
requirements specified in the Federal award; and
(5) In accordance with its agreement, uses the Federal funds to
carry out a program for a public purpose specified in authorizing
statute, as opposed to providing goods or services for the benefit of
the pass-through entity.
(b) Contractors. A contract is for the purpose of obtaining goods
and services for the non-Federal entity's own use and creates a
procurement relationship with the contractor. See the definition of
contract in Sec. 200.1 of this part. Characteristics indicative of a
procurement relationship between the non-Federal entity and a
contractor are when the contractor:
(1) Provides the goods and services within normal business
operations;
(2) Provides similar goods or services to many different
purchasers;
(3) Normally operates in a competitive environment;
(4) Provides goods or services that are ancillary to the operation
of the Federal program; and
(5) Is not subject to compliance requirements of the Federal
program as a result of the agreement, though similar requirements may
apply for other reasons.
(c) Use of judgment in making determination. In determining whether
an agreement between a pass-through entity and another non-Federal
entity casts the latter as a subrecipient or a contractor, the
substance of the relationship is more important than the form of the
agreement. All of the characteristics listed above may not be present
in all cases, and the pass-through entity must use judgment in
classifying each agreement as a subaward or a procurement contract.
Sec. 200.332 Requirements for pass-through entities.
All pass-through entities must:
(a) Ensure that every subaward is clearly identified to the
subrecipient as a subaward and includes the following information at
the time of the subaward and if any of these data elements change,
include the changes in subsequent subaward modification. When some of
this information is not available, the pass-through entity must provide
the best information available to describe the Federal award and
subaward. Required information includes:
(1) Federal award identification.
(i) Subrecipient name (which must match the name associated with
its unique entity identifier);
(ii) Subrecipient's unique entity identifier;
(iii) Federal Award Identification Number (FAIN);
(iv) Federal Award Date (see the definition of Federal award date
in Sec. 200.1 of this part) of award to the recipient by the Federal
agency;
(v) Subaward Period of Performance Start and End Date;
(vi) Subaward Budget Period Start and End Date;
(vii) Amount of Federal Funds Obligated by this action by the pass-
through entity to the subrecipient;
(viii) Total Amount of Federal Funds Obligated to the subrecipient
by the pass-through entity including the current financial obligation;
(ix) Total Amount of the Federal Award committed to the
subrecipient by the pass-through entity;
(x) Federal award project description, as required to be responsive
to the Federal Funding Accountability and Transparency Act (FFATA);
(xi) Name of Federal awarding agency, pass-through entity, and
contact information for awarding official of the Pass-through entity;
(xii) Assistance Listings number and Title; the pass-through entity
must identify the dollar amount made available under each Federal award
and the Assistance Listings Number at time of disbursement;
(xiii) Identification of whether the award is R&D; and
(xiv) Indirect cost rate for the Federal award (including if the de
minimis rate is charged) per Sec. 200.414.
(2) All requirements imposed by the pass-through entity on the
subrecipient so that the Federal award is used in accordance with
Federal statutes, regulations and the terms and conditions of the
Federal award;
(3) Any additional requirements that the pass-through entity
imposes on the subrecipient in order for the pass-through entity to
meet its own responsibility to the Federal awarding agency including
identification of any required financial and performance reports;
(4)(i) An approved federally recognized indirect cost rate
negotiated between the subrecipient and the Federal Government. If no
approved rate exists, the pass-through entity must determine the
appropriate rate in collaboration with the subrecipient, which is
either:
(A) The negotiated indirect cost rate between the pass-through
entity and the subrecipient; which can be based on a prior negotiated
rate between a different PTE and the same subrecipient. If basing the
rate on a previously negotiated rate, the pass-through entity is not
required to collect information justifying this rate, but may elect to
do so;
(B) The de minimis indirect cost rate.
(ii) The pass-through entity must not require use of a de minimis
indirect cost rate if the subrecipient has a Federally approved rate.
Subrecipients can elect to use the cost allocation method to account
for indirect costs in accordance with Sec. 200.405(d).
(5) A requirement that the subrecipient permit the pass-through
entity and auditors to have access to the subrecipient's records and
financial
[[Page 49558]]
statements as necessary for the pass-through entity to meet the
requirements of this part; and
(6) Appropriate terms and conditions concerning closeout of the
subaward.
(b) Evaluate each subrecipient's risk of noncompliance with Federal
statutes, regulations, and the terms and conditions of the subaward for
purposes of determining the appropriate subrecipient monitoring
described in paragraphs (d) and (e) of this section, which may include
consideration of such factors as:
(1) The subrecipient's prior experience with the same or similar
subawards;
(2) The results of previous audits including whether or not the
subrecipient receives a Single Audit in accordance with Subpart F of
this part, and the extent to which the same or similar subaward has
been audited as a major program;
(3) Whether the subrecipient has new personnel or new or
substantially changed systems; and
(4) The extent and results of Federal awarding agency monitoring
(e.g., if the subrecipient also receives Federal awards directly from a
Federal awarding agency).
(c) Consider imposing specific subaward conditions upon a
subrecipient if appropriate as described in Sec. 200.208.
(d) Monitor the activities of the subrecipient as necessary to
ensure that the subaward is used for authorized purposes, in compliance
with Federal statutes, regulations, and the terms and conditions of the
subaward; and that subaward performance goals are achieved. Pass-
through entity monitoring of the subrecipient must include:
(1) Reviewing financial and performance reports required by the
pass-through entity.
(2) Following-up and ensuring that the subrecipient takes timely
and appropriate action on all deficiencies pertaining to the Federal
award provided to the subrecipient from the pass-through entity
detected through audits, on-site reviews, and written confirmation from
the subrecipient, highlighting the status of actions planned or taken
to address Single Audit findings related to the particular subaward.
(3) Issuing a management decision for applicable audit findings
pertaining only to the Federal award provided to the subrecipient from
the pass-through entity as required by Sec. 200.521.
(4) The pass-through entity is responsible for resolving audit
findings specifically related to the subaward and not responsible for
resolving cross-cutting findings. If a subrecipient has a current
Single Audit report posted in the Federal Audit Clearinghouse and has
not otherwise been excluded from receipt of Federal funding (e.g., has
been debarred or suspended), the pass-through entity may rely on the
subrecipient's cognizant audit agency or cognizant oversight agency to
perform audit follow-up and make management decisions related to cross-
cutting findings in accordance with section Sec. 300.513(a)(3)(vii).
Such reliance does not eliminate the responsibility of the pass-through
entity to issue subawards that conform to agency and award-specific
requirements, to manage risk through ongoing subaward monitoring, and
to monitor the status of the findings that are specifically related to
the subaward.
(e) Depending upon the pass-through entity's assessment of risk
posed by the subrecipient (as described in paragraph (b) of this
section), the following monitoring tools may be useful for the pass-
through entity to ensure proper accountability and compliance with
program requirements and achievement of performance goals:
(1) Providing subrecipients with training and technical assistance
on program-related matters; and
(2) Performing on-site reviews of the subrecipient's program
operations;
(3) Arranging for agreed-upon-procedures engagements as described
in Sec. 200.425.
(f) Verify that every subrecipient is audited as required by
Subpart F of this part when it is expected that the subrecipient's
Federal awards expended during the respective fiscal year equaled or
exceeded the threshold set forth in Sec. 200.501.
(g) Consider whether the results of the subrecipient's audits, on-
site reviews, or other monitoring indicate conditions that necessitate
adjustments to the pass-through entity's own records.
(h) Consider taking enforcement action against noncompliant
subrecipients as described in Sec. 200.339 of this part and in program
regulations.
Sec. 200.333 Fixed amount subawards.
With prior written approval from the Federal awarding agency, a
pass-through entity may provide subawards based on fixed amounts up to
the Simplified Acquisition Threshold, provided that the subawards meet
the requirements for fixed amount awards in Sec. 200.201.
Record Retention and Access
Sec. 200.334 Retention requirements for records.
Financial records, supporting documents, statistical records, and
all other non-Federal entity records pertinent to a Federal award must
be retained for a period of three years from the date of submission of
the final expenditure report or, for Federal awards that are renewed
quarterly or annually, from the date of the submission of the quarterly
or annual financial report, respectively, as reported to the Federal
awarding agency or pass-through entity in the case of a subrecipient.
Federal awarding agencies and pass-through entities must not impose any
other record retention requirements upon non-Federal entities. The only
exceptions are the following:
(a) If any litigation, claim, or audit is started before the
expiration of the 3-year period, the records must be retained until all
litigation, claims, or audit findings involving the records have been
resolved and final action taken.
(b) When the non-Federal entity is notified in writing by the
Federal awarding agency, cognizant agency for audit, oversight agency
for audit, cognizant agency for indirect costs, or pass-through entity
to extend the retention period.
(c) Records for real property and equipment acquired with Federal
funds must be retained for 3 years after final disposition.
(d) When records are transferred to or maintained by the Federal
awarding agency or pass-through entity, the 3-year retention
requirement is not applicable to the non-Federal entity.
(e) Records for program income transactions after the period of
performance. In some cases recipients must report program income after
the period of performance. Where there is such a requirement, the
retention period for the records pertaining to the earning of the
program income starts from the end of the non-Federal entity's fiscal
year in which the program income is earned.
(f) Indirect cost rate proposals and cost allocations plans. This
paragraph applies to the following types of documents and their
supporting records: Indirect cost rate computations or proposals, cost
allocation plans, and any similar accounting computations of the rate
at which a particular group of costs is chargeable (such as computer
usage chargeback rates or composite fringe benefit rates).
(1) If submitted for negotiation. If the proposal, plan, or other
computation is
[[Page 49559]]
required to be submitted to the Federal Government (or to the pass-
through entity) to form the basis for negotiation of the rate, then the
3-year retention period for its supporting records starts from the date
of such submission.
(2) If not submitted for negotiation. If the proposal, plan, or
other computation is not required to be submitted to the Federal
Government (or to the pass-through entity) for negotiation purposes,
then the 3-year retention period for the proposal, plan, or computation
and its supporting records starts from the end of the fiscal year (or
other accounting period) covered by the proposal, plan, or other
computation.
Sec. 200.335 Requests for transfer of records.
The Federal awarding agency must request transfer of certain
records to its custody from the non-Federal entity when it determines
that the records possess long-term retention value. However, in order
to avoid duplicate recordkeeping, the Federal awarding agency may make
arrangements for the non-Federal entity to retain any records that are
continuously needed for joint use.
Sec. 200.336 Methods for collection, transmission, and storage of
information.
The Federal awarding agency and the non-Federal entity should,
whenever practicable, collect, transmit, and store Federal award-
related information in open and machine-readable formats rather than in
closed formats or on paper in accordance with applicable legislative
requirements. A machine-readable format is a format in a standard
computer language (not English text) that can be read automatically by
a web browser or computer system. The Federal awarding agency or pass-
through entity must always provide or accept paper versions of Federal
award-related information to and from the non-Federal entity upon
request. If paper copies are submitted, the Federal awarding agency or
pass-through entity must not require more than an original and two
copies. When original records are electronic and cannot be altered,
there is no need to create and retain paper copies. When original
records are paper, electronic versions may be substituted through the
use of duplication or other forms of electronic media provided that
they are subject to periodic quality control reviews, provide
reasonable safeguards against alteration, and remain readable.
Sec. 200.337 Access to records.
(a) Records of non-Federal entities. The Federal awarding agency,
Inspectors General, the Comptroller General of the United States, and
the pass-through entity, or any of their authorized representatives,
must have the right of access to any documents, papers, or other
records of the non-Federal entity which are pertinent to the Federal
award, in order to make audits, examinations, excerpts, and
transcripts. The right also includes timely and reasonable access to
the non-Federal entity's personnel for the purpose of interview and
discussion related to such documents.
(b) Extraordinary and rare circumstances. Only under extraordinary
and rare circumstances would such access include review of the true
name of victims of a crime. Routine monitoring cannot be considered
extraordinary and rare circumstances that would necessitate access to
this information. When access to the true name of victims of a crime is
necessary, appropriate steps to protect this sensitive information must
be taken by both the non-Federal entity and the Federal awarding
agency. Any such access, other than under a court order or subpoena
pursuant to a bona fide confidential investigation, must be approved by
the head of the Federal awarding agency or delegate.
(c) Expiration of right of access. The rights of access in this
section are not limited to the required retention period but last as
long as the records are retained. Federal awarding agencies and pass-
through entities must not impose any other access requirements upon
non-Federal entities.
Sec. 200.338 Restrictions on public access to records.
No Federal awarding agency may place restrictions on the non-
Federal entity that limit public access to the records of the non-
Federal entity pertinent to a Federal award, except for protected
personally identifiable information (PII) or when the Federal awarding
agency can demonstrate that such records will be kept confidential and
would have been exempted from disclosure pursuant to the Freedom of
Information Act (5 U.S.C. 552) or controlled unclassified information
pursuant to Executive Order 13556 if the records had belonged to the
Federal awarding agency. The Freedom of Information Act (5 U.S.C. 552)
(FOIA) does not apply to those records that remain under a non-Federal
entity's control except as required under Sec. 200.315. Unless
required by Federal, state, local, and tribal statute, non-Federal
entities are not required to permit public access to their records. The
non-Federal entity's records provided to a Federal agency generally
will be subject to FOIA and applicable exemptions.
Remedies for Noncompliance
Sec. 200.339 Remedies for noncompliance.
If a non-Federal entity fails to comply with the U.S. Constitution,
Federal statutes, regulations or the terms and conditions of a Federal
award, the Federal awarding agency or pass-through entity may impose
additional conditions, as described in Sec. 200.208. If the Federal
awarding agency or pass-through entity determines that noncompliance
cannot be remedied by imposing additional conditions, the Federal
awarding agency or pass-through entity may take one or more of the
following actions, as appropriate in the circumstances:
(a) Temporarily withhold cash payments pending correction of the
deficiency by the non-Federal entity or more severe enforcement action
by the Federal awarding agency or pass-through entity.
(b) Disallow (that is, deny both use of funds and any applicable
matching credit for) all or part of the cost of the activity or action
not in compliance.
(c) Wholly or partly suspend or terminate the Federal award.
(d) Initiate suspension or debarment proceedings as authorized
under 2 CFR part 180 and Federal awarding agency regulations (or in the
case of a pass-through entity, recommend such a proceeding be initiated
by a Federal awarding agency).
(e) Withhold further Federal awards for the project or program.
(f) Take other remedies that may be legally available.
Sec. 200.340 Termination.
(a) The Federal award may be terminated in whole or in part as
follows:
(1) By the Federal awarding agency or pass-through entity, if a
non-Federal entity fails to comply with the terms and conditions of a
Federal award;
(2) By the Federal awarding agency or pass-through entity, to the
greatest extent authorized by law, if an award no longer effectuates
the program goals or agency priorities;
(3) By the Federal awarding agency or pass-through entity with the
consent of the non-Federal entity, in which case the two parties must
agree upon the termination conditions, including the effective date
and, in the case of partial termination, the portion to be terminated;
(4) By the non-Federal entity upon sending to the Federal awarding
agency or pass-through entity written notification setting forth the
reasons for
[[Page 49560]]
such termination, the effective date, and, in the case of partial
termination, the portion to be terminated. However, if the Federal
awarding agency or pass-through entity determines in the case of
partial termination that the reduced or modified portion of the Federal
award or subaward will not accomplish the purposes for which the
Federal award was made, the Federal awarding agency or pass-through
entity may terminate the Federal award in its entirety; or
(5) By the Federal awarding agency or pass-through entity pursuant
to termination provisions included in the Federal award.
(b) A Federal awarding agency should clearly and unambiguously
specify termination provisions applicable to each Federal award, in
applicable regulations or in the award, consistent with this section.
(c) When a Federal awarding agency terminates a Federal award prior
to the end of the period of performance due to the non-Federal entity's
material failure to comply with the Federal award terms and conditions,
the Federal awarding agency must report the termination to the OMB-
designated integrity and performance system accessible through SAM
(currently FAPIIS).
(1) The information required under paragraph (c) of this section is
not to be reported to designated integrity and performance system until
the non-Federal entity either--
(i) Has exhausted its opportunities to object or challenge the
decision, see Sec. 200.342; or
(ii) Has not, within 30 calendar days after being notified of the
termination, informed the Federal awarding agency that it intends to
appeal the Federal awarding agency's decision to terminate.
(2) If a Federal awarding agency, after entering information into
the designated integrity and performance system about a termination,
subsequently:
(i) Learns that any of that information is erroneous, the Federal
awarding agency must correct the information in the system within three
business days;
(ii) Obtains an update to that information that could be helpful to
other Federal awarding agencies, the Federal awarding agency is
strongly encouraged to amend the information in the system to
incorporate the update in a timely way.
(3) Federal awarding agencies, must not post any information that
will be made publicly available in the non-public segment of designated
integrity and performance system that is covered by a disclosure
exemption under the Freedom of Information Act. If the non-Federal
entity asserts within seven calendar days to the Federal awarding
agency who posted the information, that some of the information made
publicly available is covered by a disclosure exemption under the
Freedom of Information Act, the Federal awarding agency who posted the
information must remove the posting within seven calendar days of
receiving the assertion. Prior to reposting the releasable information,
the Federal agency must resolve the issue in accordance with the
agency's Freedom of Information Act procedures.
(d) When a Federal award is terminated or partially terminated,
both the Federal awarding agency or pass-through entity and the non-
Federal entity remain responsible for compliance with the requirements
in Sec. Sec. 200.344 and 200.345.
Sec. 200.341 Notification of termination requirement.
(a) The Federal agency or pass-through entity must provide to the
non-Federal entity a notice of termination.
