United States: Federal Grant & Contract News For Nonprofits - December 2013

Last Updated: January 6 2014
Article by Dismas Locaria, Elizabeth A. Buehler and Jeffrey S. Tenenbaum

Overview

As 2013 came to a close, on December 26, 2013, the Office of Management Budget (OMB) issued the long-awaited final rule to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, more commonly known as the "Super Circular." This rule finalizes OMB's proposed guidance from February 1, 2013, and represents the culmination of an effort that was more than two years in the making. Among other things, this rule streamlines eight Federal regulations (including OMB Circulars A-110, A-122, and A-133) into a single, comprehensive policy guide and affords the Federal government the ability to better administer the $600 billion awarded annually for grants, cooperative agreements, and other types of financial assistance. This will have important implications for all nonprofit recipients of, and applicants for, Federal grants and cooperative agreements ("awards").

OMB's Vision of the "Super Circular"

OMB's reformulation of the various circulars "embodies principles set forth by the President, who directed OMB to work with key stakeholders to evaluate potential reforms to Federal grants policies in Executive Order 13520 on Reducing Improper Payments and in the Presidential Memorandum on Administrative Flexibility, Lower Costs, and Better Results for State, Local, and Tribal Governments." OMB further postulates that the guidance will improve upon current policies by:

  • Eliminating duplicative and conflicting guidance;
  • Focusing on performance over compliance for accountability;
  • Encouraging efficient use of information technology and shared services;
  • Providing for consistent and transparent treatment of costs;
  • Limiting allowable costs to make the best use of Federal resources;
  • Setting standard business processes using data definitions;
  • Encouraging non-Federal entities to have family-friendly policies;
  • Strengthening oversight; and
  • Targeting audit requirements on risk of waste, fraud, and abuse.

In addition, OMB explains that it and its partners "are continuing complementary work to strengthen program outcomes through innovative and effective use of grant-making models, performance metrics, and evaluation, as described in OMB Memorandum M-13-17 on Next Steps in the Evidence and Innovation Agenda."

Notable Aspects of the "Super Circular"

While the Super Circular does not entirely change the eight Federal regulations from which it is derived, it does include some noteworthy changes. For example:

  • Conflicts of Interest: The guidance requires Federal agencies to establish conflict of interest policies for Federal awards and mandates that non-Federal entities disclose in writing any potential conflict of interest to the Federal awarding agency (or higher-tiered entity) in accordance with the awarding agency's policy.
  • Mandatory Disclosure: Much like the Federal Acquisition Regulation, the guidance requires organizations for a Federal award to disclose, "in a timely manner" and in writing to the Federal awarding agency or pass-through entity, "all violations of Federal criminal law involving fraud, bribery, or gratuity violations potentially affecting the Federal award." The guidance specifically adds that an organization's failure to make required disclosures can result in a number of actions, including suspension and/or debarment. While many nonprofit organizations may have already taken this approach, this is a significant development in the grant arena, signifying the sea-change that may be taking place with respect to the Federal government's grant compliance and enforcement efforts.
  • Indirect Costs: The guidance explicitly requires pass-through entities (typically states and local governments receiving Federal funding) to either honor a nonprofit's negotiated indirect cost rate if one already exists or negotiate a rate in accordance with Federal guidelines. Nonprofits will be empowered to elect an automatic indirect cost rate of 10 percent of modified total direct costs – which can be used indefinitely if they so choose – or negotiate a higher rate. Without question, this is an important new provision for nonprofits, which had not been previously reimbursed by their higher-tiered grantors.
  • Direct Costs: The guidance makes clear that, in certain circumstances, program administration costs (e.g., secretarial staff dedicated to a specific program) can be reported as direct costs applicable to a specific program. In the past, in some instances, grantees were required to pass these charges on via their indirect cost rates.
  • Audit Rules: The new guidance raises the threshold for compliance audits of entities that receive Federal award money from $500,000 per fiscal year to $750,000 per fiscal year. This is another positive change for nonprofits – particularly smaller nonprofits and those that receive only small amounts of funding from the Federal government – as it should reduce costs for these nonprofits. OMB estimates that approximately 5,000 non-Federal organizations will be relieved from the audit requirement as a result of the higher threshold.

Going Forward

The Super Circular technically is effective as of December 26, 2013 (the date it was issued in the Federal Register); however, in practice, Federal agencies have one year to implement the policies and procedures applicable to Federal awards by promulgating a regulation by December 26, 2014, unless otherwise required by statute. With respect to non-Federal agencies, the rule is effective immediately; however, the rule recognizes the problems that may arise if non-Federal entities implement policies and procedures to comply with the Super Circular, even though agency-specific guidance has not been issued. As a result, comments to the rule provide that "Non-Federal entities wishing to implement entity-wide system changes to comply with the guidance after the effective date will not be penalized for doing so."

To assist organizations in understanding the final rule, OMB will host an informational webcast. Parties interested in the webcast should visit www.cfo.gov/cofar.

To view the Super Circular, click here.

In sum, while a true effective date of the Super Circular is a bit unclear, it will be imperative for nonprofit organizations to assess their current practices and policies and take appropriate steps to ensure that they conform with the final rule in a timely manner.

* * * * *

Special thanks to the National Council of Nonprofits for their assistance in and contributions to the preparation of this newsletter. For more information from the Council on the new Super Circular and its implications for nonprofits, click here.

Related Information

The Top Ten Federal Grant and Contract Pitfalls for Nonprofits (recorded webinar)

Goldmines and Landmines – Fundamentals of Federal Grants Compliance

Pitfalls for Nonprofits that Receive Federal Funds: Lessons Learned from ACORN (presentation)

Pitfalls for Nonprofits that Receive Federal Funds: Lessons Learned from ACORN (article)

Government Contractors Toolkit

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.