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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: August 12, 2002

SUBJECT: Office of Management and Budget; Grants Streamlining Activities Under the Federal Financial Assistance Management Improvement Act of 1999 (Public Law 106-107)

SOURCE: Federal Register, August 12, 2002, Vol. 67, No. 155, page 52543

AGENCIES: Office of Management and Budget (OMB)

ACTION: Notices and Proposed Rules

SYNOPSIS: This notice announces five actions that relate to the streamlining efforts of the OMB staff and the interagency works groups dedicated to implementing Public Law 106-107. The five actions are: (1) proposed revisions to OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations; (2) an explanation of the OMB decision not revise OMB Circular A-110, Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations; (3) a proposed standard format for the announcement of federal discretionary grant and cooperative agreement funding opportunities; (4) proposed standard data elements for use in grant funding opportunity announcements, which are to be published in FedBizOpps; and (5) proposed revisions to OMB Circular A-21, Cost Principles for Educational Institutions, OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments, and OMB Circular A-122, Cost Principles for Non-Profit Organizations, to clarify ambiguous language.

EDITOR'S NOTE: The OMB circulars involved in these actions are available at http://www.omb.gov, then click on "Grants Management."

DATES: Comments on the various proposals must be received at the appropriate address by October 11, 2002.

FOR FURTHER INFORMATION CONTACT: Elizabeth C. Phillips, Office of Federal Financial Management, Office of Management and Budget, 202-395-3053 (direct) or 202-395-3993 (main office), or by e-mail: ephillip@omb.eop.gov.

SUPPLEMENTAL INFORMATION: The purposes of Public Law 106-107 are to (1) improve the effectiveness and performance of federal grants programs, (2) simplify federal grant application and reporting requirements, (3) improve the delivery of services to the public, and (4) facilitate greater coordination among those responsible for delivering the services.

Public Law 106-107 requires the director of OMB to direct, coordinate, and assist federal agencies in establishing a common application and reporting system, including electronic processes, and uniform administrative rules for federal grants programs across different federal agencies.

Under the joint leadership of OMB and the Department of Health and Human Services, interagency work groups are working to make it easier for state, local, and tribal governments, universities, and non-profit organizations to administer federal grants by developing and recommending streamlining and simplification proposals.

The following are the five actions OMB and the interagency work groups are proposing/announcing:

• Revisions to OMB Circular A-133: Three changes are being proposed to OMB Circular A-133. The proposed revisions, if adopted, will apply to audits of fiscal years ending after December 31, 2003, and earlier implementation will not be permitted.
  
  
  1. Increase the audit threshold from $300,000 to $500,000. Currently, all non-federal entities (states, local governments, and non-profit organizations) that expend $300,000 or more in a year in federal awards must have an audit conducted in accordance with OMB Circular A-133 -- at present, this is 34,000 entities. By increasing the threshold from $300,000 to $500,000, the number of entities to be audited would be reduced by 6,000 to 28,000, while exempting from audit less than 0.5% of federal dollars expended by entities currently filing OMB Circular A-133 audits. This change would be made in __.200(a), __.200(b); __.200(d); __.230(b)(2); and __.400(d)(4). (EDITOR'S NOTE: OMB Circular A-133 is in the "common rule" format, which allows each agency to insert the A-133 text into its regulations verbatim merely by adding its appropriate Code of Federal Regulations (CFR) section number. For example, the National Aeronautics and Space Administration incorporated the text of ___.400, Responsibilities, into its regulations in Title 14 of the CFR (14 CFR) Part 1260 - Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations, as 14 CFR 1260.400, and 14 CFR Part 1273 - Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments, as 14 CFR 1273.400. The Department of State did the same by incorporating the text of ___.400 into its regulations as 22 CFR Part 135.400 and 22 CFR 145.400 in exactly the same manner.)
     
