New Guidance for Federal Grantees/Subawardees
Authors: Katie Van Pelt, The Watershed Center
Since the U.S. Office of Management and Budget Uniform Guidance for Federal Awards has come out, many organizations are asking “what does that mean for me?” Below is a summary of some of the changes you need to know.
What is the OMB Uniform Guidance?
It is a compilation of previous circulars that contains overarching federal rules in 2 C.F.R. Part 200. It replaces the OMB Circulars A-110, A-122 and A-133. Basically, it is the rule book for managing federal funds.
When do the new guidelines apply?
The Uniform Guidance (UG) applies to grants and subawards, cooperative agreements and cost reimbursement contracts made after December 26, 2014, and to those amended with additional funds after that same date. Grants received prior to this date can still operate under the old guidelines. However, non-federal entities may elect to manage all federal awards, new and existing, in accordance with the UG as of December 26, 2014.
What are some of the key changes I need to know?
Procurement (200.317 – 200.326): The changes in the procurement guidelines will probably have the most impact on all of us. The new regulations are more restrictive. There is a grace period for implementation of the updated procurement standards, and for calendar year 2015 and fiscal years ending in 2016, you can choose either to adopt the UG or continue to follow the old regulations (OMB Circulars A89, A-102 and A-110).
Here is a simplified breakdown of the new procurement guidelines:
- Purchases/ contracts that are under $3,000: These purchases may be made without soliciting competitive quotes if the program manager considers the price to be reasonable.
- Purchases/ contracts between $3,000 and $150,000: You must gather quotes or proposals from at least three qualified sources and identify all evaluation factors and their relative importance. A copy of the quotes must be kept in the file. The contracts must be awarded to the source whose proposal is most advantageous to the program, with price and other factors considered.
- Sole source justification: Under the new rules, you can only use sole source justification if: (1) the item/service is available only from a single source, (2) the federal awarding agency where you received your funding expressly authorizes noncompetitive proposals in response to a written request from you or after solicitation of a number of sources, or (3) competition is determined inadequate or unavailable. You can no longer use sole source justification simply because you have worked with someone in the past or because they are a local business.
- Purchases over $150,000: If you enter into a contract or make a purchase that is over $150,000 you will need sealed bids, competitive proposals or sole source justification.
Internal controls (200.303): You are now required to have effective controls in place and written into your policy manuals that ensure the management of your federal funds and show that you are in compliance with regulations, terms and conditions of the award by identifying how your organization evaluates and monitors compliance. You must have in place a procedure to protect personal information and other sensitive information. For example, locking file cabinets and password protected software. Have an updated, documented internal control manual available for your auditors. Now is a good time to take a look at your organization’s policies and make adjustments.
Travel (200.474): Your travel costs must be consistent with your organization’s travel policy. If you don’t have a written travel policy, create one. Conference attendance must have supporting documentation and be retained by the recipient.
Financial management (200.302): Your financial system must identify all federal awards that are received with the following information: Catalog of Federal Domestic Assistance number and title, federal award ID and year, name of federal awarding agency, and the pass through entity’s name. You must have a written procedure to implement payments.
Audit Changes: Changes to the single audit, including the increased threshold from $500,000 in annual federal expenditures to $750,000, are effective for fiscal years beginning after December 26, 2014. Therefore, audits of the 2015 calendar year will be the first audits conducted under the UG as it relates to federal single audits.
This is a large amount of information to digest, and your organization may be looking for direction to determine exactly which rules apply to you. Here are some helpful online resources:
For pass-through entities, there are additional changes to award and monitoring protocols. See these Subrecipient Monitoring Guidelines.