The Office of Management and Budget (OMB) proposed changes to its Guidance for Grants and Agreements (2 CFR). These proposed changes were published on October 5, 2023 in the Federal Register. The OMB accepted comments on these proposed changes until December 4, 2023.
The OMB’s proposed changes to the 2 CFR intend to meet the goals of making the guidance more accessible and comprehendible and to improve federal financial assistance oversight, transparency, and management. These goals will be met by proposing changes that will reduce agency and recipient burden, clarify sections that have previously led to different interpretations, rewrite sections in plain language, and address terms that previously have been used inconsistently.
Proposed changes to Uniform Guidance (UG) are contained in parts 1, 25, 170, 175, 180, 182, and 200 of the 2 CFR. Below is a summary of the proposed changes to each section.
Part 1 – About Title 2 of the Code of Federal Regulations & Subtitle A
The title of 2 CFR, Subtitle A, and Chapter I would be changed to “Federal Financial Assistance” from “Grants and Agreements.” This will help clarify that the UG is applicable beyond grants and cooperative agreements.
Part 25 – Unique Entity Identifier & System for Award Management
The title of Part 25 would be changed to “Unique Entity Identifier and System for Award Management” from “Universal Identifier and System for Award Management.” The OMB also proposed clarifying that second-tier subrecipients or contracts are not required to obtain a Unique Entity Identifier (UEI) and register in SAM.gov. They further clarify that the federal agency may use discretion when determining if beneficiaries are required to obtain a UEI and register on SAM.gov. Regular subrecipients and recipients of loan guarantees must still obtain a UEI and be registered on SAM.gov.
The currently published 2 CFR includes a circumstantial exception in which recipients are allowed up to 30 days after the federal award date to obtain a UEI and SAM.gov registration. The OMB recognized that issues could arise when attempting to register in SAM.gov, particularly with new applicants. As such, it proposed that federal agencies would be provided with the option to allow recipients an additional 90 days to obtain a UEI and register on SAM.gov if circumstances persist.
Part 170 – Reporting Subaward & Executive Compensation Information
The proposed changes to part 170 were minimal and were made to align UG more appropriately with existing authorizing statutes. To better align with the Transparency in Government Act of 2021 and DATA Act of 2014, the OMB proposed clarifying the reporting requirements for federal agencies and provided resolutions for issues related to the award term, such as clarifying which entities the award term applies to.
Part 175 – Award Term for Trafficking in Persons
The proposed changes to part 175 were made to ensure it aligns with authorizing statutes that have been updated since the 2 CFR initially was published. For example, the OMB proposed adding provisions related to compliance plans and added a requirement for notification to inspector generals when indicated to align better with existing statutes.
Part 180 – OMB Guidelines to Agencies on Government-Wide Debarment & Suspension (Nonprocurement)
The proposed changes in part 180 focus on clarifying administrative actions that are available in lieu of debarment and offer additional indicators to consider before issuing suspensions. Additional indicators proposed, such as warrants and accompanying affidavits, are to be considered before issuing suspensions.
Part 182 – Government-Wide Requirements for Drug-Free Workplace (Financial Assistance) & Part 183 – Never Contract With the Enemy
Part 182 and 183 proposed changes were limited to only plain language revisions.
Part 200 – Uniform Administrative Requirements, Cost Principles, & Audit Requirements for Federal Awards
Most of the changes the OMB proposed are found in part 200, which focuses on uniform administrative requirements, cost principles, and audit requirements for those receiving federal awards. A summary of the proposed changes is listed below:
- An increase in the threshold for the disposition of equipment and supplies from $5,000 to $10,000.
- A change that would allow federal agencies to request, receive, and distribute information regarding federal awards in languages other than English when indicated.
- A change in verbiage used from “small purchases” to “simplified acquisitions.”
- The addition of “veteran-owned businesses” to the list of business categories that recipients are encouraged to consider for procurement contracts. Current encouraged business categories include minority businesses, women-owned businesses, and labor surplus area firms.
- The addition of the requirement for pass-through entities to confirm that potential subrecipients are not suspended, debarred, or excluded from receiving federal funds.The removal of prior written approval requirements for several costs, including real property, equipment, direct costs, entertainment costs, exchange rates, memberships, participant support costs, selling and marketing costs, and taxes.
- A raise in the de minimis rate from 10% to 15%.
- A change to the modified total direct costs exclusion threshold for subawards from $25,000 to $50,000.
- A raise in the Single Audit threshold from $750,000 to $1 million.
The changes proposed to the 2 CFR by the OMB intend to reduce the administrative burden on federal agencies and recipients. In addition, the changes are aimed at clarifying sections of guidance that have previously led to differing interpretations. Lastly, the proposed changes were designed to assist federal agencies in the improvement of management, oversight, and transparency. Ultimately, the proposed changes intend to make the federal guidance regarding federal funds more comprehendible and accessible to federal agencies and recipients. For further details on the proposed changes, refer to the Federal Register Guidance for Grants and Agreements.
How FORVIS Can Help
Federal award requirements can be hard to navigate. Our dedicated National Grants Management team at FORVIS has extensive experience with federal, state, and local awards and grants. We serve clients by providing timely guidance relating to grant administration, compliance, and reporting, as well as helping clients navigate the full life cycle of a grant. If you have questions or need assistance, please reach out to a professional at FORVIS.