OMB Pre-Releases Much-Anticipated Rewrite of the Uniform Guidance

Venable LLP

Venable LLP

On December 26, 2013, the Office of Management and Budget (OMB) issued the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (commonly referred to as the "Uniform Guidance"). The Uniform Guidance represented a sea change in the management, administration, and oversight of federal financial assistance, such as grants and cooperative agreements. Now, nearly ten years later, OMB is planning the release for comment a rewrite of the Uniform Guidance, which is the biggest change to this regulation since its inception. Thus far, OMB has only issued an unofficial pre-release of the rewrite, but when it's officially published in the Federal Register, interested parties will have 60 days to provide comments.

While we at Venable continue to review the many changes contained in this proposed rulemaking, we have already noted several important proposed changes:

  • Various thresholds have been increased to provide added flexibility. For example, equipment, which used to have a per-unit threshold value of $5,000 or more, has been increased to $10,000, which gives grant recipients fewer administrative obligations concerning these lesser-valued items
  • After much debate over the ten years, OMB is proposing to more closely align the mandatory disclosure rule of the Uniform Guidance (2 CFR 200.113) with the standard under the Federal Acquisition Regulation (FAR) (48 CFR 52.203-13). In particular, the proposed rule would require the disclosure of "credible evidence" of a "violation of Federal criminal law potentially affecting the Federal award … or a violation of the civil False Claims Act." Accordingly, per False Claims Act case law, credible evidence of a material noncompliance with any grant regulation or award term would arguably warrant a disclosure under this new rule
  • With respect to the Uniform Guidance's procurement standards, the propose rule:
    • Includes "veteran-owned business" in the types of businesses that recipients and subrecipients are encouraged to consider for procurement opportunities under a federal award
    • Adds a new subsection that incorporates Executive Order 14057, Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability, which encourages recipients, to the extent permitted by law, to purchase, acquire, or use products and services that can be reused, refurbished, or recycled; contain recycled content, are biobased, or are energy and water efficient; and are sustainable
    • Seeks comment on its proposal to delete the existing paragraph (b) in 2 CFR 200.324, requiring the recipient to negotiate profit as a separate element of the price for each contract in which there is no price competition
  • In Section 200.333, OMB proposes removing the current Simplified Acquisition Threshold limit for fixed amount subawards to provide agencies and recipients with increased flexibility in making programmatic and budgetary decisions, while still allowing recipients to establish their own award-specific thresholds with the prior written approval of the federal agency
  • With respect to the cost principles, OMB proposes:
    • Removing the prior written approval requirements for ten items. This includes no longer requiring prior written approval for such items as real property, equipment, direct costs, entertainment costs, exchange rates, memberships, participant support costs, selling and marketing costs, and taxes
    • Raising the de minimis indirect cost rate from 10 percent to 15 percent
  • Regarding the audit requirements, OMB proposes increasing the audit threshold from $750,000 to $1,000,000

Venable continues to review the proposed changes to the Uniform Guidance.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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