October 2014: What Everyone Needs to Know About the New OMB Grant Rules

October 2014 Meeting: What Everyone Needs to Know About the New OMB Grant Rules

Anita Lichtblau, of Casner and Edwards, gave an overview of the changes in federal regulations known at the Super Circular most likely to affect our members. The Super Circular consolidates and supersedes seven federal circulars. Our members may be most familiar with the A-133 audit circular, the A-122 cost principle circular, and the A-110 grant administrative circular.

The Super Circular requires federal agencies to promulgate regulations to apply to federal grants and funding increments to existing grants made after December 26, 2014. There will be one full fiscal year grace period for procurement rules. It is not clear that federal agencies are ready to issue the regulations by the deadline. For multiyear grants, federal agencies may choose to apply the regulations at annual renewal.

Federal agencies may not impose rules that are inconsistent with the Super Circular (like prior approval of budget revisions) and may not impose additional burdens except as provided in 200.102 (exceptions) and 200.210 (information contained in a feral award) or unless specifically required by a federal statute, regulation or Executive Order.

Anita advised the attendees to check their conflict of interest policies and procedures against the Super Circular. Awardees and sub-recipients are required to disclose potential conflicts in writing to the federal awarding agency or passthrough
entity. Written disclosure is also required for all violations of federal criminal law involving fraud, bribery, or gratuity violations potentially affecting the federal award.

The Super Circular establishes internal control standards to be monitored. Anita drew attention to contract sign-off procedures as an example of internal control that may have been missed in the past. Safeguards for Personally Identifiable Information must be implemented, largely already covered under the WISP regulations issued by Massachusetts a few years ago. Record retention in electronic form is encouraged if the record cannot be altered, such as pdf files. The period for disallowing costs is now limited to the 3 year record retention period.

Procurement guidelines are more prescriptive than in past circulars. Micropurchases” under $3,000 do not require specific procedures. For the Simplified Acquisition Threshold up to $150,000, there should be documented competition. Over $150,000, there should be a sealed bid or competitive process for procurement. Documentation must detail:

  1. the history of procurement;
  2. rationale for the method of procurement
  3. selection of the contract type;
  4. contractor selection or rejection; and
  5. the basis for the contract price.

Cost or price analysis is required for any procurement in excess of $150,000.

Profit must be negotiated as a separate element of the price for each contract in which there is no price competition and in all cases where cost analysis is performed.

All Pass-Through Entities must either:

  1. accept the federal negotiated rate;
  2. negotiate a different rate; or
  3. pay a de minimus rate of 10% for indirect costs.

The Super Circular also addresses personnel activity documentation for employees who split their time among funding sources.

As a consolation, the threshold for the Single Audit requirement has been raised to $750,000.