Subaward and Executive Compensation Reporting Under Transparency Act to Begin October 1, 2010
This client alert will be of interest to any recipient of federal grant funds, including non-profit organizations, state and local governments, and institutions of higher education.
The 2006 Federal Funding Accountability and Transparency Act (“Transparency Act”), Pub. L. No. 109-282, requires that the executive branch create and maintain a searchable public website containing certain basic information on virtually all active federal grant awards. The Office of Management and Budget (“OMB”), which is implementing the Transparency Act, has released new guidance requiring, for the first time, that the funding agencies impose reporting requirements on grant recipients themselves, through a new term in their grant paperwork. Funding agencies will be required to incorporate this new term into all awards made on or after October 1, 2010.
If incorporated into your organization’s award paperwork as proposed, your amended grant will require your organization to (1) “report each action that obligates $25,000 or more in Federal funds that does not include Recovery funds . . . for a subaward”; (2) “report total compensation for each of your five most highly compensated executives for the preceding completed fiscal year”; and (3) “for each first-tier subrecipient under this award, . . . report the names and total compensation of each of the subrecipient’s most highly compensated executives for the subrecipient’s preceding completed fiscal year.” Recipients will be obligated to report the information “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.)” The complete text of the proposed term, which OMB released on September 14, is available at 75 Fed. Reg. at 55,670 (Sept. 14, 2010).
Although this requirement adds to the already significant regulatory burdens on federal grant recipients, we anticipate that OMB may elect to impose additional Transparency Act requirements on grantees in the future, under its authority to collect “any . . . relevant information” pertaining to federal awards. Transparency Act, § 2(b)(1)(G). Specifically, we anticipate that OMB may add a requirement that grantees report information about all vendor agreements over a certain dollar value. While the current term pertaining to subrecipients and executive compensation will add to the regulatory burden of certain federal grantees, we anticipate that a reporting requirement for vendor agreements will add dramatically to the many compliance requirements that grantees operate under.
If you have any questions about the information in this Client Alert, or about other issues relating to the Transparency Act, or federal grants in general, please contact Ted Waters at ewaters@FTLF.com.
This Client Alert is provided solely for educational and informational purposes. It is not intended to constitute legal advice or to create an attorney-client relationship. Readers should obtain legal advice specific to their enterprise and circumstances in connection with each of the topics addressed.