(b) If the Federal award is terminated for the non-Federal entity's
material failure to comply with the U.S. Constitution, Federal
statutes, regulations, or terms and conditions of the Federal award,
the notification must state that--
(1) The termination decision will be reported to the OMB-designated
integrity and performance system accessible through SAM (currently
FAPIIS);
(2) The information will be available in the OMB-designated
integrity and performance system for a period of five years from the
date of the termination, then archived;
(3) Federal awarding agencies that consider making a Federal award
to the non-Federal entity during that five year period must consider
that information in judging whether the non-Federal entity is qualified
to receive the Federal award, when the Federal share of the Federal
award is expected to exceed the simplified acquisition threshold over
the period of performance;
(4) The non-Federal entity may comment on any information the OMB-
designated integrity and performance system contains about the non-
Federal entity for future consideration by Federal awarding agencies.
The non-Federal entity may submit comments to the awardee integrity and
performance portal accessible through SAM (currently (CPARS).
(5) Federal awarding agencies will consider non-Federal entity
comments when determining whether the non-Federal entity is qualified
for a future Federal award.
(c) Upon termination of a Federal award, the Federal awarding
agency must provide the information required under FFATA to the Federal
website established to fulfill the requirements of FFATA, and update or
notify any other relevant governmentwide systems or entities of any
indications of poor performance as required by 41 U.S.C. 417b and 31
U.S.C. 3321 and implementing guidance at 2 CFR part 77 (forthcoming at
time of publication). See also the requirements for Suspension and
Debarment at 2 CFR part 180.
Sec. 200.342 Opportunities to object, hearings, and appeals.
Upon taking any remedy for non-compliance, the Federal awarding
agency must provide the non-Federal entity an opportunity to object and
provide information and documentation challenging the suspension or
termination action, in accordance with written processes and procedures
published by the Federal awarding agency. The Federal awarding agency
or pass-through entity must comply with any requirements for hearings,
appeals or other administrative proceedings to which the non-Federal
entity is entitled under any statute or regulation applicable to the
action involved.
Sec. 200.343 Effects of suspension and termination.
Costs to the non-Federal entity resulting from financial
obligations incurred by the non-Federal entity during a suspension or
after termination of a Federal award or subaward are not allowable
unless the Federal awarding agency or pass-through entity expressly
authorizes them in the notice of suspension or termination or
subsequently. However, costs during suspension or after termination are
allowable if:
(a) The costs result from financial obligations which were properly
incurred by the non-Federal entity before the effective date of
suspension or termination, are not in anticipation of it; and
(b) The costs would be allowable if the Federal award was not
suspended or expired normally at the end of the period of performance
in which the termination takes effect.
Closeout
Sec. 200.344 Closeout.
The Federal awarding agency or pass-through entity will close out
the Federal award when it determines that all applicable administrative
actions and all required work of the Federal award have been completed
by the non-Federal entity. If the non-Federal entity fails to
[[Page 49561]]
complete the requirements, the Federal awarding agency or pass-through
entity will proceed to close out the Federal award with the information
available. This section specifies the actions the non-Federal entity
and Federal awarding agency or pass-through entity must take to
complete this process at the end of the period of performance.
(a) The recipient must submit, no later than 120 calendar days
after the end date of the period of performance, all financial,
performance, and other reports as required by the terms and conditions
of the Federal award. A subrecipient must submit to the pass-through
entity, no later than 90 calendar days (or an earlier date as agreed
upon by the pass-through entity and subrecipient) after the end date of
the period of performance, all financial, performance, and other
reports as required by the terms and conditions of the Federal award.
The Federal awarding agency or pass-through entity may approve
extensions when requested and justified by the non-Federal entity, as
applicable.
(b) Unless the Federal awarding agency or pass-through entity
authorizes an extension, a non-Federal entity must liquidate all
financial obligations incurred under the Federal award no later than
120 calendar days after the end date of the period of performance as
specified in the terms and conditions of the Federal award.
(c) The Federal awarding agency or pass-through entity must make
prompt payments to the non-Federal entity for costs meeting the
requirements in Subpart E of this part under the Federal award being
closed out.
(d) The non-Federal entity must promptly refund any balances of
unobligated cash that the Federal awarding agency or pass-through
entity paid in advance or paid and that are not authorized to be
retained by the non-Federal entity for use in other projects. See OMB
Circular A-129 and see Sec. 200.346, for requirements regarding
unreturned amounts that become delinquent debts.
(e) Consistent with the terms and conditions of the Federal award,
the Federal awarding agency or pass-through entity must make a
settlement for any upward or downward adjustments to the Federal share
of costs after closeout reports are received.
(f) The non-Federal entity must account for any real and personal
property acquired with Federal funds or received from the Federal
Government in accordance with Sec. Sec. 200.310 through 200.316 and
200.330.
(g) When a recipient or subrecipient completes all closeout
requirements, the Federal awarding agency or pass-through entity must
promptly complete all closeout actions for Federal awards. The Federal
awarding agency must make every effort to complete closeout actions no
later than one year after the end of the period of performance unless
otherwise directed by authorizing statutes. Closeout actions include
Federal awarding agency actions in the grants management and payment
systems.
(h) If the non-Federal entity does not submit all reports in
accordance with this section and the terms and conditions of the
Federal Award, the Federal awarding agency must proceed to close out
with the information available within one year of the period of
performance end date.
(i) If the non-Federal entity does not submit all reports in
accordance with this section within one year of the period of
performance end date, the Federal awarding agency must report the non-
Federal entity's material failure to comply with the terms and
conditions of the award with the OMB-designated integrity and
performance system (currently FAPIIS). Federal awarding agencies may
also pursue other enforcement actions per Sec. 200.339.
Post-Closeout Adjustments and Continuing Responsibilities
Sec. 200.345 Post-closeout adjustments and continuing
responsibilities.
(a) The closeout of a Federal award does not affect any of the
following:
(1) The right of the Federal awarding agency or pass-through entity
to disallow costs and recover funds on the basis of a later audit or
other review. The Federal awarding agency or pass-through entity must
make any cost disallowance determination and notify the non-Federal
entity within the record retention period.
(2) The requirement for the non-Federal entity to return any funds
due as a result of later refunds, corrections, or other transactions
including final indirect cost rate adjustments.
(3) The ability of the Federal awarding agency to make financial
adjustments to a previously closed award such as resolving indirect
cost payments and making final payments.
(4) Audit requirements in subpart F of this part.
(5) Property management and disposition requirements in Sec. Sec.
200.310 through 200.316 of this subpart.
(6) Records retention as required in Sec. Sec. 200.334 through
200.337 of this subpart.
(b) After closeout of the Federal award, a relationship created
under the Federal award may be modified or ended in whole or in part
with the consent of the Federal awarding agency or pass-through entity
and the non-Federal entity, provided the responsibilities of the non-
Federal entity referred to in paragraph (a) of this section, including
those for property management as applicable, are considered and
provisions made for continuing responsibilities of the non-Federal
entity, as appropriate.
Collection of Amounts Due
Sec. 200.346 Collection of amounts due.
(a) Any funds paid to the non-Federal entity in excess of the
amount to which the non-Federal entity is finally determined to be
entitled under the terms of the Federal award constitute a debt to the
Federal Government. If not paid within 90 calendar days after demand,
the Federal awarding agency may reduce the debt by:
(1) Making an administrative offset against other requests for
reimbursements;
(2) Withholding advance payments otherwise due to the non-Federal
entity; or
(3) Other action permitted by Federal statute.
(b) Except where otherwise provided by statutes or regulations, the
Federal awarding agency will charge interest on an overdue debt in
accordance with the Federal Claims Collection Standards (31 CFR parts
900 through 999). The date from which interest is computed is not
extended by litigation or the filing of any form of appeal.
Subpart E--Cost Principles
0
46. Amend Sec. 200.400 by revising paragraph (e) and (g) to read as
follows:
Sec. 200.400 Policy guide.
* * * * *
(e) In reviewing, negotiating and approving cost allocation plans
or indirect cost proposals, the cognizant agency for indirect costs
should generally assure that the non-Federal entity is applying these
cost accounting principles on a consistent basis during their review
and negotiation of indirect cost proposals. Where wide variations exist
in the treatment of a given cost item by the non-Federal entity, the
reasonableness and equity of such treatments should be fully
considered. See the definition of indirect (facilities & administrative
(F&A)) costs in Sec. 200.1 of this part.
* * * * *
(g) The non-Federal entity may not earn or keep any profit
resulting from Federal financial assistance, unless
[[Page 49562]]
explicitly authorized by the terms and conditions of the Federal award.
See also Sec. 200.307.
0
47. Amend Sec. 200.401 by revising paragraphs (a)(3) and (4), (b), and
(c) to read as follows:
Sec. 200.401 Application.
(a) * * *
(3) Fixed amount awards. See also Sec. 200.1 Definitions and
200.201.
(4) Federal awards to hospitals (see appendix IX to this part).
* * * * *
(b) Federal contract. Where a Federal contract awarded to a non-
Federal entity is subject to the Cost Accounting Standards (CAS), it
incorporates the applicable CAS clauses, Standards, and CAS
administration requirements per the 48 CFR Chapter 99 and 48 CFR part
30 (FAR Part 30). CAS applies directly to the CAS-covered contract and
the Cost Accounting Standards at 48 CFR parts 9904 or 9905 takes
precedence over the cost principles in this subpart E with respect to
the allocation of costs. When a contract with a non-Federal entity is
subject to full CAS coverage, the allowability of certain costs under
the cost principles will be affected by the allocation provisions of
the Cost Accounting Standards (e.g., CAS 414--48 CFR 9904.414, Cost of
Money as an Element of the Cost of Facilities Capital, and CAS 417--48
CFR 9904.417, Cost of Money as an Element of the Cost of Capital Assets
Under Construction), apply rather the allowability provisions of Sec.
200.449. In complying with those requirements, the non-Federal entity's
application of cost accounting practices for estimating, accumulating,
and reporting costs for other Federal awards and other cost objectives
under the CAS-covered contract still must be consistent with its cost
accounting practices for the CAS-covered contracts. In all cases, only
one set of accounting records needs to be maintained for the allocation
of costs by the non-Federal entity.
(c) Exemptions. Some nonprofit organizations, because of their size
and nature of operations, can be considered to be similar to for-profit
entities for purpose of applicability of cost principles. Such
nonprofit organizations must operate under Federal cost principles
applicable to for-profit entities located at 48 CFR 31.2. A listing of
these organizations is contained in appendix VIII to this part. Other
organizations, as approved by the cognizant agency for indirect costs,
may be added from time to time.
0
48. Amend Sec. 200.403 by revising paragraphs (f) and (g) and adding
paragraph (h) to read as follows:
Sec. 200.403 Factors affecting allowability of costs.
* * * * *
(f) Not be included as a cost or used to meet cost sharing or
matching requirements of any other federally-financed program in either
the current or a prior period. See also Sec. 200.306(b).
(g) Be adequately documented. See also Sec. Sec. 200.300 through
200.309 of this part.
(h) Cost must be incurred during the approved budget period. The
Federal awarding agency is authorized, at its discretion, to waive
prior written approvals to carry forward unobligated balances to
subsequent budget periods pursuant to Sec. 200.308(e)(3).
0
49. Amend Sec. 200.405 by revising paragraph (d) to read as follows:
Sec. 200.405 Allocable costs.
* * * * *
(d) Direct cost allocation principles: If a cost benefits two or
more projects or activities in proportions that can be determined
without undue effort or cost, the cost must be allocated to the
projects based on the proportional benefit. If a cost benefits two or
more projects or activities in proportions that cannot be determined
because of the interrelationship of the work involved, then,
notwithstanding paragraph (c) of this section, the costs may be
allocated or transferred to benefitted projects on any reasonable
documented basis. Where the purchase of equipment or other capital
asset is specifically authorized under a Federal award, the costs are
assignable to the Federal award regardless of the use that may be made
of the equipment or other capital asset involved when no longer needed
for the purpose for which it was originally required. See also
Sec. Sec. 200.310 through 200.316 and 200.439.
* * * * *
0
50. Amend Sec. 200.406 by revising paragraph (b) to read as follows:
Sec. 200.406 Applicable credits.
* * * * *
(b) In some instances, the amounts received from the Federal
Government to finance activities or service operations of the non-
Federal entity should be treated as applicable credits. Specifically,
the concept of netting such credit items (including any amounts used to
meet cost sharing or matching requirements) must be recognized in
determining the rates or amounts to be charged to the Federal award.
(See Sec. Sec. 200.436 and 200.468, for areas of potential application
in the matter of Federal financing of activities.)
0
51. Amend Sec. 200.407 by revising paragraphs (g) and (y) to read as
follows:
Sec. 200.407 Prior written approval (prior approval).
* * * * *
(g) Sec. 200.333 Fixed amount subawards;
* * * * *
(y) Sec. 200.475 Travel costs.
0
52. Revise Sec. 200.409 to read as follows:
Sec. 200.409 Special considerations.
In addition to the basic considerations regarding the allowability
of costs highlighted in this subtitle, other subtitles in this part
describe special considerations and requirements applicable to states,
local governments, Indian tribes, and IHEs. In addition, certain
provisions among the items of cost in this subpart are only applicable
to certain types of non-Federal entities, as specified in the following
sections:
(a) Direct and Indirect (F&A) Costs (Sec. Sec. 200.412-200.415) of
this subpart;
(b) Special Considerations for States, Local Governments and Indian
Tribes (Sec. Sec. 200.416 and 200.417) of this subpart; and
(c) Special Considerations for Institutions of Higher Education
(Sec. Sec. 200.418 and 200.419) of this subpart.
0
53. Revise Sec. 200.410 to read as follows:
Sec. 200.410 Collection of unallowable costs.
Payments made for costs determined to be unallowable by either the
Federal awarding agency, cognizant agency for indirect costs, or pass-
through entity, either as direct or indirect costs, must be refunded
(including interest) to the Federal Government in accordance with
instructions from the Federal agency that determined the costs are
unallowable unless Federal statute or regulation directs otherwise. See
also Sec. Sec. 200.300 through 200.309 in subpart D of this part.
0
54. Amend Sec. 200.413 by revising paragraphs (a), (b), and (f) to
read as follows:
Sec. 200.413 Direct costs.
(a) General. Direct costs are those costs that can be identified
specifically with a particular final cost objective, such as a Federal
award, or other internally or externally funded activity, or that can
be directly assigned to such activities relatively easily with a high
degree of accuracy. Costs incurred for the same purpose in like
circumstances must be treated consistently as either
[[Page 49563]]
direct or indirect (F&A) costs. See also Sec. 200.405.
(b) Application to Federal awards. Identification with the Federal
award rather than the nature of the goods and services involved is the
determining factor in distinguishing direct from indirect (F&A) costs
of Federal awards. Typical costs charged directly to a Federal award
are the compensation of employees who work on that award, their related
fringe benefit costs, the costs of materials and other items of expense
incurred for the Federal award. If directly related to a specific
award, certain costs that otherwise would be treated as indirect costs
may also be considered direct costs. Examples include extraordinary
utility consumption, the cost of materials supplied from stock or
services rendered by specialized facilities, program evaluation costs,
or other institutional service operations.
* * * * *
(f) For nonprofit organizations, the costs of activities performed
by the non-Federal entity primarily as a service to members, clients,
or the general public when significant and necessary to the non-Federal
entity's mission must be treated as direct costs whether or not
allowable, and be allocated an equitable share of indirect (F&A) costs.
Some examples of these types of activities include:
(1) Maintenance of membership rolls, subscriptions, publications,
and related functions. See also Sec. 200.454.
(2) Providing services and information to members, legislative or
administrative bodies, or the public. See also Sec. Sec. 200.454 and
200.450.
(3) Promotion, lobbying, and other forms of public relations. See
also Sec. Sec. 200.421 and 200.450.
(4) Conferences except those held to conduct the general
administration of the non-Federal entity. See also Sec. 200.432.
(5) Maintenance, protection, and investment of special funds not
used in operation of the non-Federal entity. See also Sec. 200.442.
(6) Administration of group benefits on behalf of members or
clients, including life and hospital insurance, annuity or retirement
plans, and financial aid. See also Sec. 200.431.
0
55. Amend Sec. 200.414 by revising paragraphs (a), (c) introductory
text, (c)(3) and (4), (d), (f), and (g) and adding paragraph (h) to
read as follows:
Sec. 200.414 Indirect (F&A) costs.
(a) Facilities and administration classification. For major
Institutions of Higher Education (IHE) and major nonprofit
organizations, indirect (F&A) costs must be classified within two broad
categories: ``Facilities'' and ``Administration.'' ``Facilities'' is
defined as depreciation on buildings, equipment and capital
improvement, interest on debt associated with certain buildings,
equipment and capital improvements, and operations and maintenance
expenses. ``Administration'' is defined as general administration and
general expenses such as the director's office, accounting, personnel
and all other types of expenditures not listed specifically under one
of the subcategories of ``Facilities'' (including cross allocations
from other pools, where applicable). For nonprofit organizations,
library expenses are included in the ``Administration'' category; for
IHEs, they are included in the ``Facilities'' category. Major IHEs are
defined as those required to use the Standard Format for Submission as
noted in appendix III to this part, and Rate Determination for
Institutions of Higher Education paragraph C. 11. Major nonprofit
organizations are those which receive more than $10 million dollars in
direct Federal funding.
* * * * *
(c) Federal Agency Acceptance of Negotiated Indirect Cost Rates.
(See also Sec. 200.306.)
* * * * *
(3) The Federal awarding agency must implement, and make publicly
available, the policies, procedures and general decision-making
criteria that their programs will follow to seek and justify deviations
from negotiated rates.
(4) As required under Sec. 200.204, the Federal awarding agency
must include in the notice of funding opportunity the policies relating
to indirect cost rate reimbursement, matching, or cost share as
approved under paragraph (e)(1) of this section. As appropriate, the
Federal agency should incorporate discussion of these policies into
Federal awarding agency outreach activities with non-Federal entities
prior to the posting of a notice of funding opportunity.
