[Federal Register: May 1, 2000 (Volume 65, Number 84)]
[Page 25396-25397]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]



OMB Circular A-110, ``Grants and Agreements with Institutions of 
Higher Education, Hospitals and Other Non-Profit Organizations''

AGENCY: Office of Management and Budget, Executive Office of the 

ACTION: Advance Notice of Proposed Revision.


SUMMARY: This advance notice seeks comments on a proposal by the Grants 
Management Committee of the Chief Financial Officer's Council that 
would ask OMB to amend Circular A-110, ``Uniform Administrative 
Requirements for Grants and Agreements with Institutions of Higher 
Education, Hospitals, and Other Non-Profit Organizations.'' The 
amendment would require Federal awarding agencies to offer recipients 
the option to request cash advances on a ``pooled'' basis. Before 
making this recommendation, the Council seeks comments from recipients 
and Federal agencies on the merits of pooled payment systems and grant-
by-grant payment systems.

DATES: Comments must be received by June 30, 2000.

ADDRESSES: Comments should be addressed to: F. James Charney, Policy 
Analyst, Office of Management and Budget, Room 6025, New Executive 
Office Building, Washington, DC 20503. Comments may be submitted via e-
mail (grants@omb.eop.gov), but must be made in the text of the message 
and not as an attachment. The full text of Circular A-110 may be 
obtained by accessing OMB's home page (http://www.whitehouse.gov/omb), 
under the heading ``Grants Management.''

FOR FURTHER INFORMATION CONTACT: Gary Maupin, Chief Financial Officer, 
Food and Nutrition Service, United States Department of Agriculture, at 
(703) 305-2046.

SUPPLEMENTARY INFORMATION: Section 22(c) of the Circular provides that 
``whenever possible, advances shall be consolidated to cover 
anticipated cash needs for all awards made by the Federal awarding 
agency to the recipient.'' The Chief Financial Officers Council 
(Council) is considering whether to recommend an amendment to the 
Circular that would expand on this provision by requiring agencies to 
offer a pooled payment procedure (where cash advances are requested 
from a ``pool'' of grants rather than on a grant-by-grant basis) as an 
option for recipients in requesting cash advances under Federal awards. 
Under either method, however, a recipient must maintain systems that 
minimize the time elapsing between the receipt of Federal advance 
payments and their disbursement for program purposes. This issue 
emerged from the work of the Council's Grants Management Committee as 
it considered a proposal to formally incorporate a pooled payment 
process into the Federal Government's body of accounting standards.

[[Page 25397]]

    In considering this proposal, the Council has consulted with 
several Federal agencies and some recipients subject to the Circular. 
However, OMB and the Council are interested in soliciting comments from 
the broader grants community, learning how pooled and grant-by-grant 
payment systems affect Federal agencies and recipients, as well as what 
specific problems or benefits are created for recipients under the two 
    This proposal will not affect the policy recently adopted by the 
Council that each civilian agency permit recipients the option of using 
one of two governmentwide payment systems, the Automated Standard 
Application for Payments (ASAP) system managed by the Department of the 
Treasury, and the Payment Management System (PMS) operated by the 
Department of Health and Human Services (HHS). Both of these systems 
have the ability to track either pooled or award-by-award payment 

The Pooled Payment System

    Under a pooled payment process, the recipient estimates the 
aggregate amount of cash that it will need for all its Federal awards 
from each awarding agency and requests a draw in that amount. The draw 
is then allocated among all the awards based on a formula. When 
recipients report expenditures, the allocation is adjusted to the 
actual reported expenditures.
    The Council found that two major agencies currently using the 
pooling method--HHS and the National Science Foundation--believe it 
provides a more efficient and customer-friendly method of drawing cash 
for grant purposes. Recipients report individual cash expenditures for 
each grant via a financial report such as the Standard Form (SF) 269 
(Financial Status Report) or SF-272 (Report of Federal Cash 
Transactions). Many recipients have expressed an inability to 
accurately determine cash needs on a grant-by-grant basis at the time 
of draw. Requiring this determination ``up front'' may cause recipients 
to draw larger amounts of cash, less frequently, resulting in poor 
management of Federal funds.

Grant-By-Grant Payment Systems

    Other Federal agencies have developed systems that require 
recipients to request funds on a grant-by-grant basis. Some of these 
agencies approve the requests on a grant-by-grant basis; pool the 
individual amounts; and issue payments in the aggregate. At least one 
agency accepts grant-by-grant payments as reports of cash usage and 
records them as expenditures, eliminating the requirement for 
recipients to submit the SF-272 or, in most cases, the SF-269.
    Agencies that use grant-by-grant payment systems believe that 
agency grant officers have more timely information on payments and can 
provide more immediate technical assistance to a recipient experiencing 
problems with a particular grant. These agencies believe that, under 
pooled payment systems, reports often come in too late for them to be 
able to help recipients take corrective actions on specific grants.

Effect on Federal Agencies

    Federal agencies face some challenges accounting for advances 
similar to those of their recipients. These challenges include 
identifying advances to multiple awards. Those agencies that currently 
use pooling address this challenge by using estimates of how recipients 
will distribute a pooled payment request among the various grants held 
by the institution. These estimates are then adjusted to actual when 
the recipients submit their expense reports (SF-269 or SF-272).
    After the agency has made these adjustments, it gains a better 
understanding of how the recipients are using funds under each specific 
award. Thus, accurate and timely reporting is essential to the success 
of any pooling method. For this reason, some agencies believe that a 
transition from grant-by-grant to pooled payments for their awards must 
be accompanied by monthly reporting of actual expenditures, in an 
electronic format, rather than the paper-based quarterly reporting that 
is currently required by agencies currently using pooled payment 

Request for Comment

    OMB and the Council seek comments from both recipients and Federal 
agencies on the merits of pooled payment systems and grant-by-grant 
payment systems, as well as whether recipients should have this option. 
Specifically, commenters are asked to respond to the following 
    1. Would it be worth it to recipients if they were allowed to make 
pooled payment requests only in exchange for a requirement to 
electronically report their actual costs on a monthly basis? (Section 
52(a)(2)(iv) of the Circular authorizes Federal agencies to require 
monthly submission of the SF-272 from recipients that receive advances 
of $1 million or more annually.)
    2. Should the Circular include a minimum number of awards and/or 
dollars below which the pooled payment option is not be offered? That 
is, recipients that only get a few awards, or for only small amounts, 
would not be offered the option to make pooled payment requests.
    3. How might a pool payment system impact the Federal agencies' 
abilities to monitor the financial performance of recipients, and thus 
determine program compliance?
    4. Should recipients be permitted to determine whether they receive 
advances on a pooled or grant-by-grant basis, or should Federal 
agencies continue to make that determination?

Joshua Gotbaum,
Executive Associate Director and Controller.
[FR Doc. 00-10738 Filed 4-28-00; 8:45 am]