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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: August 8, 2000

FROM: Barry McVay, CPCM

SUBJECT: Office of Management and Budget Circular No. A-21, Cost Principles for Educational Institutions

SOURCE: Federal Register, August 8, 2000, Vol. 65, No. 153, page 48565

AGENCIES: Office of Management and Budget (OMB), Executive Office of the President

ACTION: Request for Comments

SYNOPSIS: OMB is revising Circular A-21, Cost Principles for Educational Institutions, to add a standard format for submitting facilities and administrative (F&A) rate proposals by educational institutions.

EDITOR'S NOTE: Circular A-21, with all its amendments, is available on OMB's Homepage at http://www.whitehouse.gov/OMB/circulars/index.html#numerical.

EFFECTIVE DATE: September 7, 2000. The standard format requirement is applicable for F&A rate proposals submitted on or after July 1, 2001.

FOR FURTHER INFORMATION CONTACT: Gilbert Tran, Financial Standards, Reporting and Management Integrity Branch, Office of Federal Financial Management, Office of Management and Budget, 202-395-3993. Non-federal organizations should contact their cognizant federal agency.

SUPPLEMENTAL INFORMATION: OMB Circular A-21 establishes principles for determining costs applicable to federal grants, contracts, and other sponsored agreements with educational institutions.

On September 10, 1997, OMB proposed to use a standard format for F&A rate proposals submitted by large educational institutions. OMB made the proposal because it believed the standard format would assist institutions in completing their proposals more efficiently and help the federal cognizant agency review each proposal on a more consistent basis. OMB received 35 comments from federal agencies, universities, and professional organizations in response to the proposal. All commenters were in favor of the development of such a form.

OMB, with assistance from federal agencies and universities, developed the standard form for inclusion in Circular A-21. On August 12, 1999, OMB proposed to revise Circular A-21 to incorporate the new form. OMB received 40 comments from universities, federal agencies, and professional organizations, and all comments were considered and incorporated, where appropriate, in the final revision.

On May 9, 2000, OMB published a notice that it had submitted "Standard Form for Facilities and Administrative Rate Proposals" to the Office of Information and Regulatory Affairs (OIRA) for review. Three comments were received, and all were in favor of the action, though further clarifications were sought on some data items in the standard form (such as whether significant decreases in an overhead rate component need to be explained, and how are cross-allocations of an overhead pool to another overhead pool reported). OMB has included the clarifications in the final rule's introductory material, and is adopting as final the May 9, 2000, version of the form and other related changes to Circular A-21.

The form is added to the Circular A-21 Attachment, Principles for Determining Costs Applicable to Grants, Contracts, and Other Agreements with Educational Institutions, as Appendix C, OMB Circular A-21 Documentation Requirement for Facilities and Administrative (F&A) Rate Proposals Claiming Costs Under the Regular Method. Appendix C consists of two parts: Part I provides a schedule of summary data on the institution's F&A cost pools and their allocations, and the proposed F&A rates (it includes an example of a completed Part I); and Part II describes the standard documentation to be submitted with the institution's F&A rate proposal.

In addition, in the Attachment's Part G, Determination and Application of F&A Cost Rate or Rates, is added Section G.12, Standard Format for Submission, which states the following:

"For facilities and administrative (F&A) rate proposals submitted on or after July 1, 2001, educational institutions shall use the standard format, shown in Appendix C, to submit their F&A rate proposal to the cognizant agency. The cognizant agency may, on an institution-by-institution basis, grant exceptions from all or portions of Part II of the standard format requirement. This requirement does not apply to educational institutions which use the simplified method for calculating F&A rates, as described in Section H [Simplified Method for Small Institutions]."

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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