(d) Pass-through entities are subject to the requirements in Sec.
200.332(a)(4).
* * * * *
(f) In addition to the procedures outlined in the appendices in
paragraph (e) of this section, any non-Federal entity that does not
have a current negotiated (including provisional) rate, except for
those non-Federal entities described in appendix VII to this part,
paragraph D.1.b, may elect to charge a de minimis rate of 10% of
modified total direct costs (MTDC) which may be used indefinitely. No
documentation is required to justify the 10% de minimis indirect cost
rate. As described in Sec. 200.403, costs must be consistently charged
as either indirect or direct costs, but may not be double charged or
inconsistently charged as both. If chosen, this methodology once
elected must be used consistently for all Federal awards until such
time as a non-Federal entity chooses to negotiate for a rate, which the
non-Federal entity may apply to do at any time.
(g) Any non-Federal entity that has a current federally-negotiated
indirect cost rate may apply for a one-time extension of the rates in
that agreement for a period of up to four years. This extension will be
subject to the review and approval of the cognizant agency for indirect
costs. If an extension is granted the non-Federal entity may not
request a rate review until the extension period ends. At the end of
the 4-year extension, the non-Federal entity must re-apply to negotiate
a rate. Subsequent one-time extensions (up to four years) are permitted
if a renegotiation is completed between each extension request.
(h) The federally negotiated indirect rate, distribution base, and
rate type for a non-Federal entity (except for the Indian tribes or
tribal organizations, as defined in the Indian Self Determination,
Education and Assistance Act, 25 U.S.C. 450b(1)) must be available
publicly on an OMB-designated Federal website.
0
56. Amend Sec. 200.415 by revising paragraphs (b)(1) and (2), (c), and
(d) to read as follows:
Sec. 200.415 Required certifications.
* * * * *
(b) * * *
(1) A proposal to establish a cost allocation plan or an indirect
(F&A) cost rate, whether submitted to a Federal cognizant agency for
indirect costs or maintained on file by the non-Federal entity, must be
certified by the non-Federal entity using the Certificate of Cost
Allocation Plan or Certificate of Indirect Costs as set forth in
appendices III through VII, and IX of this part. The certificate must
be signed on behalf of the non-Federal entity by an individual at a
level no lower than vice president or chief financial officer of the
non-Federal entity that submits the proposal.
(2) Unless the non-Federal entity has elected the option under
Sec. 200.414(f), the Federal Government may either disallow all
indirect (F&A) costs or unilaterally establish such a plan or rate when
the non-Federal entity fails to submit a certified proposal for
establishing such a plan or rate in accordance with the requirements.
Such
[[Page 49564]]
a plan or rate may be based upon audited historical data or such other
data that have been furnished to the cognizant agency for indirect
costs and for which it can be demonstrated that all unallowable costs
have been excluded. When a cost allocation plan or indirect cost rate
is unilaterally established by the Federal Government because the non-
Federal entity failed to submit a certified proposal, the plan or rate
established will be set to ensure that potentially unallowable costs
will not be reimbursed.
(c) Certifications by nonprofit organizations as appropriate that
they did not meet the definition of a major nonprofit organization as
defined in Sec. 200.414(a).
(d) See also Sec. 200.450 for another required certification.
0
57. Revise Sec. 200.417 to read as follows:
Sec. 200.417 Interagency service.
The cost of services provided by one agency to another within the
governmental unit may include allowable direct costs of the service
plus a pro-rated share of indirect costs. A standard indirect cost
allowance equal to ten percent of the direct salary and wage cost of
providing the service (excluding overtime, shift premiums, and fringe
benefits) may be used in lieu of determining the actual indirect costs
of the service. These services do not include centralized services
included in central service cost allocation plans as described in
Appendix V to Part 200.
0
58. Amend Sec. 200.418 by revising paragraph (a) to read as follows:
Sec. 200.418 Costs incurred by states and local governments.
* * * * *
(a) The costs meet the requirements of Sec. 200.402-411 of this
subpart;
* * * * *
0
59. Amend Sec. 200.419 by revising paragraphs (a), (b) introductory
text, and (b)(1) and (2) to read as follows:
Sec. 200.419 Cost accounting standards and disclosure statement.
(a) An IHE that receive an aggregate total $50 million or more in
Federal awards and instruments subject to this subpart (as specified in
Sec. 200.101) in its most recently completed fiscal year must comply
with the Cost Accounting Standards Board's cost accounting standards
located at 48 CFR 9905.501, 9905.502, 9905.505, and 9905.506. CAS-
covered contracts and subcontracts awarded to the IHEs are subject to
the broader range of CAS requirements at 48 CFR 9900 through 9999 and
48 CFR part 30 (FAR Part 30).
(b) Disclosure statement. An IHE that receives an aggregate total
$50 million or more in Federal awards and instruments subject to this
subpart (as specified in Sec. 200.101) during its most recently
completed fiscal year must disclose their cost accounting practices by
filing a Disclosure Statement (DS-2), which is reproduced in Appendix
III to Part 200. With the approval of the cognizant agency for indirect
costs, an IHE may meet the DS-2 submission by submitting the DS-2 for
each business unit that received $50 million or more in Federal awards
and instruments.
(1) The DS-2 must be submitted to the cognizant agency for indirect
costs with a copy to the IHE's cognizant agency for audit. The initial
DS-2 and revisions to the DS-2 must be submitted in coordination with
the IHE's indirect (F&A) rate proposal, unless an earlier submission is
requested by the cognizant agency for indirect costs. IHEs with CAS-
covered contracts or subcontracts meeting the dollar threshold in 48
CFR 9903.202-1(f) must submit their initial DS-2 or revisions no later
than prior to the award of a CAS-covered contract or subcontract.
(2) An IHE must maintain an accurate DS-2 and comply with disclosed
cost accounting practices. An IHE must file amendments to the DS-2 to
the cognizant agency for indirect costs in advance of a disclosed
practice being changed to comply with a new or modified standard, or
when a practice is changed for other reasons. An IHE may proceed with
implementing the change after it has notified the Federal cognizant
agency for indirect costs. If the change represents a variation from 2
CFR part 200, the change may require approval by the Federal cognizant
agency for indirect costs, in accordance with Sec. 200.102(b).
Amendments of a DS-2 may be submitted at any time. Resubmission of a
complete, updated DS-2 is discouraged except when there are extensive
changes to disclosed practices.
* * * * *
0
60. Revise Sec. 200.420 to read as follows:
Sec. 200.420 Considerations for selected items of cost.
This section provides principles to be applied in establishing the
allowability of certain items involved in determining cost, in addition
to the requirements of Subtitle II of this subpart. These principles
apply whether or not a particular item of cost is properly treated as
direct cost or indirect (F&A) cost. Failure to mention a particular
item of cost is not intended to imply that it is either allowable or
unallowable; rather, determination as to allowability in each case
should be based on the treatment provided for similar or related items
of cost, and based on the principles described in Sec. Sec. 200.402
through 200.411. In case of a discrepancy between the provisions of a
specific Federal award and the provisions below, the Federal award
governs. Criteria outlined in Sec. 200.403 must be applied in
determining allowability. See also Sec. 200.102.
0
61. Amend Sec. 200.421 by revising paragraphs (b)(1) and (e)(2) to
read as follows:
Sec. 200.421 Advertising and public relations.
* * * * *
(b) * * *
(1) The recruitment of personnel required by the non-Federal entity
for performance of a Federal award (See also Sec. 200.463);
* * * * *
(e) * * *
(2) Costs of meetings, conventions, convocations, or other events
related to other activities of the entity (see also Sec. 200.432),
including:
* * * * *
0
62. Revise Sec. 200.422 to read as follows:
Sec. 200.422 Advisory councils.
Costs incurred by advisory councils or committees are unallowable
unless authorized by statute, the Federal awarding agency or as an
indirect cost where allocable to Federal awards. See Sec. 200.444,
applicable to States, local governments, and Indian tribes.
0
63. Amend Sec. 200.425 by revising paragraphs (a)(1) and (2) and (c)
introductory text to read as follows:
Sec. 200.425 Audit services.
* * * * *
(a) * * *
(1) Any costs when audits required by the Single Audit Act and
subpart F of this part have not been conducted or have been conducted
but not in accordance therewith; and
(2) Any costs of auditing a non-Federal entity that is exempted
from having an audit conducted under the Single Audit Act and subpart F
of this part because its expenditures under Federal awards are less
than $750,000 during the non-Federal entity's fiscal year.
* * * * *
(c) Pass-through entities may charge Federal awards for the cost of
agreed-upon-procedures engagements to monitor subrecipients (in
accordance with subpart D, Sec. Sec. 200.331-333) who are exempted
from the requirements of
[[Page 49565]]
the Single Audit Act and subpart F of this part. This cost is allowable
only if the agreed-upon-procedures engagements are:
* * * * *
0
64. Revise Sec. 200.426 to read as follows:
Sec. 200.426 Bad debts.
Bad debts (debts which have been determined to be uncollectable),
including losses (whether actual or estimated) arising from
uncollectable accounts and other claims, are unallowable. Related
collection costs, and related legal costs, arising from such debts
after they have been determined to be uncollectable are also
unallowable. See also Sec. 200.428.
0
65. Revise Sec. 200.428 to read as follows:
Sec. 200.428 Collections of improper payments.
The costs incurred by a non-Federal entity to recover improper
payments are allowable as either direct or indirect costs, as
appropriate. Amounts collected may be used by the non-Federal entity in
accordance with cash management standards set forth in Sec. 200.305.
0
66. Revise Sec. 200.429 to read as follows:
Sec. 200.429 Commencement and convocation costs.
For IHEs, costs incurred for commencements and convocations are
unallowable, except as provided for in (B)(9) Student Administration
and Services, in appendix III to this part, as activity costs.
0
67. Amend Sec. 200.430 by revising paragraphs (a) introductory text
and (a)(3), the paragraph (h) subject heading, and paragraphs (h)(3),
(h)(8)(iv), and (h)(8)(viii)(C) to read as follows:
Sec. 200.430 Compensation--personal services.
(a) General. Compensation for personal services includes all
remuneration, paid currently or accrued, for services of employees
rendered during the period of performance under the Federal award,
including but not necessarily limited to wages and salaries.
Compensation for personal services may also include fringe benefits
which are addressed in Sec. 200.431. Costs of compensation are
allowable to the extent that they satisfy the specific requirements of
this part, and that the total compensation for individual employees:
* * * * *
(3) Is determined and supported as provided in paragraph (i) of
this section, when applicable.
* * * * *
(h) Institutions of Higher Education (IHEs). * * *
(3) Intra-Institution of Higher Education (IHE) consulting. Intra-
IHE consulting by faculty should be undertaken as an IHE responsibility
requiring no compensation in addition to IBS. However, in unusual cases
where consultation is across departmental lines or involves a separate
or remote operation, and the work performed by the faculty member is in
addition to his or her regular responsibilities, any charges for such
work representing additional compensation above IBS are allowable
provided that such consulting arrangements are specifically provided
for in the Federal award or approved in writing by the Federal awarding
agency.
* * * * *
(iv) Encompass federally-assisted and all other activities
compensated by the non-Federal entity on an integrated basis, but may
include the use of subsidiary records as defined in the non-Federal
entity's written policy;
* * * * *
(viii) * * *
(C) The non-Federal entity's system of internal controls includes
processes to review after-the-fact interim charges made to a Federal
award based on budget estimates. All necessary adjustment must be made
such that the final amount charged to the Federal award is accurate,
allowable, and properly allocated.
* * * * *
0
68. Revise Sec. 200.431 to read as follows:
Sec. 200.431 Compensation--fringe benefits.
(a) General. Fringe benefits are allowances and services provided
by employers to their employees as compensation in addition to regular
salaries and wages. Fringe benefits include, but are not limited to,
the costs of leave (vacation, family-related, sick or military),
employee insurance, pensions, and unemployment benefit plans. Except as
provided elsewhere in these principles, the costs of fringe benefits
are allowable provided that the benefits are reasonable and are
required by law, non-Federal entity-employee agreement, or an
established policy of the non-Federal entity.
(b) Leave. The cost of fringe benefits in the form of regular
compensation paid to employees during periods of authorized absences
from the job, such as for annual leave, family-related leave, sick
leave, holidays, court leave, military leave, administrative leave, and
other similar benefits, are allowable if all of the following criteria
are met:
(1) They are provided under established written leave policies;
(2) The costs are equitably allocated to all related activities,
including Federal awards; and,
(3) The accounting basis (cash or accrual) selected for costing
each type of leave is consistently followed by the non-Federal entity
or specified grouping of employees.
(i) When a non-Federal entity uses the cash basis of accounting,
the cost of leave is recognized in the period that the leave is taken
and paid for. Payments for unused leave when an employee retires or
terminates employment are allowable in the year of payment.
(ii) The accrual basis may be only used for those types of leave
for which a liability as defined by GAAP exists when the leave is
earned. When a non-Federal entity uses the accrual basis of accounting,
allowable leave costs are the lesser of the amount accrued or funded.
(c) Fringe benefits. The cost of fringe benefits in the form of
employer contributions or expenses for social security; employee life,
health, unemployment, and worker's compensation insurance (except as
indicated in Sec. 200.447); pension plan costs (see paragraph (i) of
this section); and other similar benefits are allowable, provided such
benefits are granted under established written policies. Such benefits,
must be allocated to Federal awards and all other activities in a
manner consistent with the pattern of benefits attributable to the
individuals or group(s) of employees whose salaries and wages are
chargeable to such Federal awards and other activities, and charged as
direct or indirect costs in accordance with the non-Federal entity's
accounting practices.
(d) Cost objectives. Fringe benefits may be assigned to cost
objectives by identifying specific benefits to specific individual
employees or by allocating on the basis of entity-wide salaries and
wages of the employees receiving the benefits. When the allocation
method is used, separate allocations must be made to selective
groupings of employees, unless the non-Federal entity demonstrates that
costs in relationship to salaries and wages do not differ significantly
for different groups of employees.
(e) Insurance. See also Sec. 200.447(d)(1) and (2).
(1) Provisions for a reserve under a self-insurance program for
unemployment compensation or
[[Page 49566]]
workers' compensation are allowable to the extent that the provisions
represent reasonable estimates of the liabilities for such
compensation, and the types of coverage, extent of coverage, and rates
and premiums would have been allowable had insurance been purchased to
cover the risks. However, provisions for self-insured liabilities which
do not become payable for more than one year after the provision is
made must not exceed the present value of the liability.
(2) Costs of insurance on the lives of trustees, officers, or other
employees holding positions of similar responsibility are allowable
only to the extent that the insurance represents additional
compensation. The costs of such insurance when the non-Federal entity
is named as beneficiary are unallowable.
(3) Actual claims paid to or on behalf of employees or former
employees for workers' compensation, unemployment compensation,
severance pay, and similar employee benefits (e.g., post-retirement
health benefits), are allowable in the year of payment provided that
the non-Federal entity follows a consistent costing policy.
(f) Automobiles. That portion of automobile costs furnished by the
non-Federal entity that relates to personal use by employees (including
transportation to and from work) is unallowable as fringe benefit or
indirect (F&A) costs regardless of whether the cost is reported as
taxable income to the employees.
(g) Pension plan costs. Pension plan costs which are incurred in
accordance with the established policies of the non-Federal entity are
allowable, provided that:
(1) Such policies meet the test of reasonableness.
(2) The methods of cost allocation are not discriminatory.
(3) Except for State and Local Governments, the cost assigned to
each fiscal year should be determined in accordance with GAAP.
(4) The costs assigned to a given fiscal year are funded for all
plan participants within six months after the end of that year.
However, increases to normal and past service pension costs caused by a
delay in funding the actuarial liability beyond 30 calendar days after
each quarter of the year to which such costs are assignable are
unallowable. Non-Federal entity may elect to follow the ``Cost
Accounting Standard for Composition and Measurement of Pension Costs''
(48 CFR 9904.412).
(5) Pension plan termination insurance premiums paid pursuant to
the Employee Retirement Income Security Act (ERISA) of 1974 (29 U.S.C.
1301-1461) are allowable. Late payment charges on such premiums are
unallowable. Excise taxes on accumulated funding deficiencies and other
penalties imposed under ERISA are unallowable.
(6) Pension plan costs may be computed using a pay-as-you-go method
or an acceptable actuarial cost method in accordance with established
written policies of the non-Federal entity.
(i) For pension plans financed on a pay-as-you-go method, allowable
costs will be limited to those representing actual payments to retirees
or their beneficiaries.
(ii) Pension costs calculated using an actuarial cost-based method
recognized by GAAP are allowable for a given fiscal year if they are
funded for that year within six months after the end of that year.
Costs funded after the six-month period (or a later period agreed to by
the cognizant agency for indirect costs) are allowable in the year
funded. The cognizant agency for indirect costs may agree to an
extension of the six-month period if an appropriate adjustment is made
to compensate for the timing of the charges to the Federal Government
and related Federal reimbursement and the non-Federal entity's
contribution to the pension fund. Adjustments may be made by cash
refund or other equitable procedures to compensate the Federal
Government for the time value of Federal reimbursements in excess of
contributions to the pension fund.
(iii) Amounts funded by the non-Federal entity in excess of the
actuarially determined amount for a fiscal year may be used as the non-
Federal entity's contribution in future periods.
(iv) When a non-Federal entity converts to an acceptable actuarial
cost method, as defined by GAAP, and funds pension costs in accordance
with this method, the unfunded liability at the time of conversion is
allowable if amortized over a period of years in accordance with GAAP.
(v) The Federal Government must receive an equitable share of any
previously allowed pension costs (including earnings thereon) which
revert or inure to the non-Federal entity in the form of a refund,
withdrawal, or other credit.