     
  2. Increase the threshold for cognizant agency for audit from $25,000,000 to $50,000,000. Currently, recipients (non-federal entities that expend federal awards received directly from a federal awarding agency) which expend more than $25,000,000 a year in federal awards have a federal agency designated as their "cognizant agency for audit." All other non-federal entities have a federal agency as their "oversight agency for audit." The basic difference between the two is that a "cognizant agency for audit" is required to perform certain oversight functions listed in OMB Circular A-133 and an "oversight agency for audit" is given the option to assume these responsibilities -- the only responsibility the oversight agency for audit is required to perform is to provide technical advice to auditors and auditees upon request (paragraphs ___.400(a) and ___.400(b) describe "cognizant agency for audit" and "oversight agency for audit", respectively). Of the 34,000 non-federal entities currently filing OMB Circular A-133 audits, approximately 1,000 have a cognizant agency for audit. Increasing this threshold from $25,000,000 to $50,000,000 will reduce the number of non-federal entities with a cognizant agency for audit assignments to approximately 500. This change would allow the federal agencies to provide more focused audit oversight where there is the greatest risk in terms of federal awards expended but still provide each non-federal entity with an assigned oversight agency for audit from which to request technical advice. This change would be made in the first sentence of __.400(a).
     
     
  3. Change the base year for cognizant agency for audit determination from one to two years before the start of the five year audit cognizance period. The cognizant agency for audit is determined by which federal agency provides the predominant amount of direct federal awards funding to a recipient in the base year. For example, cognizant agency for audit determinations for the years 2001 through 2005 were based upon which federal agency provided the predominant amount of federal awards expended in the base years ending in 2000. Since OMB Circular A-133 reports for the non-federal entities' fiscal years ending December 31, 2000, were not required to be filed until September 30, 2001, it was not possible to produce a cognizant agency for audit assignment list at the start of 2001. This change will provide sufficient time to make cognizant agency for audit determinations before the start of the audit cognizance period.
     
     Under the proposed change, 2004 will be the base year for determining the cognizant agency for audit for 2006 through 2010. All fiscal year 2004 A-133 reports are due to the Federal Audit Clearinghouse (FAC) on or before September 30, 2005. This will provide sufficient time for federal agencies to use the FAC database to produce a cognizant agency for audit list for the 2006 through 2010 audit cognizance period at the start of 2006 (the base year for 2001 through 2005 will remain at 2000). This change would be made in the third, fourth, and fifth sentences of __.400(a).
  
  OMB is encouraging respondents to submit comments by e-mail to tramsey@omb.eop.gov to insure timely receipt because it cannot guarantee that comments mailed through the U.S. Postal Services will be received before the comment closing date (October 11, 2002). Include "A-133 Comments" in the subject line and the full body of the comments in the e-mail text and as an attachment. Comments may also be submitted by fax to 202-395-4915, or by mail to Terrill W. Ramsey, Office of Federal Financial Management, Office of Management and Budget, Room 6025, New Executive Office Building, Washington, DC 20503.
  
  For further information, contact Terrill W. Ramsey, Office of Federal Financial Management, Office of Management and Budget, 202-395-3812 (direct) or 202-395-3993 (main office), or e-mail: tramsey@omb.eop.gov.
  
  
• Decision Not to Revise OMB Circular A-110: On May 1, 2000, OMB published an advance notice of proposed revision in which comments were sought on several questions relating to federal requirements for requesting and issuing cash payments under federal awards (see the May 1, 2000, FEDERAL CONTRACTS DISPATCH "Office of Management and Budget Circular A-110, Grants and Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations"). The primary issue was whether OMB Circular A-110 should be revised to require federal awarding agencies to offer recipients the option to either request cash advances on a "pooled" basis or to continue to use the current grant-by-grant payment system.
  
  With the grant-by-grant payment method, a recipient identifies estimated costs for each award and requests cash advances on that basis. Under a pooled payment process, the recipient estimates the aggregate amount of cash that it will need for all of its awards from the awarding agency and requests a cash advance in that amount. The awarding agency then uses a methodology it has developed to estimate how the recipient will distribute the cash advances among its various awards. When recipients report expenditures, the allocation is adjusted to the actual reported expenditures.
  
