The Office of Management and Budget (OMB) has proposed substantial changes to the uniform guidance (UG) that would clarify multiple sections, relax certain prior approval requirements, and increase thresholds that trigger compliance requirements and limit cost recovery,[1] according to attorneys from Feldesman Tucker Leifer Fidell LLP.
The changes—which the Biden administration characterized as “a fundamental rewrite” of the UG—will eliminate “obstacles to using funding for its intended purpose” and “will also allow recipients to focus on the people they serve rather than compliance work that does not improve performance,”[2] the administration said.
This is a major revision to the UG, and the rewrite contains multiple changes, said Ted Waters, managing partner of Feldesman Tucker. Many of the proposed changes would benefit grantees, but may pose potential problems, Waters and his colleagues explained in a recent webinar detailing the proposal.[3]
Comments on the proposed changes are due Dec. 4.
During the webinar, Nicole Bacon, also a partner at the firm, noted that OMB listed four major goals of the proposed revisions:
1. Incorporate statutory provisions and administrative priorities
2. Reduce agency and recipient burden
3. Clarify sections that recipients and agencies have interpreted differently
4. Rewrite applicable sections to include plain language (e.g., “recipient” and “subrecipient” rather than “non-federal entity”)
“These are policy changes and clarification,” Bacon said.
Waters, Bacon and their colleagues Scott Sheffler—a partner at Feldesman Tucker who specializes in counseling federal grant recipients—and Phillip Escoriaza—senior counsel in Feldesman Tucker’s Federal Grants and Health Law, Education Grants and Litigation practice groups—dissected the proposed changes to the UG and detailed them regulation section by section to the webinar audience.
Definitions, Applicability and Pre-Award Requirements
In Subpart A, the proposed revision to the UG would change the § 200.1 Equipment Definition to increase the threshold from $5,000 to $10,000. “I know a lot of our clients would be excited about this,” Bacon said. “But we also like to caution everyone: it’s still your organization’s capitalization threshold or $10,000, whichever is less. So, if this change goes through, you’ll want to make sure you update your policies.”
The proposal also would clarify that the § 200.1Micropurchase Definition cost is based on individual transactions.
In addition, it would increase the eligible value in Modified Total Direct Costs (MTDC) (§ 200.1, MTDC Definition) indirect base from $25,000 to $50,000 per subaward, meaning subawards can be counted in the base for up to $50,000 per subaward.
In Subpart B, at § 200.101(a)(2), Applicability, the proposed changes would update the language of the applicability section to clarify that only “non-Federal entities” are subject to Subpart F audits. The proposed language states: “Subpart F only applies to non-Federal entities as defined in the Single Audit Act Amendments of 1996 (31 U.S.C. 7501–7507).”[4] That, definitionally, excludes for-profits, Waters said.
And at § 200.113, mandatory disclosures would be clarified to indicate that reporting would only be triggered by credible evidence of a violation and civil False Claims Act (FCA) violations would be added to reportable events.
“It was kind of strange language in the original uniform guidance as it’s marched through the last eight years about disclosing fraud related to federal grants,” Waters said, adding that the language used “was literally ‘fraud,’ which is a determination that really only the enforcement agencies make, and prosecutors and courts.” The language in the revised draft UG “is the more familiar language that if you have credible evidence of fraud or misdeeds, that you have to disclose,” he said.
The draft update adds the second part about the FCA, Waters pointed out, noting that “I will say we have a lot of heartburn over this change, because under the False Claims Act, or really in the whole federal world, there’s already a number of self-disclosure protocols and practices, and this seems to be paralleling that. Self-disclosure, of course, is usually voluntary, and now they’re adding this additional layer of ‘You have to self-disclose with credible evidence.’”