(h) Post-retirement health. Post-retirement health plans (PRHP)
refers to costs of health insurance or health services not included in
a pension plan covered by paragraph (g) of this section for retirees
and their spouses, dependents, and survivors. PRHP costs may be
computed using a pay-as-you-go method or an acceptable actuarial cost
method in accordance with established written policies of the non-
Federal entity.
(1) For PRHP financed on a pay-as-you-go method, allowable costs
will be limited to those representing actual payments to retirees or
their beneficiaries.
(2) PRHP costs calculated using an actuarial cost method recognized
by GAAP are allowable if they are funded for that year within six
months after the end of that year. Costs funded after the six-month
period (or a later period agreed to by the cognizant agency) are
allowable in the year funded. The Federal cognizant agency for indirect
costs may agree to an extension of the six-month period if an
appropriate adjustment is made to compensate for the timing of the
charges to the Federal Government and related Federal reimbursements
and the non-Federal entity's contributions to the PRHP fund.
Adjustments may be made by cash refund, reduction in current year's
PRHP costs, or other equitable procedures to compensate the Federal
Government for the time value of Federal reimbursements in excess of
contributions to the PRHP fund.
(3) Amounts funded in excess of the actuarially determined amount
for a fiscal year may be used as the non-Federal entity contribution in
a future period.
(4) When a non-Federal entity converts to an acceptable actuarial
cost method and funds PRHP costs in accordance with this method, the
initial unfunded liability attributable to prior years is allowable if
amortized over a period of years in accordance with GAAP, or, if no
such GAAP period exists, over a period negotiated with the cognizant
agency for indirect costs.
(5) To be allowable in the current year, the PRHP costs must be
paid either to:
(i) An insurer or other benefit provider as current year costs or
premiums, or
(ii) An insurer or trustee to maintain a trust fund or reserve for
the sole purpose of providing post-retirement benefits to retirees and
other beneficiaries.
(6) The Federal Government must receive an equitable share of any
amounts of previously allowed post-retirement benefit costs (including
earnings thereon) which revert or inure to the non-Federal entity in
the form of a refund, withdrawal, or other credit.
(i) Severance pay. (1) Severance pay, also commonly referred to as
dismissal wages, is a payment in addition to regular salaries and
wages, by non-Federal entities to workers whose
[[Page 49567]]
employment is being terminated. Costs of severance pay are allowable
only to the extent that in each case, it is required by
(i) Law;
(ii) Employer-employee agreement;
(iii) Established policy that constitutes, in effect, an implied
agreement on the non-Federal entity's part; or
(iv) Circumstances of the particular employment.
(2) Costs of severance payments are divided into two categories as
follows:
(i) Actual normal turnover severance payments must be allocated to
all activities; or, where the non-Federal entity provides for a reserve
for normal severances, such method will be acceptable if the charge to
current operations is reasonable in light of payments actually made for
normal severances over a representative past period, and if amounts
charged are allocated to all activities of the non-Federal entity.
(ii) Measurement of costs of abnormal or mass severance pay by
means of an accrual will not achieve equity to both parties. Thus,
accruals for this purpose are not allowable. However, the Federal
Government recognizes its responsibility to participate, to the extent
of its fair share, in any specific payment. Prior approval by the
Federal awarding agency or cognizant agency for indirect cost, as
appropriate, is required.
(3) Costs incurred in certain severance pay packages which are in
an amount in excess of the normal severance pay paid by the non-Federal
entity to an employee upon termination of employment and are paid to
the employee contingent upon a change in management control over, or
ownership of, the non-Federal entity's assets, are unallowable.
(4) Severance payments to foreign nationals employed by the non-
Federal entity outside the United States, to the extent that the amount
exceeds the customary or prevailing practices for the non-Federal
entity in the United States, are unallowable, unless they are necessary
for the performance of Federal programs and approved by the Federal
awarding agency.
(5) Severance payments to foreign nationals employed by the non-
Federal entity outside the United States due to the termination of the
foreign national as a result of the closing of, or curtailment of
activities by, the non-Federal entity in that country, are unallowable,
unless they are necessary for the performance of Federal programs and
approved by the Federal awarding agency.
(j) For IHEs only. (1) Fringe benefits in the form of undergraduate
and graduate tuition or remission of tuition for individual employees
are allowable, provided such benefits are granted in accordance with
established non-Federal entity policies, and are distributed to all
non-Federal entity activities on an equitable basis. Tuition benefits
for family members other than the employee are unallowable.
(2) Fringe benefits in the form of tuition or remission of tuition
for individual employees not employed by IHEs are limited to the tax-
free amount allowed per section 127 of the Internal Revenue Code as
amended.
(3) IHEs may offer employees tuition waivers or tuition reductions,
provided that the benefit does not discriminate in favor of highly
compensated employees. Employees can exercise these benefits at other
institutions according to institutional policy. See Sec. 200.466, for
treatment of tuition remission provided to students.
(k) Fringe benefit programs and other benefit costs. For IHEs whose
costs are paid by state or local governments, fringe benefit programs
(such as pension costs and FICA) and any other benefits costs
specifically incurred on behalf of, and in direct benefit to, the non-
Federal entity, are allowable costs of such non-Federal entities
whether or not these costs are recorded in the accounting records of
the non-Federal entities, subject to the following:
(1) The costs meet the requirements of Basic Considerations in
Sec. Sec. 200.402 through 200.411;
(2) The costs are properly supported by approved cost allocation
plans in accordance with applicable Federal cost accounting principles;
and
(3) The costs are not otherwise borne directly or indirectly by the
Federal Government.
0
69. Revise Sec. 200.432 to read as follows:
Sec. 200.432 Conferences.
A conference is defined as a meeting, retreat, seminar, symposium,
workshop or event whose primary purpose is the dissemination of
technical information beyond the non-Federal entity and is necessary
and reasonable for successful performance under the Federal award.
Allowable conference costs paid by the non-Federal entity as a sponsor
or host of the conference may include rental of facilities, speakers'
fees, costs of meals and refreshments, local transportation, and other
items incidental to such conferences unless further restricted by the
terms and conditions of the Federal award. As needed, the costs of
identifying, but not providing, locally available dependent-care
resources are allowable. Conference hosts/sponsors must exercise
discretion and judgment in ensuring that conference costs are
appropriate, necessary and managed in a manner that minimizes costs to
the Federal award. The Federal awarding agency may authorize exceptions
where appropriate for programs including Indian tribes, children, and
the elderly. See also Sec. Sec. 200.438, 200.456, and 200.475.
0
70. Amend Sec. 200.433 by revising paragraphs (b) and (c) to read as
follows:
Sec. 200.433 Contingency provisions.
* * * * *
(b) It is permissible for contingency amounts other than those
excluded in paragraph (a) of this section to be explicitly included in
budget estimates, to the extent they are necessary to improve the
precision of those estimates. Amounts must be estimated using broadly-
accepted cost estimating methodologies, specified in the budget
documentation of the Federal award, and accepted by the Federal
awarding agency. As such, contingency amounts are to be included in the
Federal award. In order for actual costs incurred to be allowable, they
must comply with the cost principles and other requirements in this
part (see also Sec. Sec. 200.300 and 200.403 of this part); be
necessary and reasonable for proper and efficient accomplishment of
project or program objectives, and be verifiable from the non-Federal
entity's records.
(c) Payments made by the Federal awarding agency to the non-Federal
entity's ``contingency reserve'' or any similar payment made for events
the occurrence of which cannot be foretold with certainty as to the
time or intensity, or with an assurance of their happening, are
unallowable, except as noted in Sec. Sec. 200.431 and 200.447.
0
71. Amend Sec. 200.434 by revising paragraphs (b), (c), (f), and
(g)(2) to read as follows:
Sec. 200.434 Contributions and donations.
* * * * *
(b) The value of services and property donated to the non-Federal
entity may not be charged to the Federal award either as a direct or
indirect (F&A) cost. The value of donated services and property may be
used to meet cost sharing or matching requirements (see Sec. 200.306).
Depreciation on donated assets is permitted in accordance with Sec.
200.436, as long as the donated property is not counted towards cost
sharing or matching requirements.
(c) Services donated or volunteered to the non-Federal entity may
be furnished to a non-Federal entity by professional
[[Page 49568]]
and technical personnel, consultants, and other skilled and unskilled
labor. The value of these services may not be charged to the Federal
award either as a direct or indirect cost. However, the value of
donated services may be used to meet cost sharing or matching
requirements in accordance with the provisions of Sec. 200.306.
* * * * *
(f) Fair market value of donated services must be computed as
described in Sec. 200.306.
* * * * *
(g) * * *
(2) The value of the donations may be used to meet cost sharing or
matching share requirements under the conditions described in Sec.
200.300 of this part. The value of the donations must be determined in
accordance with Sec. 200.300. Where donations are treated as indirect
costs, indirect cost rates will separate the value of the donations so
that reimbursement will not be made.
0
72. Amend Sec. 200.436 by revising paragraphs (c) introductory text,
(c)(3) and (4), and (e) to read as follows:
Sec. 200.436 Depreciation.
* * * * *
(c) Depreciation is computed applying the following rules. The
computation of depreciation must be based on the acquisition cost of
the assets involved. For an asset donated to the non-Federal entity by
a third party, its fair market value at the time of the donation must
be considered as the acquisition cost. Such assets may be depreciated
or claimed as matching but not both. For the computation of
depreciation, the acquisition cost will exclude:
* * * * *
(3) Any portion of the cost of buildings and equipment contributed
by or for the non-Federal entity that are already claimed as matching
or where law or agreement prohibits recovery;
(4) Any asset acquired solely for the performance of a non-Federal
award; and
* * * * *
(e) Charges for depreciation must be supported by adequate property
records, and physical inventories must be taken at least once every two
years to ensure that the assets exist and are usable, used, and needed.
Statistical sampling techniques may be used in taking these
inventories. In addition, adequate depreciation records showing the
amount of depreciation must be maintained.
0
73. Amend Sec. 200.439 by revising paragraphs (a) and (b)(3) and (7)
to read as follows:
Sec. 200.439 Equipment and other capital expenditures.
(a) See Sec. 200.1 for the definitions of capital expenditures,
equipment, special purpose equipment, general purpose equipment,
acquisition cost, and capital assets.
* * * * *
(b) * * *
(3) Capital expenditures for improvements to land, buildings, or
equipment which materially increase their value or useful life are
unallowable as a direct cost except with the prior written approval of
the Federal awarding agency, or pass-through entity. See Sec. 200.436,
for rules on the allowability of depreciation on buildings, capital
improvements, and equipment. See also Sec. 200.465.
* * * * *
(7) Equipment and other capital expenditures are unallowable as
indirect costs. See Sec. 200.436.
0
74. Revise Sec. 200.441 to read as follows:
Sec. 200.441 Fines, penalties, damages and other settlements.
Costs resulting from non-Federal entity violations of, alleged
violations of, or failure to comply with, Federal, state, tribal, local
or foreign laws and regulations are unallowable, except when incurred
as a result of compliance with specific provisions of the Federal
award, or with prior written approval of the Federal awarding agency.
See also Sec. 200.435.
0
75. Revise Sec. 200.442 to read as follows:
Sec. 200.442 Fund raising and investment management costs.
(a) Costs of organized fund raising, including financial campaigns,
endowment drives, solicitation of gifts and bequests, and similar
expenses incurred to raise capital or obtain contributions are
unallowable. Fund raising costs for the purposes of meeting the Federal
program objectives are allowable with prior written approval from the
Federal awarding agency. Proposal costs are covered in Sec. 200.460.
(b) Costs of investment counsel and staff and similar expenses
incurred to enhance income from investments are unallowable except when
associated with investments covering pension, self-insurance, or other
funds which include Federal participation allowed by this part.
(c) Costs related to the physical custody and control of monies and
securities are allowable.
(d) Both allowable and unallowable fund-raising and investment
activities must be allocated as an appropriate share of indirect costs
under the conditions described in Sec. 200.413.
0
76. Amend Sec. 200.443 by revising paragraphs (b)(1) and (3) and (d)
to read as follows:
Sec. 200.443 Gains and losses on disposition of depreciable assets.
* * * * *
(b) * * *
(1) The gain or loss is processed through a depreciation account
and is reflected in the depreciation allowable under Sec. Sec. 200.436
and 200.439.
* * * * *
(3) A loss results from the failure to maintain permissible
insurance, except as otherwise provided in Sec. 200.447.
* * * * *
(d) When assets acquired with Federal funds, in part or wholly, are
disposed of, the distribution of the proceeds must be made in
accordance with Sec. Sec. 200.310 through 200.316 of this part.
0
77. Amend Sec. 200.444 by revising paragraphs (a) introductory text,
(a)(4), and (b) to read as follows:
Sec. 200.444 General costs of government.
(a) For states, local governments, and Indian Tribes, the general
costs of government are unallowable (except as provided in Sec.
200.475). Unallowable costs include:
* * * * *
(4) Costs of prosecutorial activities unless treated as a direct
cost to a specific program if authorized by statute or regulation
(however, this does not preclude the allowability of other legal
activities of the Attorney General as described in Sec. 200.435); and
* * * * *
(b) For Indian tribes and Councils of Governments (COGs) (see
definition for Local government in Sec. 200.1 of this part), up to 50%
of salaries and expenses directly attributable to managing and
operating Federal programs by the chief executive and his or her staff
can be included in the indirect cost calculation without documentation.
0
78. Amend Sec. 200.447 by revising paragraph (a)(4) to read as
follows:
Sec. 200.447 Insurance and indemnification.
(a) * * *
(4) Costs of insurance on the lives of trustees, officers, or other
employees holding positions of similar responsibilities are allowable
only to the extent that the insurance represents additional
compensation (see Sec. 200.431). The cost of such insurance when the
non-Federal entity is
[[Page 49569]]
identified as the beneficiary is unallowable.
* * * * *
0
79. Amend Sec. 200.448 by revising paragraph (a)(1)(iii) to read as
follows:
Sec. 200.448 Intellectual property.
(a) * * *
(1) * * *
(iii) General counseling services relating to patent and copyright
matters, such as advice on patent and copyright laws, regulations,
clauses, and employee intellectual property agreements (See also Sec.
200.459).
* * * * *
0
80. Amend Sec. 200.449 by revising paragraphs (b)(1) and (c)(4) to
read as follows:
Sec. 200.449 Interest.
* * * * *
(b) Capital assets. (1) Capital assets is defined as noted in Sec.
200.1 of this part. An asset cost includes (as applicable) acquisition
costs, construction costs, and other costs capitalized in accordance
with GAAP.
* * * * *
(c) * * *
(4) The non-Federal entity limits claims for Federal reimbursement
of interest costs to the least expensive alternative. For example, a
lease contract that transfers ownership by the end of the contract may
be determined less costly than purchasing through other types of debt
financing, in which case reimbursement must be limited to the amount of
interest determined if leasing had been used.
* * * * *
0
81. Amend Sec. 200.450 by revising paragraphs (a), (c)(2)(v) and (vi),
(c)(2)(vii)(A) introductory text to read as follows:
Sec. 200.450 Lobbying.
(a) The cost of certain influencing activities associated with
obtaining grants, contracts, or cooperative agreements, or loans is an
unallowable cost. Lobbying with respect to certain grants, contracts,
cooperative agreements, and loans is governed by relevant statutes,
including among others, the provisions of 31 U.S.C. 1352, as well as
the common rule, ``New Restrictions on Lobbying'' published on February
26, 1990, including definitions, and the Office of Management and
Budget ``Governmentwide Guidance for New Restrictions on Lobbying'' and
notices published on December 20, 1989, June 15, 1990, January 15,
1992, and January 19, 1996.
* * * * *
(c) * * *
(2) * * *
(v) When a non-Federal entity seeks reimbursement for indirect
(F&A) costs, total lobbying costs must be separately identified in the
indirect (F&A) cost rate proposal, and thereafter treated as other
unallowable activity costs in accordance with the procedures of Sec.
200.413.
(vi) The non-Federal entity must submit as part of its annual
indirect (F&A) cost rate proposal a certification that the requirements
and standards of this section have been complied with. (See also Sec.
200.415.)
(vii)(A) Time logs, calendars, or similar records are not required
to be created for purposes of complying with the record keeping
requirements in Sec. 200.302 with respect to lobbying costs during any
particular calendar month when:
* * * * *
0
82. Revise Sec. 200.452 to read as follows:
Sec. 200.452 Maintenance and repair costs.
Costs incurred for utilities, insurance, security, necessary
maintenance, janitorial services, repair, or upkeep of buildings and
equipment (including Federal property unless otherwise provided for)
which neither add to the permanent value of the property nor
appreciably prolong its intended life, but keep it in an efficient
operating condition, are allowable. Costs incurred for improvements
which add to the permanent value of the buildings and equipment or
appreciably prolong their intended life must be treated as capital
expenditures (see Sec. 200.439). These costs are only allowable to the
extent not paid through rental or other agreements.
0
83. Amend Sec. 200.454 by revising paragraph (e) to read as follows:
Sec. 200.454 Memberships, subscriptions, and professional activity
costs.
* * * * *
(e) Costs of membership in organizations whose primary purpose is
lobbying are unallowable. See also Sec. 200.450.
0
84. Revise Sec. 200.456 to read as follows:
Sec. 200.456 Participant support costs.
Participant support costs as defined in Sec. 200.1 are allowable
with the prior approval of the Federal awarding agency.
0
85. Revise Sec. 200.457 to read as follows:
Sec. 200.457 Plant and security costs.
Necessary and reasonable expenses incurred for protection and
security of facilities, personnel, and work products are allowable.
Such costs include, but are not limited to, wages and uniforms of
personnel engaged in security activities; equipment; barriers;
protective (non-military) gear, devices, and equipment; contractual
security services; and consultants. Capital expenditures for plant
security purposes are subject to Sec. 200.439.
