Today, the Office of Management and Budget (“OMB”) issued proposed revisions to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”), codified at 2 C.F.R. Part 200 / 45 C.F.R. Part 75 (for HHS).

The proposed revisions are available here.

A full commentary will require a side by side review of the original language and proposed language.  Based upon a preliminary review, we highlight the following items for your awareness.  The proposed revisions:

• Shift all definitions into a single new § 200.1 (necessitating careful review to identify any substantive changes – we’re working on it);
• Add an explicit prohibition against federal awarding agencies incorporating non-binding guidance into the terms and conditions of a federal award in furtherance of Executive Order 13892 (Oct. 9, 2019) and OMB Memorandum 20-02 (Oct. 31, 2019) (§ 200.211);
• Clarify budget period and project period concepts through updated definitions, and expand authority for federal agencies to terminate awards on the basis of altered program policy goals (see §§ 200.1 and 200.339(a)(2));[1]
• Expand availability of the de minimis indirect rate to all grant recipients, regardless of whether the recipient has previously had a formal indirect rate agreement (§ 200.414(f));
• Extend final report submission and obligation liquidation periods from 90 to 120 days for direct recipients (with periods applicable to subawards remaining at 90 days) (§ 200.343(a) and (b));
• Add a domestic item preference for procurements under federal awards, to be applied “to the greatest extent practicable” with flow-down to subawards and contracts (new § 200.321);
• Provide, for certain recipients engaged in international work, regulatory implementation of “Never Contract with the Enemy” requirements (new Part 183 to Title 2 of the C.F.R.);
• Amend System for Award Management (“SAM”) entry requirements to call for grant applicants to list their “parent” or “subsidiary” entities (2 C.F.R. § 25.200(b)), add a requirement that awarding agencies considering the Federal Awardee Performance and Integrity Information System (“FAPIIS”) data for an applicant’s parent or subsidiary in making an award (§ 200.206(a)(2)), and add a definition of “subsidiary” to the Uniform Guidance (§ 200.1);
• Increase the subaward reporting threshold under Federal Financial Assistance Transparency Act (“FFATA”) requirements from $25,000 to $30,000 (2 C.F.R. § 170.220); and
• Add a prohibition against “using government funds to enter into contracts (or extend or renew contracts) with entities that use [certain telecommunications equipment]” – essentially, telecommunication equipment provided by Huawei Technologies Company and certain other foreign entities (new § 200.216).[2]

We are conducting a full examination of the proposed revisions and will share our observations through a complimentary webinar on Thursday, February 6, 2020 at 1 PM ET.  You may sign up here.

We encourage all grant recipients to review the proposed changes and submit comments to OMB. Comments are due on Monday, March 23, 2020: they must be submitted electronically and you can comment directly on the Federal Register website here or through Regulations.gov.

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If you have any questions on this or other federal grant law matters, please contact Scott Sheffler , Ted Waters, or call (202) 466-8960.

[1] This change may be in response to the holding of Policy and Research, LLC v. United States Department of Health and Human Services, 313 F. Supp. 3d 62 (D.D.C., May 11, 2018) and a number of other similar grant termination cases arising out of the Teen Pregnancy Prevention Program.  In those cases, a number of federal courts found that HHS had no authority to terminate an award at the end of a budget period when the project period would otherwise have continued and the recipient was fully compliant with all terms and conditions of its award.

[2] This addition is driven in the first instance by a statutory requirement, but, given its breadth as interpreted by OMB in the proposed rule (perhaps unnecessarily), it is likely to prove difficult for grant recipients to implement.  See Pub. L. 115-232, Sec. 889, available at: https://www.govinfo.gov/content/pkg/PLAW-115publ232/pdf/PLAW-115publ232.pdf.