  Sixty-five comments were received: 33 from universities, 14 from state and local agencies, 14 from federal agencies, and four from other sources. The 33 universities were unanimous in their support of making the pooling option available to recipients. The 14 federal respondents were divided on the question. Of the 14 state and local agencies commenting, only eight has comments on this question, and five were opposed to requiring federal awarding agencies to make the pooling method available, and one expressed concern about being forced to pool. However, their opposition must be viewed as theoretical because OMB Circular A-110 does not apply to state and local governments.
  
  While OMB Circular A-110 does not require federal awarding agencies to make the pooled payment method available to their recipients, it does authorize them to do so. Therefore, given the division among the 14 federal respondents, OMB has decided to leave OMB Circular A-110 unchanged.
  
  For further information contact Gilbert Tran, Technical Manager, OMB, 202-395-3052.
  
  
• Standard Format for Federal Agency Announcements of Funding Opportunities: The Office of Federal Financial Management (OFFM) proposes to establish a standard format for federal agency announcements of funding opportunities under programs that award discretionary grants or cooperative agreements. The purpose of the standard format is to have information organized in a consistent way in program announcements for the hundreds of federal programs that make financial assistance awards to non-federal recipients, making it easier for potential applicants to quickly find the information they need.
  
  The required format would consist of an overview, followed by the full text of the announcement, consisting of the following sections:
  
  
  1. Funding Opportunity Description
  2. Award Information
  3. Eligibility Information
     1. Eligible Applicants
     2. Cost Sharing
     3. Other Eligibility Requirements (if applicable)
  4. Application and Submission Information
     1. Address to Request Application Package
     2. Content and Form of Application Submission
     3. Submission Dates and Times
     4. Intergovernmental Review (if applicable)
     5. Funding Restrictions
     6. Other Submission Requirements
  5. Application Review Information
     1. Evaluation Criteria
     2. Review and Selection Process
     3. Anticipated Announcement and Award Dates
  6. Award Administration Information
     1. Award Notices
     2. Administrative Requirements
     3. Reporting Requirements (optional)
  7. Agency Contact(s)
  8. VIII. Other Information
  
  OMB is encouraging respondents to submit comments by e-mail to ephillip@omb.eop.gov to insure timely receipt because it cannot guarantee that comments mailed through the U.S. Postal Services will be received before the comment closing date (October 11, 2002). Include "Grant Announcement Format Contents" in the subject line and the full body of the comments in the e-mail text and as an attachment. Comments may also be submitted by fax to 202-395-3952, or by mail to Elizabeth Phillips, Office of Federal Financial Management, Office of Management and Budget, Room 6025, New Executive Office Building, Washington, DC 20503.
  
  For further information contact Elizabeth Phillips, Office of Federal Financial Management, Office of Management and Budget, 202-395-3812 (direct) or 202-395-3993 (main office), or e-mail: ephillip@omb.eop.gov.
  
  
• Standard Data Elements for Electronic Synopses of Financial Assistance Program Announcements at FedBizOpps: The OFFM proposes to establish a standard set of data elements for federal agencies to use to electronically post synopses of announcements of funding opportunities under programs that award discretionary grants or cooperative agreements. The purpose of the data elements would be to give potential applicants enough information about each funding opportunity to decide whether they are interested enough to look at the full announcement, and one or more ways (such as an Internet site, e-mail address, or phone number) to get the full announcement with the detailed information they need to decide whether they wish to apply.
  
  Federal agencies use FedBizOpps (http://www.FedBizOpps.gov) as the single site for providing public access to relevant information about procurement opportunities that exceed $25,000, including procurement notices, solicitations, drawings, and amendments. In the future, federal agencies will use FedBizOpps to post electronic synopses of funding opportunities leading to the award of grants, cooperative agreements, and other financial assistance instruments.
  