0
86. Revise Sec. 200.458 to read as follows:
Sec. 200.458 Pre-award costs.
Pre-award costs are those incurred prior to the effective date of
the Federal award or subaward directly pursuant to the negotiation and
in anticipation of the Federal award where such costs are necessary for
efficient and timely performance of the scope of work. Such costs are
allowable only to the extent that they would have been allowable if
incurred after the date of the Federal award and only with the written
approval of the Federal awarding agency. If charged to the award, these
costs must be charged to the initial budget period of the award, unless
otherwise specified by the Federal awarding agency or pass-through
entity.
0
87. Amend Sec. 200.459 by revising paragraph (a) to read as follows:
Sec. 200.459 Professional service costs.
(a) Costs of professional and consultant services rendered by
persons who are members of a particular profession or possess a special
skill, and who are not officers or employees of the non-Federal entity,
are allowable, subject to paragraphs (b) and (c) of this section when
reasonable in relation to the services rendered and when not contingent
upon recovery of the costs from the Federal Government. In addition,
legal and related services are limited under Sec. 200.435.
* * * * *
0
88. Amend Sec. 200.461 by revising paragraph (b)(3) to read as
follows:
Sec. 200.461 Publication and printing costs.
* * * * *
(b) * * *
(3) The non-Federal entity may charge the Federal award during
closeout for the costs of publication or sharing of research results if
the costs are not incurred during the period of performance of the
Federal award. If charged to the award, these costs must be charged to
the final budget period of the award, unless otherwise specified by the
Federal awarding agency.
0
89. Amend Sec. 200.463 by revising paragraph (c) to read as follows:
[[Page 49570]]
Sec. 200.463 Recruiting costs.
* * * * *
(c) Where relocation costs incurred incident to recruitment of a
new employee have been funded in whole or in part to a Federal award,
and the newly hired employee resigns for reasons within the employee's
control within 12 months after hire, the non-Federal entity will be
required to refund or credit the Federal share of such relocation costs
to the Federal Government. See also Sec. 200.464.
* * * * *
0
90. Amend Sec. 200.464 by revising paragraph (c) to read as follows:
Sec. 200.464 Relocation costs of employees.
* * * * *
(c) Allowable relocation costs for new employees are limited to
those described in paragraphs (b)(1) and (2) of this section. When
relocation costs incurred incident to the recruitment of new employees
have been charged to a Federal award and the employee resigns for
reasons within the employee's control within 12 months after hire, the
non-Federal entity must refund or credit the Federal Government for its
share of the cost. If dependents are not permitted at the location for
any reason and the costs do not include costs of transporting household
goods, the costs of travel to an overseas location must be considered
travel costs in accordance with Sec. 200.474 Travel costs, and not
this relocations costs of employees (See also Sec. 200.464).
* * * * *
0
91. Amend Sec. 200.465 by adding paragraphs (d) through (f) to read as
follows:
Sec. 200.465 Rental costs of real property and equipment.
* * * * *
(d) Rental costs under leases which are required to be accounted
for as a financed purchase under GASB standards or a finance lease
under FASB standards under GAAP are allowable only up to the amount (as
explained in paragraph (b) of this section) that would be allowed had
the non-Federal entity purchased the property on the date the lease
agreement was executed. Interest costs related to these leases are
allowable to the extent they meet the criteria in Sec. 200.449.
Unallowable costs include amounts paid for profit, management fees, and
taxes that would not have been incurred had the non-Federal entity
purchased the property.
(e) Rental or lease payments are allowable under lease contracts
where the non-Federal entity is required to recognize an intangible
right-to-use lease asset (per GASB) or right of use operating lease
asset (per FASB) for purposes of financial reporting in accordance with
GAAP.
(f) The rental of any property owned by any individuals or entities
affiliated with the non-Federal entity, to include commercial or
residential real estate, for purposes such as the home office workspace
is unallowable.
0
92. Amend Sec. 200.466 by revising paragraph (b) to read as follows:
Sec. 200.466 Scholarships and student aid costs.
* * * * *
(b) Charges for tuition remission and other forms of compensation
paid to students as, or in lieu of, salaries and wages must be subject
to the reporting requirements in Sec. 200.430, and must be treated as
direct or indirect cost in accordance with the actual work being
performed. Tuition remission may be charged on an average rate basis.
See also Sec. 200.431.
0
93. Revise Sec. 200.467 to read as follows:
Sec. 200.467 Selling and marketing costs.
Costs of selling and marketing any products or services of the non-
Federal entity (unless allowed under Sec. 200.421) are unallowable,
except as direct costs, with prior approval by the Federal awarding
agency when necessary for the performance of the Federal award.
0
94. Amend Sec. 200.468 by revising paragraph (a) and (b)(2) to read as
follows:
Sec. 200.468 Specialized service facilities.
(a) The costs of services provided by highly complex or specialized
facilities operated by the non-Federal entity, such as computing
facilities, wind tunnels, and reactors are allowable, provided the
charges for the services meet the conditions of either paragraph (b) or
(c) of this section, and, in addition, take into account any items of
income or Federal financing that qualify as applicable credits under
Sec. 200.406.
* * * * *
(b) * * *
(2) Is designed to recover only the aggregate costs of the
services. The costs of each service must consist normally of both its
direct costs and its allocable share of all indirect (F&A) costs. Rates
must be adjusted at least biennially, and must take into consideration
over/under-applied costs of the previous period(s).
* * * * *
Sec. Sec. 200.471 through 200.475 [Redesignated as Sec. Sec. 200.472
through 200.476]
0
95. Redesignate Sec. Sec. 200.471 through 200.475 as Sec. Sec.
200.472 through 200.476.
0
96. Add new Sec. 200.471 to read as follows:
Sec. 200.471 Telecommunication costs and video surveillance costs
(a) Costs incurred for telecommunications and video surveillance
services or equipment such as phones, internet, video surveillance,
cloud servers are allowable except for the following circumstances:
(b) Obligating or expending covered telecommunications and video
surveillance services or equipment or services as described in Sec.
200.216 to:
(1) Procure or obtain, extend or renew a contract to procure or
obtain;
(2) Enter into a contract (or extend or renew a contract) to
procure; or
(3) Obtain the equipment, services, or systems.
0
97. Amend newly redesignated Sec. 200.472 by revising paragraphs
(c)(2), (e)(1)(i), and (f) to read as follows:
Sec. 200.472 Termination costs.
* * * * *
(c) * * *
(2) The interest of the Federal Government is protected by transfer
of title or by other means deemed appropriate by the Federal awarding
agency (see also Sec. 200.313 (d)), and
* * * * *
(e) * * *
(1) * * *
(i) The preparation and presentation to the Federal awarding agency
of settlement claims and supporting data with respect to the terminated
portion of the Federal award, unless the termination is for cause (see
subpart D, including Sec. Sec. 200.339-200.343); and
* * * * *
(f) Claims under subawards, including the allocable portion of
claims which are common to the Federal award and to other work of the
non-Federal entity, are generally allowable. An appropriate share of
the non-Federal entity's indirect costs may be allocated to the amount
of settlements with contractors and/or subrecipients, provided that the
amount allocated is otherwise consistent with the basic guidelines
contained in Sec. 200.414. The indirect costs so allocated must
exclude the same and similar costs claimed directly or indirectly as
settlement expenses.
0
98. Amend newly redesignated Sec. 200.475 by revising paragraphs (a)
and (c)(2) to read as follows:
[[Page 49571]]
Sec. 200.475 Travel costs.
(a) General. Travel costs are the expenses for transportation,
lodging, subsistence, and related items incurred by employees who are
in travel status on official business of the non-Federal entity. Such
costs may be charged on an actual cost basis, on a per diem or mileage
basis in lieu of actual costs incurred, or on a combination of the two,
provided the method used is applied to an entire trip and not to
selected days of the trip, and results in charges consistent with those
normally allowed in like circumstances in the non-Federal entity's non-
federally-funded activities and in accordance with non-Federal entity's
written travel reimbursement policies. Notwithstanding the provisions
of Sec. 200.444, travel costs of officials covered by that section are
allowable with the prior written approval of the Federal awarding
agency or pass-through entity when they are specifically related to the
Federal award.
* * * * *
(c) * * *
(2) Travel costs for dependents are unallowable, except for travel
of duration of six months or more with prior approval of the Federal
awarding agency. See also Sec. 200.432.
* * * * *
0
99. Revise newly redesignated Sec. 200.476 to read as follows:
Sec. 200.476 Trustees.
Travel and subsistence costs of trustees (or directors) at IHEs and
nonprofit organizations are allowable. See also Sec. 200.475.
Subpart F--Audit Requirements
0
100. Amend Sec. 200.501 by revising paragraphs (b), (c), (d), (f), and
(h) to read as follows:
Sec. 200.501 Audit requirements.
* * * * *
(b) Single audit. A non-Federal entity that expends $750,000 or
more during the non-Federal entity's fiscal year in Federal awards must
have a single audit conducted in accordance with Sec. 200.514 except
when it elects to have a program-specific audit conducted in accordance
with paragraph (c) of this section.
(c) Program-specific audit election. When an auditee expends
Federal awards under only one Federal program (excluding R&D) and the
Federal program's statutes, regulations, or the terms and conditions of
the Federal award do not require a financial statement audit of the
auditee, the auditee may elect to have a program-specific audit
conducted in accordance with Sec. 200.507. A program-specific audit
may not be elected for R&D unless all of the Federal awards expended
were received from the same Federal agency, or the same Federal agency
and the same pass-through entity, and that Federal agency, or pass-
through entity in the case of a subrecipient, approves in advance a
program-specific audit.
(d) Exemption when Federal awards expended are less than $750,000.
A non-Federal entity that expends less than $750,000 during the non-
Federal entity's fiscal year in Federal awards is exempt from Federal
audit requirements for that year, except as noted in Sec. 200.503, but
records must be available for review or audit by appropriate officials
of the Federal agency, pass-through entity, and Government
Accountability Office (GAO).
* * * * *
(f) Subrecipients and contractors. An auditee may simultaneously be
a recipient, a subrecipient, and a contractor. Federal awards expended
as a recipient or a subrecipient are subject to audit under this part.
The payments received for goods or services provided as a contractor
are not Federal awards. Section Sec. 200.331 sets forth the
considerations in determining whether payments constitute a Federal
award or a payment for goods or services provided as a contractor.
* * * * *
(h) For-profit subrecipient. Since this part does not apply to for-
profit subrecipients, the pass-through entity is responsible for
establishing requirements, as necessary, to ensure compliance by for-
profit subrecipients. The agreement with the for-profit subrecipient
must describe applicable compliance requirements and the for-profit
subrecipient's compliance responsibility. Methods to ensure compliance
for Federal awards made to for-profit subrecipients may include pre-
award audits, monitoring during the agreement, and post-award audits.
See also Sec. 200.332.
0
101. Amend Sec. 200.503 by revising paragraph (e) to read as follows:
Sec. 200.503 Relation to other audit requirements.
* * * * *
(e) Request for a program to be audited as a major program. A
Federal awarding agency may request that an auditee have a particular
Federal program audited as a major program in lieu of the Federal
awarding agency conducting or arranging for the additional audits. To
allow for planning, such requests should be made at least 180 calendar
days prior to the end of the fiscal year to be audited. The auditee,
after consultation with its auditor, should promptly respond to such a
request by informing the Federal awarding agency whether the program
would otherwise be audited as a major program using the risk-based
audit approach described in Sec. 200.518 and, if not, the estimated
incremental cost. The Federal awarding agency must then promptly
confirm to the auditee whether it wants the program audited as a major
program. If the program is to be audited as a major program based upon
this Federal awarding agency request, and the Federal awarding agency
agrees to pay the full incremental costs, then the auditee must have
the program audited as a major program. A pass-through entity may use
the provisions of this paragraph for a subrecipient.
0
102. Revise Sec. 200.505 to read as follows:
Sec. 200.505 Sanctions.
In cases of continued inability or unwillingness to have an audit
conducted in accordance with this part, Federal agencies and pass-
through entities must take appropriate action as provided in Sec.
200.339.
0
103. Revise Sec. 200.506 to read as follows:
Sec. 200.506 Audit costs.
See Sec. 200.425.
0
104. Amend Sec. 200.507 by revising paragraphs (a), (b)(2), (b)(3)(ii)
through (v), (b)(4)(iv), (c)(2) and (3), and (d)(8) to read as follows:
Sec. 200.507 Program-specific audits.
(a) Program-specific audit guide available. In some cases, a
program-specific audit guide will be available to provide specific
guidance to the auditor with respect to internal controls, compliance
requirements, suggested audit procedures, and audit reporting
requirements. A listing of current program-specific audit guides can be
found in the compliance supplement, Part 8, Appendix VI, Program-
Specific Audit Guides, which includes a website where a copy of the
guide can be obtained. When a current program-specific audit guide is
available, the auditor must follow GAGAS and the guide when performing
a program-specific audit.
* * * * *
(b) * * *
(2) The auditee must prepare the financial statement(s) for the
Federal program that includes, at a minimum, a schedule of expenditures
of Federal awards for the program and notes that
[[Page 49572]]
describe the significant accounting policies used in preparing the
schedule, a summary schedule of prior audit findings consistent with
the requirements of Sec. 200.511(b), and a corrective action plan
consistent with the requirements of Sec. 200.511(c).
(3) * * *
(ii) Obtain an understanding of internal controls and perform tests
of internal controls over the Federal program consistent with the
requirements of Sec. 200.514(c) for a major program;
(iii) Perform procedures to determine whether the auditee has
complied with Federal statutes, regulations, and the terms and
conditions of Federal awards that could have a direct and material
effect on the Federal program consistent with the requirements of Sec.
200.514(d) for a major program;
(iv) Follow up on prior audit findings, perform procedures to
assess the reasonableness of the summary schedule of prior audit
findings prepared by the auditee in accordance with the requirements of
Sec. 200.511, and report, as a current year audit finding, when the
auditor concludes that the summary schedule of prior audit findings
materially misrepresents the status of any prior audit finding; and
(v) Report any audit findings consistent with the requirements of
Sec. 200.516.
(4) * * *
(iv) A schedule of findings and questioned costs for the Federal
program that includes a summary of the auditor's results relative to
the Federal program in a format consistent with Sec. 200.515(d)(1) and
findings and questioned costs consistent with the requirements of Sec.
200.515(d)(3).
(c) * * *
(2) When a program-specific audit guide is available, the auditee
must electronically submit to the FAC the data collection form prepared
in accordance with Sec. 200.512(b), as applicable to a program-
specific audit, and the reporting required by the program-specific
audit guide.
(3) When a program-specific audit guide is not available, the
reporting package for a program-specific audit must consist of the
financial statement(s) of the Federal program, a summary schedule of
prior audit findings, and a corrective action plan as described in
paragraph (b)(2) of this section, and the auditor's report(s) described
in paragraph (b)(4) of this section. The data collection form prepared
in accordance with Sec. 200.512(b), as applicable to a program-
specific audit, and one copy of this reporting package must be
electronically submitted to the FAC.
(d) * * *
(8) 200.521 Management decision; and
* * * * *
0
105. Amend Sec. 200.508 by revising paragraphs (a), (b), and (c) to
read as follows:
Sec. 200.508 Auditee responsibilities.
* * * * *
(a) Procure or otherwise arrange for the audit required by this
part in accordance with Sec. 200.509, and ensure it is properly
performed and submitted when due in accordance with Sec. 200.512.
(b) Prepare appropriate financial statements, including the
schedule of expenditures of Federal awards in accordance with Sec.
200.510.
(c) Promptly follow up and take corrective action on audit
findings, including preparation of a summary schedule of prior audit
findings and a corrective action plan in accordance with Sec.
200.511(b) and (c), respectively.
* * * * *
0
106. Amend Sec. 200.509 by revising paragraph (a) to read as follows:
Sec. 200.509 Auditor selection.
(a) Auditor procurement. In procuring audit services, the auditee
must follow the procurement standards prescribed by the Procurement
Standards in Sec. Sec. 200.317 through 200.326 of subpart D of this
part or the FAR (48 CFR part 42), as applicable. When procuring audit
services, the objective is to obtain high-quality audits. In requesting
proposals for audit services, the objectives and scope of the audit
must be made clear and the non-Federal entity must request a copy of
the audit organization's peer review report which the auditor is
required to provide under GAGAS. Factors to be considered in evaluating
each proposal for audit services include the responsiveness to the
request for proposal, relevant experience, availability of staff with
professional qualifications and technical abilities, the results of
peer and external quality control reviews, and price. Whenever
possible, the auditee must make positive efforts to utilize small
businesses, minority-owned firms, and women's business enterprises, in
procuring audit services as stated in Sec. 200.321, or the FAR (48 CFR
part 42), as applicable.
* * * * *
0
107. Amend Sec. 200.510 by revising paragraphs (a), (b) introductory
text, and (b)(3), (5), and (6) to read as follows:
Sec. 200.510 Financial statements.
(a) Financial statements. The auditee must prepare financial
statements that reflect its financial position, results of operations
or changes in net assets, and, where appropriate, cash flows for the
fiscal year audited. The financial statements must be for the same
organizational unit and fiscal year that is chosen to meet the
requirements of this part. However, non-Federal entity-wide financial
statements may also include departments, agencies, and other
organizational units that have separate audits in accordance with Sec.
200.514(a) and prepare separate financial statements.
(b) Schedule of expenditures of Federal awards. The auditee must
also prepare a schedule of expenditures of Federal awards for the
period covered by the auditee's financial statements which must include
the total Federal awards expended as determined in accordance with
Sec. 200.502. While not required, the auditee may choose to provide
information requested by Federal awarding agencies and pass-through
entities to make the schedule easier to use. For example, when a
Federal program has multiple Federal award years, the auditee may list
the amount of Federal awards expended for each Federal award year
separately. At a minimum, the schedule must:
* * * * *
(3) Provide total Federal awards expended for each individual
Federal program and the Assistance Listings Number or other identifying
number when the Assistance Listings information is not available. For a
cluster of programs also provide the total for the cluster.
* * * * *
(5) For loan or loan guarantee programs described in Sec.
200.502(b), identify in the notes to the schedule the balances
outstanding at the end of the audit period. This is in addition to
including the total Federal awards expended for loan or loan guarantee
programs in the schedule.
(6) Include notes that describe that significant accounting
policies used in preparing the schedule, and note whether or not the
auditee elected to use the 10% de minimis cost rate as covered in Sec.
200.414.
0
108. Amend Sec. 200.511 by revising paragraphs (a) and (c) to read as
follows:
Sec. 200.511 Audit findings follow-up.
(a) General. The auditee is responsible for follow-up and
corrective action on all audit findings. As part of this
responsibility, the auditee must prepare a summary schedule of prior
audit findings. The auditee must also prepare a corrective action plan
for current year audit findings. The summary schedule
[[Page 49573]]
of prior audit findings and the corrective action plan must include the
reference numbers the auditor assigns to audit findings under Sec.
200.516(c). Since the summary schedule may include audit findings from
multiple years, it must include the fiscal year in which the finding
initially occurred. The corrective action plan and summary schedule of
prior audit findings must include findings relating to the financial
statements which are required to be reported in accordance with GAGAS.
* * * * *
(c) Corrective action plan. At the completion of the audit, the
auditee must prepare, in a document separate from the auditor's
findings described in Sec. 200.516, a corrective action plan to
address each audit finding included in the current year auditor's
reports. The corrective action plan must provide the name(s) of the
contact person(s) responsible for corrective action, the corrective
action planned, and the anticipated completion date. If the auditee
does not agree with the audit findings or believes corrective action is
not required, then the corrective action plan must include an
explanation and specific reasons.
0
109. Amend Sec. 200.512 by revising paragraphs (b) introductory text,
(b)(1), (c)(1) through (4), and (g) to read as follows:
Sec. 200.512 Report submission.
* * * * *
(b) Data collection. The FAC is the repository of record for
subpart F of this part reporting packages and the data collection form.
All Federal agencies, pass-through entities and others interested in a
reporting package and data collection form must obtain it by accessing
the FAC.
(1) The auditee must submit required data elements described in
Appendix X to Part 200, which state whether the audit was completed in
accordance with this part and provides information about the auditee,
its Federal programs, and the results of the audit. The data must
include information available from the audit required by this part that
is necessary for Federal agencies to use the audit to ensure integrity
for Federal programs. The data elements and format must be approved by
OMB, available from the FAC, and include collections of information
from the reporting package described in paragraph (c) of this section.
A senior level representative of the auditee (e.g., state controller,
director of finance, chief executive officer, or chief financial
officer) must sign a statement to be included as part of the data
collection that says that the auditee complied with the requirements of
this part, the data were prepared in accordance with this part (and the
instructions accompanying the form), the reporting package does not
include protected personally identifiable information, the information
included in its entirety is accurate and complete, and that the FAC is
authorized to make the reporting package and the form publicly
available on a website.
* * * * *
(c) * * *
(1) Financial statements and schedule of expenditures of Federal
awards discussed in Sec. 200.510(a) and (b), respectively;
(2) Summary schedule of prior audit findings discussed in Sec.
200.511(b);
(3) Auditor's report(s) discussed in Sec. 200.515; and
(4) Corrective action plan discussed in Sec. 200.511(c).
* * * * *
(g) FAC responsibilities. The FAC must make available the reporting
packages received in accordance with paragraph (c) of this section and
Sec. 200.507(c) to the public, except for Indian tribes exercising the
option in (b)(2) of this section, and maintain a data base of completed
audits, provide appropriate information to Federal agencies, and follow
up with known auditees that have not submitted the required data
collection forms and reporting packages.
* * * * *
0
110. Amend Sec. 200.513 by revising paragraphs (a)(1) and (2),
(a)(3)(ii) and (vii), (b) introductory text, (c) introductory text, and
(c)(3)(i) and (iii) to read as follows:
Sec. 200.513 Responsibilities.
(a)(1) Cognizant agency for audit responsibilities. A non-Federal
entity expending more than $50 million a year in Federal awards must
have a cognizant agency for audit. The designated cognizant agency for
audit must be the Federal awarding agency that provides the predominant
amount of funding directly (direct funding) (as listed on the Schedule
of expenditures of Federal awards, see Sec. 200.510(b)) to a non-
Federal entity unless OMB designates a specific cognizant agency for
audit. When the direct funding represents less than 25 percent of the
total expenditures (as direct and subawards) by the non-Federal entity,
then the Federal agency with the predominant amount of total funding is
the designated cognizant agency for audit.
(2) To provide for continuity of cognizance, the determination of
the predominant amount of direct funding must be based upon direct
Federal awards expended in the non-Federal entity's fiscal years ending
in 2019, and every fifth year thereafter.
(3) * * *
(ii) Obtain or conduct quality control reviews on selected audits
made by non-Federal auditors, and provide the results to other
interested organizations. Cooperate and provide support to the Federal
agency designated by OMB to lead a governmentwide project to determine
the quality of single audits by providing a reliable estimate of the
extent that single audits conform to applicable requirements,
standards, and procedures; and to make recommendations to address noted
audit quality issues, including recommendations for any changes to
applicable requirements, standards and procedures indicated by the
results of the project. The governmentwide project can rely on the
current and on-going quality control review work performed by the
agencies, State auditors, and professional audit associations. This
governmentwide audit quality project must be performed once every 6
years (or at such other interval as determined by OMB), and the results
must be public.
* * * * *
(vii) Coordinate a management decision for cross-cutting audit
findings (see in Sec. 200.1 of this part) that affect the Federal
programs of more than one agency when requested by any Federal awarding
agency whose awards are included in the audit finding of the auditee.
* * * * *
(b) Oversight agency for audit responsibilities. An auditee who
does not have a designated cognizant agency for audit will be under the
general oversight of the Federal agency determined in accordance with
Sec. 200.1 oversight agency for audit. A Federal agency with oversight
for an auditee may reassign oversight to another Federal agency that
agrees to be the oversight agency for audit. Within 30 calendar days
after any reassignment, both the old and the new oversight agency for
audit must provide notice of the change to the FAC, the auditee, and,
if known, the auditor. The oversight agency for audit:
* * * * *
(c) Federal awarding agency responsibilities. The Federal awarding
agency must perform the following for the Federal awards it makes (See
also the requirements of Sec. 200.211):
[[Page 49574]]
(3) * * *
(i) Issue a management decision as prescribed in Sec. 200.521;
* * * * *
(iii) Use cooperative audit resolution mechanisms (see the
definition of cooperative audit resolution in Sec. 200.1 of this part)
to improve Federal program outcomes through better audit resolution,
follow-up, and corrective action; and
* * * * *
0
111. Amend Sec. 200.514 by revising paragraphs (d)(4), (e), and (f) to
read as follows:
Sec. 200.514 Scope of audit.
* * * * *
(d) * * *
(4) When internal control over some or all of the compliance
requirements for a major program are likely to be ineffective in
preventing or detecting noncompliance, the planning and performing of
testing described in paragraph (c)(3) of this section are not required
for those compliance requirements. However, the auditor must report a
significant deficiency or material weakness in accordance with Sec.
200.516, assess the related control risk at the
(e) Audit follow-up. The auditor must follow-up on prior audit
findings, perform procedures to assess the reasonableness of the
summary schedule of prior audit findings prepared by the auditee in
accordance with Sec. 200.511(b), and report, as a current year audit
finding, when the auditor concludes that the summary schedule of prior
audit findings materially misrepresents the status of any prior audit
finding. The auditor must perform audit follow-up procedures regardless
of whether a prior audit finding relates to a major program in the
current year.
(f) Data collection form. As required in Sec. 200.512(b)(3), the
auditor must complete and sign specified sections of the data
collection form.
0
112. Amend Sec. 200.515 by revising paragraphs (a), (d)(1)(vi) through
(ix), (d)(3), and (e) to read as follows:
Sec. 200.515 Audit reporting.
* * * * *
(a) Financial statements. The auditor must determine and provide an
opinion (or disclaimer of opinion) whether the financial statements of
the auditee are presented fairly in all materials respects in
accordance with generally accepted accounting principles (or a special
purpose framework such as cash, modified cash, or regulatory as
required by state law). The auditor must also decide whether the
schedule of expenditures of Federal awards is stated fairly in all
material respects in relation to the auditee's financial statements as
a whole.
* * * * *
(d) * * *
(1) * * *
(vi) A statement as to whether the audit disclosed any audit
findings that the auditor is required to report under Sec. 200.516(a);
(vii) An identification of major programs by listing each
individual major program; however, in the case of a cluster of
programs, only the cluster name as shown on the Schedule of
Expenditures of Federal Awards is required;
(viii) The dollar threshold used to distinguish between Type A and
Type B programs, as described in Sec. 200.518(b)(1) or (3) when a
recalculation of the Type A threshold is required for large loan or
loan guarantees; and
(ix) A statement as to whether the auditee qualified as a low-risk
auditee under Sec. 200.520.
* * * * *
(3) Findings and questioned costs for Federal awards which must
include audit findings as defined in Sec. 200.516(a).
* * * * *
(e) Nothing in this part precludes combining of the audit reporting
required by this section with the reporting required by Sec.
200.512(b) when allowed by GAGAS and appendix X to this part.
0
113. Amend Sec. 200.516 by revising paragraphs (a)(1) and (7), (b)(1)
and (6), and (c) to read as follows:
Sec. 200.516 Audit findings.
(a) * * *
(1) Significant deficiencies and material weaknesses in internal
control over major programs and significant instances of abuse relating
to major programs. The auditor's determination of whether a deficiency
in internal control is a significant deficiency or a material weakness
for the purpose of reporting an audit finding is in relation to a type
of compliance requirement for a major program identified in the
Compliance Supplement.
* * * * *
(7) Instances where the results of audit follow-up procedures
disclosed that the summary schedule of prior audit findings prepared by
the auditee in accordance with Sec. 200.511(b) materially
misrepresents the status of any prior audit finding.
(b) * * *
(1) Federal program and specific Federal award identification
including the Assistance Listings title and number, Federal award
identification number and year, name of Federal agency, and name of the
applicable pass-through entity. When information, such as the
Assistance Listings title and number or Federal award identification
number, is not available, the auditor must provide the best information
available to describe the Federal award.
* * * * *
(6) Identification of questioned costs and how they were computed.
Known questioned costs must be identified by applicable Assistance
Listings number(s) and applicable Federal award identification
number(s).
* * * * *
(c) Reference numbers. Each audit finding in the schedule of
findings and questioned costs must include a reference number in the
format meeting the requirements of the data collection form submission
required by Sec. 200.512(b) to allow for easy referencing of the audit
findings during follow-up.
0
114. Amend Sec. 200.518 by revising paragraphs (b)(3) and (4), (c)(1)
introductory text, (c)(1)(i) and (ii), (d)(1), and (f) to read as
follows:
Sec. 200.518 Major program determination.
* * * * *
(b) * * *
(3) The inclusion of large loan and loan guarantees (loans) must
not result in the exclusion of other programs as Type A programs. When
a Federal program providing loans exceeds four times the largest non-
loan program it is considered a large loan program, and the auditor
must consider this Federal program as a Type A program and exclude its
values in determining other Type A programs. This recalculation of the
Type A program is performed after removing the total of all large loan
programs. For the purposes of this paragraph a program is only
considered to be a Federal program providing loans if the value of
Federal awards expended for loans within the program comprises fifty
percent or more of the total Federal awards expended for the program. A
cluster of programs is treated as one program and the value of Federal
awards expended under a loan program is determined as described in
Sec. 200.502.
(4) For biennial audits permitted under Sec. 200.504, the
determination of Type A and Type B programs must be based upon the
Federal awards expended during the two-year period.
(c) * * *
(1) The auditor must identify Type A programs which are low-risk.
In making
[[Page 49575]]
this determination, the auditor must consider whether the requirements
in Sec. 200.519(c), the results of audit follow-up, or any changes in
personnel or systems affecting the program indicate significantly
increased risk and preclude the program from being low risk. For a Type
A program to be considered low-risk, it must have been audited as a
major program in at least one of the two most recent audit periods (in
the most recent audit period in the case of a biennial audit), and, in
the most recent audit period, the program must have not had:
(i) Internal control deficiencies which were identified as material
weaknesses in the auditor's report on internal control for major
programs as required under Sec. 200.515(c);
(ii) A modified opinion on the program in the auditor's report on
major programs as required under Sec. 200.515(c); or
* * * * *
(d) * * *
(1) The auditor must identify Type B programs which are high-risk
using professional judgment and the criteria in Sec. 200.519. However,
the auditor is not required to identify more high-risk Type B programs
than at least one fourth the number of low-risk Type A programs
identified as low-risk under Step 2 (paragraph (c) of this section).
Except for known material weakness in internal control or compliance
problems as discussed in Sec. 200.519(b)(1) and (2) and (c)(1), a
single criterion in risk would seldom cause a Type B program to be
considered high-risk. When identifying which Type B programs to risk
assess, the auditor is encouraged to use an approach which provides an
opportunity for different high-risk Type B programs to be audited as
major over a period of time.
* * * * *
(f) Percentage of coverage rule. If the auditee meets the criteria
in Sec. 200.520, the auditor need only audit the major programs
identified in Step 4 (paragraphs (e)(1) and (2) of this section) and
such additional Federal programs with Federal awards expended that, in
aggregate, all major programs encompass at least 20 percent (0.20) of
total Federal awards expended. Otherwise, the auditor must audit the
major programs identified in Step 4 (paragraphs (e)(1) and (2) of this
section) and such additional Federal programs with Federal awards
expended that, in aggregate, all major programs encompass at least 40
percent (0.40) of total Federal awards expended.
* * * * *
0
115. Amend Sec. 200.519 by revising paragraph (d)(1) to read as
follows:
Sec. 200.519 Criteria for Federal program risk.
* * * * *
(d) * * *
(1) The nature of a Federal program may indicate risk.
Consideration should be given to the complexity of the program and the
extent to which the Federal program contracts for goods and services.
For example, Federal programs that disburse funds through third-party
contracts or have eligibility criteria may be of higher risk. Federal
programs primarily involving staff payroll costs may have high risk for
noncompliance with requirements of Sec. 200.430, but otherwise be at
low risk.
* * * * *
0
116. Amend Sec. 200.520 by revising the introductory text and
paragraphs (a) and (e)(1) and (2) to read as follows:
Sec. 200.520 Criteria for a low-risk auditee.
An auditee that meets all of the following conditions for each of
the preceding two audit periods must qualify as a low-risk auditee and
be eligible for reduced audit coverage in accordance with Sec.
200.518.
(a) Single audits were performed on an annual basis in accordance
with the provisions of this Subpart, including submitting the data
collection form and the reporting package to the FAC within the
timeframe specified in Sec. 200.512. A non-Federal entity that has
biennial audits does not qualify as a low-risk auditee.
* * * * *
(e) * * *
(1) Internal control deficiencies that were identified as material
weaknesses in the auditor's report on internal control for major
programs as required under Sec. 200.515(c);
(2) A modified opinion on a major program in the auditor's report
on major programs as required under Sec. 200.515(c); or
* * * * *
0
117. Amend Sec. 200.521 by revising paragraph (b), (c), and (e) to
read as follows:
Sec. 200.521 Management decision.
* * * * *
(b) Federal agency. As provided in Sec. 200.513(a)(3)(vii), the
cognizant agency for audit must be responsible for coordinating a
management decision for audit findings that affect the programs of more
than one Federal agency. As provided in Sec. 200.513(c)(3)(i), a
Federal awarding agency is responsible for issuing a management
decision for findings that relate to Federal awards it makes to non-
Federal entities.
(c) Pass-through entity. As provided in Sec. 200.332(d), the pass-
through entity must be responsible for issuing a management decision
for audit findings that relate to Federal awards it makes to
subrecipients.
* * * * *
(e) Reference numbers. Management decisions must include the
reference numbers the auditor assigned to each audit finding in
accordance with Sec. 200.516(c).
0
118. Amend appendix I to part 200 by revising sections A, B, C
paragraph 2, D paragraphs 3 through 5, E paragraph 3 introductory text,
E paragraph 3.iii, and F paragraphs 1 and 3 to read as follows:
Appendix I to Part 200--Full Text of Notice of Funding Opportunity
* * * * *
A. Program Description--Required
This section contains the full program description of the funding
opportunity. It may be as long as needed to adequately communicate to
potential applicants the areas in which funding may be provided. It
describes the Federal awarding agency's funding priorities or the
technical or focus areas in which the Federal awarding agency intends
to provide assistance. As appropriate, it may include any program
history (e.g., whether this is a new program or a new or changed area
of program emphasis). This section must include program goals and
objectives, a reference to the relevant Assistance Listings, a
description of how the award will contribute to the achievement of the
program's goals and objectives, and the expected performance goals,
indicators, targets, baseline data, data collection, and other outcomes
such Federal awarding agency expects to achieve, and may include
examples of successful projects that have been funded previously. This
section also may include other information the Federal awarding agency
deems necessary, and must at a minimum include citations for
authorizing statutes and regulations for the funding opportunity.
B. Federal Award Information--Required
This section provides sufficient information to help an applicant
make an informed decision about whether to submit a proposal. Relevant
information could include the total amount of funding that the Federal
awarding agency expects to award through the announcement; the expected
performance indicators, targets, baseline data, and data collection;
the anticipated number of Federal awards;
[[Page 49576]]
the expected amounts of individual Federal awards (which may be a
range); the amount of funding per Federal award, on average,
experienced in previous years; and the anticipated start dates and
periods of performance for new Federal awards. This section also should
address whether applications for renewal or supplementation of existing
projects are eligible to compete with applications for new Federal
awards.