  The federal agencies selected the data elements they believe should be included in the electronic synopses to help potential applicants decide whether they wish to review the full announcement. OMB is seeking comments on these proposed data elements, which are as follows:
  
  
  • Federal agency user identification
  • Federal agency password
  • Funding opportunity title
  • Funding opportunity number
  • Catalog of Federal Domestic Assistance (CFDA) number(s)
  • Federal agency mailing address
  • Federal agency contact for electronic accesss problems
  • Type of help available from the federal agency contact
  • Federal agency contact e-mail address
  • Funding opportunity description
  • Funding instrument types
  • Category of funding activity
  • Eligible applicants
  • How to get full announcement
  • Electronic link to full announcement
  • Cost sharing requirement
  • Due date for applications
  • Explanation of application due dates
  • Date of FedBizOpps posting
  • Date for FedBizOpps to archive
  
  OMB has the following questions it would like addressed:
  
  
  • Are the proposed data elements the essential ones that parties need to help you quickly judge whether a funding opportunity is one for which you likely will want to read the full announcement? The intent is for the data elements to be the minimum set needed for potential applicants to quickly decide whether to look at the full announcement for further details. Those who recommend adding or deleting any data elements are asked to explain why.
    
    
  • Are the names of data elements and any terms used in describing them readily understandable? Are the terms generic enough to cover all programs and agencies? Are there suggestions for alternate or additional terms or codes?
  
  Those submitting comments should submit them to Elizabeth Phillips as indicated above. E-mail comments should include "FedBizOpps Data Elements Comments" in the subject line.
  
  
• Cost Principles for Educational Institutions, for State, Local, and Indian Tribal Governments and for Non-Profit Organizations: OMB proposes to revise OMB Circular A-21, Cost Principles for Educational Institutions, OMB Circular A-87, Cost Principles for State, Local and Indian Tribal Governments, and OMB Circular A-122, Cost Principles for Non-Profit Organizations, to make the cost principles more consistent among the three circulars and to clarify some aspects of the cost principles.
  
  Rather than include the revised language in the three cost principles separately, OMB created a 206 page chart that allows side-by-side comparison of proposed changes to the language contained in the current circulars. In the chart, the first column lists the current A-21 cost principle, the second column lists the similar item, if any, from A-87, the third column lists the similar item, if any, from A-122, and the fourth column lists any proposed change to the item and which of the circulars would include the revised item. If a circular does not have an item equivalent to the other circulars, the column for that circular is blank. Also, given the separate development of the three circulars, some items contain more than one concept and some of those concepts are stated in different places in the other circulars. In some cases, OMB moved a cost item in one circular to the place where that item appears in the other circulars. In every case where one circular handles an item in a different place than the others, the fourth column of the chart contains an explanation of where OMB proposes to treat a particular concept in the three circulars.
  
  The chart is available on the OMB web site at http://www.omb.gov, under the "Grants Management/Current Documents" section, or directly at http://www.whitehouse.gov/omb/fedreg/cost_principle_nprm_table.pdf. A hard copy can be obtained from Gilbert Tran, 202-395-3052.
  
  OMB is encouraging respondents to submit comments by e-mail to hai_m._tran@omb.gov to insure timely receipt because it cannot guarantee that comments mailed through the U.S. Postal Services will be received before the comment closing date (October 11, 2002). Include "Cost Principles Revision Comments" in the subject line and the full body of the comments in the e-mail text and as an attachment. Comments may also be submitted by fax to 202-395-4915, or by mail to Gilbert Tran, Office of Federal Financial Management, Office of Management and Budget, Room 6025, New Executive Office Building, Washington, DC 20503.
  
  For further information contact Gilbert Tran, Office of Federal Financial Management, Office of Management and Budget, 202-395-3812 (direct) or 202-395-3993 (main office), or e-mail: hai_m._tran@omb.gov.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

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