This section also must indicate the type(s) of assistance
instrument (e.g., grant, cooperative agreement) that may be awarded if
applications are successful. If cooperative agreements may be awarded,
this section either should describe the ``substantial involvement''
that the Federal awarding agency expects to have or should reference
where the potential applicant can find that information (e.g., in the
funding opportunity description in Section A. or Federal award
administration information in Section D. If procurement contracts also
may be awarded, this must be stated.
C. Eligibility Information
* * * * *
2. Cost Sharing or Matching--Required. Announcements must state
whether there is required cost sharing, matching, or cost participation
without which an application would be ineligible (if cost sharing is
not required, the announcement must explicitly say so). Required cost
sharing may be a certain percentage or amount, or may be in the form of
contributions of specified items or activities (e.g., provision of
equipment). It is important that the announcement be clear about any
restrictions on the types of cost (e.g., in-kind contributions) that
are acceptable as cost sharing. Cost sharing as an eligibility
criterion includes requirements based in statute or regulation, as
described in Sec. 200.306 of this Part. This section should refer to
the appropriate portion(s) of section D. stating any pre-award
requirements for submission of letters or other documentation to verify
commitments to meet cost-sharing requirements if a Federal award is
made.
* * * * *
D. Application and Submission Information
* * * * *
3. Unique entity identifier and System for Award Management (SAM)--
Required. This paragraph must state clearly that each applicant (unless
the applicant is an individual or Federal awarding agency that is
excepted from those requirements under 2 CFR 25.110(b) or (c), or has
an exception approved by the Federal awarding agency under 2 CFR
25.110(d)) is required to: (i) Be registered in SAM before submitting
its application; (ii) Provide a valid unique entity identifier in its
application; and (iii) Continue to maintain an active SAM registration
with current information at all times during which it has an active
Federal award or an application or plan under consideration by a
Federal awarding agency. It also must state that the Federal awarding
agency may not make a Federal award to an applicant until the applicant
has complied with all applicable unique entity identifier and SAM
requirements and, if an applicant has not fully complied with the
requirements by the time the Federal awarding agency is ready to make a
Federal award, the Federal awarding agency may determine that the
applicant is not qualified to receive a Federal award and use that
determination as a basis for making a Federal award to another
applicant.
4. Submission Dates and Times--Required. Announcements must
identify due dates and times for all submissions. This includes not
only the full applications but also any preliminary submissions (e.g.,
letters of intent, white papers, or pre-applications). It also includes
any other submissions of information before Federal award that are
separate from the full application. If the funding opportunity is a
general announcement that is open for a period of time with no specific
due dates for applications, this section should say so. Note that the
information on dates that is included in this section also must appear
with other overview information in a location preceding the full text
of the announcement (see Sec. 200.204 of this part).
5. Intergovernmental Review--Required, if applicable. If the
funding opportunity is subject to Executive Order 12372,
``Intergovernmental Review of Federal Programs,'' the notice must say
so and applicants must contact their state's Single Point of Contact
(SPOC) to find out about and comply with the state's process under
Executive Order 12372, it may be useful to inform potential applicants
that the names and addresses of the SPOCs are listed in the Office of
Management and Budget's website.
* * * * *
E. Application Review Information
* * * * *
3. For any Federal award under a notice of funding opportunity, if
the Federal awarding agency anticipates that the total Federal share
will be greater than the simplified acquisition threshold on any
Federal award under a notice of funding opportunity may include, over
the period of performance, this section must also inform applicants:
* * * * *
iii. That the Federal awarding agency will consider any comments by
the applicant, in addition to the other information in the designated
integrity and performance system, in making a judgment about the
applicant's integrity, business ethics, and record of performance under
Federal awards when completing the review of risk posed by applicants
as described in Sec. 200.206.
* * * * *
F. Federal Award Administration Information
1. Federal Award Notices--Required. This section must address what
a successful applicant can expect to receive following selection. If
the Federal awarding agency's practice is to provide a separate notice
stating that an application has been selected before it actually makes
the Federal award, this section would be the place to indicate that the
letter is not an authorization to begin performance (to the extent that
it allows charging to Federal awards of pre-award costs at the non-
Federal entity's own risk). This section should indicate that the
notice of Federal award signed by the grants officer (or equivalent) is
the authorizing document, and whether it is provided through postal
mail or by electronic means and to whom. It also may address the
timing, form, and content of notifications to unsuccessful applicants.
See also Sec. 200.211.
* * * * *
3. Reporting--Required. This section must include general
information about the type (e.g., financial or performance), frequency,
and means of submission (paper or electronic) of post-Federal award
reporting requirements. Highlight any special reporting requirements
for Federal awards under this funding opportunity that differ (e.g., by
report type, frequency, form/format, or circumstances for use) from
what the Federal awarding agency's Federal awards usually require.
Federal awarding agencies must also describe in this section all
relevant requirements such as those at 2 CFR 180.335 and 180.350.
If the Federal share of any Federal award may include more than
$500,000 over the period of performance, this section must inform
potential applicants about the post award reporting
[[Page 49577]]
requirements reflected in appendix XII to this part.
* * * * *
0
119. Amend appendix II to part 200 by revising paragraphs (A) and (J)
and adding paragraphs (K) and (L) to read as follows:
Appendix II to Part 200--Contract Provisions for Non-Federal Entity
Contracts Under Federal Awards
* * * * *
(A) Contracts for more than the simplified acquisition threshold,
which is the inflation adjusted amount determined by the Civilian
Agency Acquisition Council and the Defense Acquisition Regulations
Council (Councils) as authorized by 41 U.S.C. 1908, must address
administrative, contractual, or legal remedies in instances where
contractors violate or breach contract terms, and provide for such
sanctions and penalties as appropriate.
* * * * *
(J) See Sec. 200.323.
(K) See Sec. 200.216.
(L) See Sec. 200.322.
0
120. Amend appendix III to part 200:
0
a. Under section A by revising the introductory text and paragraphs 1.d
introductory text, 2.b, 2.d(4) introductory text, 2.d.(4)(b), 2.d.(5),
and 2.e.(1); and
0
b. Under section B by revising paragraphs 1, 2.a and b introductory
text, 3, 4.c.(2)(ii)B, 5.a, 6.a.(2)(a), 6.b.(1), 8.a., and 9.a;
0
c. Under section C by revising paragraphs 1.a.(1) and (3), 2., 7, 8.a.,
9.a., 11.a. introductory text, 11.a.(1), 11.a.(2)b;
0
d. By revising section E;
0
e. Under section F by revising paragraph 2.c.
The revisions read as follows:
Appendix III to Part 200--Indirect (F&A) Costs Identification and
Assignment, and Rate Determination for Institutions of Higher Education
(IHEs)
A. General
This appendix provides criteria for identifying and computing
indirect (or indirect (F&A)) rates at IHEs (institutions). Indirect
(F&A) costs are those that are incurred for common or joint objectives
and therefore cannot be identified readily and specifically with a
particular sponsored project, an instructional activity, or any other
institutional activity. See subsection B.1 for a discussion of the
components of indirect (F&A) costs.
1. Major Functions of an Institution
* * * * *
d. Other institutional activities means all activities of an
institution except for instruction, departmental research, organized
research, and other sponsored activities, as defined in this section;
indirect (F&A) cost activities identified in this Appendix paragraph B,
Identification and assignment of indirect (F&A) costs; and specialized
services facilities described in Sec. 200.468 of this part.
* * * * *
2. Criteria for Distribution
* * * * *
b. Need for cost groupings. The overall objective of the indirect
(F&A) cost allocation process is to distribute the indirect (F&A) costs
described in Section B, Identification and assignment of indirect (F&A)
costs, to the major functions of the institution in proportions
reasonably consistent with the nature and extent of their use of the
institution's resources. In order to achieve this objective, it may be
necessary to provide for selective distribution by establishing
separate groupings of cost within one or more of the indirect (F&A)
cost categories referred to in subsection B.1. In general, the cost
groupings established within a category should constitute, in each
case, a pool of those items of expense that are considered to be of
like nature in terms of their relative contribution to (or degree of
remoteness from) the particular cost objectives to which distribution
is appropriate. Cost groupings should be established considering the
general guides provided in subsection c of this section. Each such pool
or cost grouping should then be distributed individually to the related
cost objectives, using the distribution base or method most appropriate
in light of the guidelines set forth in subsection d of this section.
* * * * *
d. * * *
(4) If a cost analysis study is not performed, or if the study does
not result in an equitable distribution of the costs, the distribution
must be made in accordance with the appropriate base cited in Section
B, unless one of the following conditions is met:
* * * * *
(b) The institution qualifies for, and elects to use, the
simplified method for computing indirect (F&A) cost rates described in
Section D.
(5) Notwithstanding subsection (3), effective July 1, 1998, a cost
analysis or base other than that in Section B must not be used to
distribute utility or student services costs. Instead, subsection
B.4.c, may be used in the recovery of utility costs.
e. * * *
(1) Indirect (F&A) costs are the broad categories of costs
discussed in Section B.1.
* * * * *
B. Identification and Assignment of Indirect (F&A) Costs
1. Definition of Facilities and Administration
See Sec. 200.414 which provides the basis for these indirect cost
requirements.
2. Depreciation
a. The expenses under this heading are the portion of the costs of
the institution's buildings, capital improvements to land and
buildings, and equipment which are computed in accordance with Sec.
200.436.
b. In the absence of the alternatives provided for in Section
A.2.d, the expenses included in this category must be allocated in the
following manner:
3. Interest
Interest on debt associated with certain buildings, equipment and
capital improvements, as defined in Sec. 200.449, must be classified
as an expenditure under the category Facilities. These costs must be
allocated in the same manner as the depreciation on the buildings,
equipment and capital improvements to which the interest relates.
4. Operation and Maintenance Expenses
* * * * *
c. * * *
(2) * * *
(ii) * * *
B. In July 2012, values for these two indices (taken respectively
from the Lawrence Berkeley Laboratory ``Labs for the 21st Century''
benchmarking tool and the US Department of Energy ``Buildings Energy
Databook'' and were 310 kBtu/sq ft-yr. and 155 kBtu/sq ft-yr., so that
the adjustment ratio is 2.0 by this methodology. To retain currency,
OMB will adjust the EUI numbers from time to time (no more often than
annually nor less often than every 5 years), using reliable and
publicly disclosed data. Current values of both the EUIs and the REUI
will be posted on the OMB website.
5. General Administration and General Expenses
a. The expenses under this heading are those that have been
incurred for the general executive and administrative
[[Page 49578]]
offices of educational institutions and other expenses of a general
character which do not relate solely to any major function of the
institution; i.e., solely to (1) instruction, (2) organized research,
(3) other sponsored activities, or (4) other institutional activities.
The general administration and general expense category should also
include its allocable share of fringe benefit costs, operation and
maintenance expense, depreciation, and interest costs. Examples of
general administration and general expenses include: Those expenses
incurred by administrative offices that serve the entire university
system of which the institution is a part; central offices of the
institution such as the President's or Chancellor's office, the offices
for institution-wide financial management, business services, budget
and planning, personnel management, and safety and risk management; the
office of the General Counsel; and the operations of the central
administrative management information systems. General administration
and general expenses must not include expenses incurred within non-
university-wide deans' offices, academic departments, organized
research units, or similar organizational units. (See subsection 6.)
* * * * *
6. Departmental Administration Expenses
a. * * *
(2) * * *
(a) Salaries and fringe benefits attributable to the administrative
work (including bid and proposal preparation) of faculty (including
department heads) and other professional personnel conducting research
and/or instruction, must be allowed at a rate of 3.6 percent of
modified total direct costs. This category does not include
professional business or professional administrative officers. This
allowance must be added to the computation of the indirect (F&A) cost
rate for major functions in Section C; the expenses covered by the
allowance must be excluded from the departmental administration cost
pool. No documentation is required to support this allowance.
* * * * *
b. The following guidelines apply to the determination of
departmental administrative costs as direct or indirect (F&A) costs.
(1) In developing the departmental administration cost pool,
special care should be exercised to ensure that costs incurred for the
same purpose in like circumstances are treated consistently as either
direct or indirect (F&A) costs. For example, salaries of technical
staff, laboratory supplies (e.g., chemicals), telephone toll charges,
animals, animal care costs, computer costs, travel costs, and
specialized shop costs must be treated as direct costs wherever
identifiable to a particular cost objective. Direct charging of these
costs may be accomplished through specific identification of individual
costs to benefitting cost objectives, or through recharge centers or
specialized service facilities, as appropriate under the circumstances.
See Sec. Sec. 200.413(c) and 200.468.
* * * * *
8. Library Expenses
a. The expenses under this heading are those that have been
incurred for the operation of the library, including the cost of books
and library materials purchased for the library, less any items of
library income that qualify as applicable credits under Sec. 200.406.
The library expense category should also include the fringe benefits
applicable to the salaries and wages included therein, an appropriate
share of general administration and general expense, operation and
maintenance expense, and depreciation. Costs incurred in the purchases
of rare books (museum-type books) with no value to Federal awards
should not be allocated to them.
* * * * *
9. Student Administration and Services
a. The expenses under this heading are those that have been
incurred for the administration of student affairs and for services to
students, including expenses of such activities as deans of students,
admissions, registrar, counseling and placement services, student
advisers, student health and infirmary services, catalogs, and
commencements and convocations. The salaries of members of the academic
staff whose responsibilities to the institution require administrative
work that benefits sponsored projects may also be included to the
extent that the portion charged to student administration is determined
in accordance with subpart E of this Part. This expense category also
includes the fringe benefit costs applicable to the salaries and wages
included therein, an appropriate share of general administration and
general expenses, operation and maintenance, interest expense, and
depreciation.
* * * * *
C. Determination and Application of Indirect (F&A) Cost Rate or Rates
1. Indirect (F&A) Cost Pools
a. (1) Subject to subsection b, the separate categories of indirect
(F&A) costs allocated to each major function of the institution as
prescribed in Section B, must be aggregated and treated as a common
pool for that function. The amount in each pool must be divided by the
distribution base described in subsection 2 to arrive at a single
indirect (F&A) cost rate for each function.
* * * * *
(3) Each institution's indirect (F&A) cost rate process must be
appropriately designed to ensure that Federal sponsors do not in any
way subsidize the indirect (F&A) costs of other sponsors, specifically
activities sponsored by industry and foreign governments. Accordingly,
each allocation method used to identify and allocate the indirect (F&A)
cost pools, as described in Sections A.2 and B.2 through B.9, must
contain the full amount of the institution's modified total costs or
other appropriate units of measurement used to make the computations.
In addition, the final rate distribution base (as defined in subsection
2) for each major function (organized research, instruction, etc., as
described in Section A.1 functions of an institution) must contain all
the programs or activities which utilize the indirect (F&A) costs
allocated to that major function. At the time an indirect (F&A) cost
proposal is submitted to a cognizant agency for indirect costs, each
institution must describe the process it uses to ensure that Federal
funds are not used to subsidize industry and foreign government funded
programs.
2. The Distribution Basis
Indirect (F&A) costs must be distributed to applicable Federal
awards and other benefitting activities within each major function (see
section A.1) on the basis of modified total direct costs (MTDC),
consisting of all salaries and wages, fringe benefits, materials and
supplies, services, travel, and up to the first $25,000 of each
subaward (regardless of the period covered by the subaward). MTDC is
defined in Sec. 200.1. For this purpose, an indirect (F&A) cost rate
should be determined for each of the separate indirect (F&A) cost pools
developed pursuant to subsection 1. The rate in each case should be
stated as the percentage which the amount of the particular indirect
(F&A) cost pool is of the modified total direct costs identified with
such pool.
* * * * *
[[Page 49579]]
7. Fixed Rates for the Life of the Sponsored Agreement
a. Except as provided in paragraph (c)(1) of Sec. 200.414, Federal
agencies must use the negotiated rates in effect at the time of the
initial award throughout the life of the Federal award. Award levels
for Federal awards may not be adjusted in future years as a result of
changes in negotiated rates. ``Negotiated rates'' per the rate
agreement include final, fixed, and predetermined rates and exclude
provisional rates. ``Life'' for the purpose of this subsection means
each competitive segment of a project. A competitive segment is a
period of years approved by the Federal awarding agency at the time of
the Federal award. If negotiated rate agreements do not extend through
the life of the Federal award at the time of the initial award, then
the negotiated rate for the last year of the Federal award must be
extended through the end of the life of the Federal award.
b. Except as provided in Sec. 200.414, when an educational
institution does not have a negotiated rate with the Federal Government
at the time of an award (because the educational institution is a new
recipient or the parties cannot reach agreement on a rate), the
provisional rate used at the time of the award must be adjusted once a
rate is negotiated and approved by the cognizant agency for indirect
costs.
8. Limitation on Reimbursement of Administrative Costs
a. Notwithstanding the provisions of subsection C.1.a, the
administrative costs charged to Federal awards awarded or amended
(including continuation and renewal awards) with effective dates
beginning on or after the start of the institution's first fiscal year
which begins on or after October 1, 1991, must be limited to 26% of
modified total direct costs (as defined in subsection 2) for the total
of General Administration and General Expenses, Departmental
Administration, Sponsored Projects Administration, and Student
Administration and Services (including their allocable share of
depreciation, interest costs, operation and maintenance expenses, and
fringe benefits costs, as provided by Section B, and all other types of
expenditures not listed specifically under one of the subcategories of
facilities in Section B.
* * * * *
9. Alternative Method for Administrative Costs
a. Notwithstanding the provisions of subsection C.1.a, an
institution may elect to claim a fixed allowance for the
``Administration'' portion of indirect (F&A) costs. The allowance could
be either 24% of modified total direct costs or a percentage equal to
95% of the most recently negotiated fixed or predetermined rate for the
cost pools included under ``Administration'' as defined in Section B.1,
whichever is less. Under this alternative, no cost proposal need be
prepared for the ``Administration'' portion of the indirect (F&A) cost
rate nor is further identification or documentation of these costs
required (see subsection c). Where a negotiated indirect (F&A) cost
agreement includes this alternative, an institution must make no
further charges for the expenditure categories described in Section
B.5, Section B.6, Section B.7, and Section B.9.
* * * * *
11. Negotiation and Approval of Indirect (F&A) Rate
a. Cognizant agency for indirect costs is defined in Subpart A.
(1) Cost negotiation cognizance is assigned to the Department of
Health and Human Services (HHS) or the Department of Defense's Office
of Naval Research (DOD), normally depending on which of the two
agencies (HHS or DOD) provides more funds directly to the educational
institution for the most recent three years. Information on funding
must be derived from relevant data gathered by the National Science
Foundation. In cases where neither HHS nor DOD provides Federal funding
directly to an educational institution, the cognizant agency for
indirect costs assignment must default to HHS. Notwithstanding the
method for cognizance determination described in this section, other
arrangements for cognizance of a particular educational institution may
also be based in part on the types of research performed at the
educational institution and must be decided based on mutual agreement
between HHS and DOD. Where a non-Federal entity only receives funds as
a subrecipient, see Sec. 200.332.
(2) * * *
b. Acceptance of rates. See Sec. 200.414.
* * * * *
E. Documentation Requirements
The standard format for documentation requirements for indirect
(indirect (F&A)) rate proposals for claiming costs under the regular
method is available on the OMB website.
F. Certification
* * * * *
2. * * *
c. Certificate. The certificate required by this section must be in
the following form:
Certificate of Indirect (F&A) Costs
This is to certify that to the best of my knowledge and belief:
(1) I have reviewed the indirect (F&A) cost proposal submitted
herewith;
(2) All costs included in this proposal [identify date] to
establish billing or final indirect (F&A) costs rate for [identify
period covered by rate] are allowable in accordance with the
requirements of the Federal agreement(s) to which they apply and with
the cost principles applicable to those agreements.
(3) This proposal does not include any costs which are unallowable
under subpart E of this part such as (without limitation): Public
relations costs, contributions and donations, entertainment costs,
fines and penalties, lobbying costs, and defense of fraud proceedings;
and
(4) All costs included in this proposal are properly allocable to
Federal agreements on the basis of a beneficial or causal relationship
between the expenses incurred and the agreements to which they are
allocated in accordance with applicable requirements.
I declare that the foregoing is true and correct.
Institution of Higher Education:
Signature:-------------------------------------------------------------
Name of Official:------------------------------------------------------
Title:-----------------------------------------------------------------
Date of Execution:-----------------------------------------------------
0
121. Amend appendix IV to part 200:
0
a. By revising section A;
0
b. Under section B by revising paragraphs 2.b through e, 3.b(1), (2),
and (4), 3.c.(4), 3.f and g, and 4.b and c;
0
c. Under section C by revising paragraphs 2.a through c; and
0
d. Under section D by revising (D)(1), and under the center heading
``Certificate of Indirect (F&A) Costs'', paragraphs (2) and (3).
The revisions read as follows:
Appendix IV to Part 200--Indirect (F&A) Costs Identification and
Assignment, and Rate Determination for Nonprofit Organizations
A. General
1. Indirect costs are those that have been incurred for common or
joint objectives and cannot be readily identified with a particular
final cost objective. Direct cost of minor amounts may be treated as
indirect costs under the conditions described in Sec. 200.413(d).
After direct costs have been determined and assigned directly
[[Page 49580]]
to awards or other work as appropriate, indirect costs are those
remaining to be allocated to benefitting cost objectives. A cost may
not be allocated to a Federal award as an indirect cost if any other
cost incurred for the same purpose, in like circumstances, has been
assigned to a Federal award as a direct cost.
2. ``Major nonprofit organizations'' are defined in paragraph (a)
of Sec. 200.414. See indirect cost rate reporting requirements in
sections B.2.e and B.3.g of this Appendix.
B. Allocation of Indirect Costs and Determination of Indirect Cost
Rates
* * * * *
2. Simplified Allocation Method
* * * * *
b. Both the direct costs and the indirect costs must exclude
capital expenditures and unallowable costs. However, unallowable costs
which represent activities must be included in the direct costs under
the conditions described in Sec. 200.413(e).
c. The distribution base may be total direct costs (excluding
capital expenditures and other distorting items, such as subawards for
$25,000 or more), direct salaries and wages, or other base which
results in an equitable distribution. The distribution base must
exclude participant support costs as defined in Sec. 200.1.
d. Except where a special rate(s) is required in accordance with
section B.5 of this Appendix, the indirect cost rate developed under
the above principles is applicable to all Federal awards of the
organization. If a special rate(s) is required, appropriate
modifications must be made in order to develop the special rate(s).
e. For an organization that receives more than $10 million in
direct Federal funding in a fiscal year, a breakout of the indirect
cost component into two broad categories, Facilities and Administration
as defined in paragraph (a) of Sec. 200.414, is required. The rate in
each case must be stated as the percentage which the amount of the
particular indirect cost category (i.e., Facilities or Administration)
is of the distribution base identified with that category.
3. Multiple Allocation Base Method
* * * * *
(b) * * *
(1) Depreciation. The expenses under this heading are the portion
of the costs of the organization's buildings, capital improvements to
land and buildings, and equipment which are computed in accordance with
Sec. 200.436.
(2) Interest. Interest on debt associated with certain buildings,
equipment and capital improvements are computed in accordance with
Sec. 200.449.
* * * * *
(4) General administration and general expenses. The expenses under
this heading are those that have been incurred for the overall general
executive and administrative offices of the organization and other
expenses of a general nature which do not relate solely to any major
function of the organization. This category must also include its
allocable share of fringe benefit costs, operation and maintenance
expense, depreciation, and interest costs. Examples of this category
include central offices, such as the director's office, the office of
finance, business services, budget and planning, personnel, safety and
risk management, general counsel, management information systems, and
library costs.
In developing this cost pool, special care should be exercised to
ensure that costs incurred for the same purpose in like circumstances
are treated consistently as either direct or indirect costs. For
example, salaries of technical staff, project supplies, project
publication, telephone toll charges, computer costs, travel costs, and
specialized services costs must be treated as direct costs wherever
identifiable to a particular program. The salaries and wages of
administrative and pooled clerical staff should normally be treated as
indirect costs. Direct charging of these costs may be appropriate as
described in Sec. 200.413. Items such as office supplies, postage,
local telephone costs, periodicals and memberships should normally be
treated as indirect costs.
(c) * * *
(4) General administration and general expenses. General
administration and general expenses must be allocated to benefitting
functions based on modified total costs (MTC). The MTC is the modified
total direct costs (MTDC), as described in Sec. 200.1, plus the
allocated indirect cost proportion. The expenses included in this
category could be grouped first according to major functions of the
organization to which they render services or provide benefits. The
aggregate expenses of each group must then be allocated to benefitting
functions based on MTC.
* * * * *
f. Distribution basis. Indirect costs must be distributed to
applicable Federal awards and other benefitting activities within each
major function on the basis of MTDC (see definition in Sec. 200.1).
g. Individual Rate Components. An indirect cost rate must be
determined for each separate indirect cost pool developed. The rate in
each case must be stated as the percentage which the amount of the
particular indirect cost pool is of the distribution base identified
with that pool. Each indirect cost rate negotiation or determination
agreement must include development of the rate for each indirect cost
pool as well as the overall indirect cost rate. The indirect cost pools
must be classified within two broad categories: ``Facilities'' and
``Administration,'' as described in Sec. 200.414(a).
4. Direct Allocation Method
* * * * *
b. This method is acceptable, provided each joint cost is prorated
using a base which accurately measures the benefits provided to each
Federal award or other activity. The bases must be established in
accordance with reasonable criteria and be supported by current data.
This method is compatible with the Standards of Accounting and
Financial Reporting for Voluntary Health and Welfare Organizations
issued jointly by the National Health Council, Inc., the National
Assembly of Voluntary Health and Social Welfare Organizations, and the
United Way of America.
c. Under this method, indirect costs consist exclusively of general
administration and general expenses. In all other respects, the
organization's indirect cost rates must be computed in the same manner
as that described in section B.2 of this Appendix.
* * * * *
C. Negotiation and Approval of Indirect Cost Rates
* * * * *
2. Negotiation and Approval of Rates
a. Unless different arrangements are agreed to by the Federal
agencies concerned, the Federal agency with the largest dollar value of
Federal awards directly funded to an organization will be designated as
the cognizant agency for indirect costs for the negotiation and
approval of the indirect cost rates and, where necessary, other rates
such as fringe benefit and computer charge-out rates. Once an agency is
assigned cognizance for a particular nonprofit organization, the
assignment will not be changed unless there is a shift in the dollar
volume of the Federal awards directly funded to the organization for at
least three years. All concerned Federal agencies must be given the
opportunity
[[Page 49581]]
to participate in the negotiation process but, after a rate has been
agreed upon, it will be accepted by all Federal agencies. When a
Federal agency has reason to believe that special operating factors
affecting its Federal awards necessitate special indirect cost rates in
accordance with section B.5 of this Appendix, it will, prior to the
time the rates are negotiated, notify the cognizant agency for indirect
costs. (See also Sec. 200.414.) If the nonprofit does not receive any
funding from any Federal agency, the pass-through entity is responsible
for the negotiation of the indirect cost rates in accordance with Sec.
200.332(a)(4).
b. Except as otherwise provided in Sec. 200.414(f), a nonprofit
organization which has not previously established an indirect cost rate
with a Federal agency must submit its initial indirect cost proposal
immediately after the organization is advised that a Federal award will
be made and, in no event, later than three months after the effective
date of the Federal award.
c. Unless approved by the cognizant agency for indirect costs in
accordance with Sec. 200.414(g), organizations that have previously
established indirect cost rates must submit a new indirect cost
proposal to the cognizant agency for indirect costs within six months
after the close of each fiscal year.
* * * * *
D. Certification of Indirect (F&A) Costs
(1) Required Certification. No proposal to establish indirect (F&A)
cost rates must be acceptable unless such costs have been certified by
the nonprofit organization using the Certificate of Indirect (F&A)
Costs set forth in section j. of this appendix. The certificate must be
signed on behalf of the organization by an individual at a level no
lower than vice president or chief financial officer for the
organization.
* * * * *
Certificate of Indirect (F&A) Costs
* * * * *
(2) All costs included in this proposal [identify date] to
establish billing or final indirect (F&A) costs rate for [identify
period covered by rate] are allowable in accordance with the
requirements of the Federal awards to which they apply and with subpart
E of this part.
(3) This proposal does not include any costs which are unallowable
under subpart E of this part such as (without limitation): Public
relations costs, contributions and donations, entertainment costs,
fines and penalties, lobbying costs, and defense of fraud proceedings;
and
* * * * *
0
122. Amend appendix V to part 200 by revising:
0
a. Section A, paragraph 2;
0
b. Section B, paragraph 4;
0
c. Section C
0
d. Section E, paragraph 3.b.(1); and
0
e. Section G, paragraph 5.
The revisions read as follows:
Appendix V to Part 200--State/Local Governmentwide Central Service Cost
Allocation Plans
A. General
* * * * *
2. Guidelines and illustrations of central service cost allocation
plans are provided in a brochure published by the Department of Health
and Human Services entitled ``A Guide for State, Local and Indian
Tribal Governments: Cost Principles and Procedures for Developing Cost
Allocation Plans and Indirect Cost Rates for Agreements with the
Federal Government.'' A copy of this brochure may be obtained from the
HHS Cost Allocation Services or at their website.
B. Definitions
* * * * *
4. Cognizant agency for indirect costs is defined in Sec. 200.1.
The determination of cognizant agency for indirect costs for states and
local governments is described in section F.1.
* * * * *
C. Scope of the Central Service Cost Allocation Plans
The central service cost allocation plan will include all central
service costs that will be claimed (either as a billed or an allocated
cost) under Federal awards and will be documented as described in
section E. omitted from the plan will not be reimbursed.
E. Documentation Requirements for Submitted Plans
* * * * *
3. Billed Services
* * * * *
b. * * *
(1) For each internal service fund or similar activity with an
operating budget of $5 million or more, the plan must include: A brief
description of each service; a balance sheet for each fund based on
individual accounts contained in the governmental unit's accounting
system; a revenue/expenses statement, with revenues broken out by
source, e.g., regular billings, interest earned, etc.; a listing of all
non-operating transfers (as defined by GAAP) into and out of the fund;
a description of the procedures (methodology) used to charge the costs
of each service to users, including how billing rates are determined; a
schedule of current rates; and, a schedule comparing total revenues
(including imputed revenues) generated by the service to the allowable
costs of the service, as determined under this part, with an
explanation of how variances will be handled.
* * * * *
G. Other Polices
* * * * *
5. Records Retention
All central service cost allocation plans and related documentation
used as a basis for claiming costs under Federal awards must be
retained for audit in accordance with the records retention
requirements contained in subpart D of this part.
* * * * *
0
123. Amend appendix VI to part 200 by revising paragraph 2 in section D
to read as follows:
Appendix VI to Part 200--Public Assistance Cost Allocation Plans
* * * * *
D. Submission, Documentation, and Approval of Public Assistance Cost
Allocation Plans
* * * * *
2. Under the coordination process outlined in section E, affected
Federal agencies will review all new plans and plan amendments and
provide comments, as appropriate, to HHS. The effective date of the
plan or plan amendment will be the first day of the calendar quarter
following the event that required the amendment, unless another date is
specifically approved by HHS. HHS, as the cognizant agency for indirect
costs acting on behalf of all affected Federal agencies, will, as
necessary, conduct negotiations with the state public assistance agency
and will inform the state agency of the action taken on the plan or
plan amendment.
* * * * *
0
124. Amend appendix VII to part 200 by revising:
0
a. Section A, paragraphs 2, 3, 4, and 5;
0
b. Section B, paragraph 3;
0
c. Section D, paragraph 1a.; and
0
d. Section E, paragraph 4.
The revisions read as follows:
[[Page 49582]]
Appendix VII to Part 200--States and Local Government and Indian Tribe
Indirect Cost Proposals
A. General
* * * * *
2. Indirect costs include (a) the indirect costs originating in
each department or agency of the governmental unit carrying out Federal
awards and (b) the costs of central governmental services distributed
through the central service cost allocation plan (as described in
Appendix V to this part) and not otherwise treated as direct costs.
3. Indirect costs are normally charged to Federal awards by the use
of an indirect cost rate. A separate indirect cost rate(s) is usually
necessary for each department or agency of the governmental unit
claiming indirect costs under Federal awards. Guidelines and
illustrations of indirect cost proposals are provided in a brochure
published by the Department of Health and Human Services entitled ``A
Guide for States and Local Government Agencies: Cost Principles and
Procedures for Establishing Cost Allocation Plans and Indirect Cost
Rates for Grants and Contracts with the Federal Government.'' A copy of
this brochure may be obtained from HHS Cost Allocation Services or at
their website.
4. Because of the diverse characteristics and accounting practices
of governmental units, the types of costs which may be classified as
indirect costs cannot be specified in all situations. However, typical
examples of indirect costs may include certain state/local-wide central
service costs, general administration of the non-Federal entity
accounting and personnel services performed within the non-Federal
entity, depreciation on buildings and equipment, the costs of operating
and maintaining facilities.
5. This Appendix does not apply to state public assistance
agencies. These agencies should refer instead to Appendix VI to this
part.
B. Definitions
* * * * *
3. Cognizant agency for indirect costs means the Federal agency
responsible for reviewing and approving the governmental unit's
indirect cost rate(s) on the behalf of the Federal Government. The
cognizant agency for indirect costs assignment is described in Appendix
V, section F.
* * * * *
D. Submission and Documentation of Proposals
1. Submission of Indirect Cost Rate Proposals
a. All departments or agencies of the governmental unit desiring to
claim indirect costs under Federal awards must prepare an indirect cost
rate proposal and related documentation to support those costs. The
proposal and related documentation must be retained for audit in
accordance with the records retention requirements contained in Sec.
200.334.
* * * * *
E. Negotiation and Approval of Rates
* * * * *
4. Refunds must be made if proposals are later found to have
included costs that (a) are unallowable (i) as specified by law or
regulation, (ii) as identified in Sec. 200.420, or (iii) by the terms
and conditions of Federal awards, or (b) are unallowable because they
are clearly not allocable to Federal awards. These adjustments or
refunds will be made regardless of the type of rate negotiated
(predetermined, final, fixed, or provisional).
* * * * *
0
125. Amend appendix VIII to part 200 by revising the heading and
paragraphs 32 and 33 to read as follows:
Appendix VIII to Part 200--Nonprofit Organizations Exempted From
Subpart E of Part 200
* * * * *
32. Nonprofit insurance companies, such as Blue Cross and Blue
Shield Organizations
33. Other nonprofit organizations as negotiated with Federal
awarding agencies
0
126. Appendix XI to part 200 is revised to read as follows:
Appendix XI to Part 200--Compliance Supplement
The compliance supplement is available on the OMB website.
0
127. Amend appendix XII to part 200 by revising section A, paragraph
2.b to read as follows:
Appendix XII to Part 200--Award Term and Condition for Recipient
Integrity and Performance Matters
A. Reporting of Matters Related to Recipient Integrity and Performance
* * * * *
2. Proceedings About Which You Must Report
* * * * *
b. Reached its final disposition during the most recent five-year
period; and
* * * * *
[FR Doc. 2020-17468 Filed 8-11-20; 8:45 am]
BILLING CODE 3110-01-P
