What You Should Know About the Recent Changes to OMB Uniform Guidance
September 30, 2024
The White House Office of Management and Budget (OMB) has recently issued significant revisions to the Uniform Guidance, formally known as the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 C.F.R. Part 200). These changes, effective October 1, 2024, mark the most substantial update since the Guidance’s inception a decade ago.
Background and Rationale
The OMB Uniform Guidance sets the foundational requirements for federal financial assistance, including grants, cooperative agreements, and loans. The 2024 revisions aim to streamline processes, reduce administrative burdens, enhance transparency, and promote equitable access to federal funds. The updates reflect extensive feedback from over 50 federal agencies, state and local governments, Tribal organizations, nonprofits, universities, and numerous public comments.
It’s essential for organizations and professionals engaged with federal financial assistance to stay informed about the latest updates to the Uniform Guidance as issued by the White House Office of Management and Budget (OMB). Here’s a breakdown of the significant changes and what they mean:
**Effective Date and Implementation**
The updated Uniform Guidance is set to take effect on October 1, 2024. An implementation memorandum has been released alongside the updates, directing federal agencies to implement these revisions by the effective date and providing additional tools to enhance the management of federal financial assistance.
**Key Updates in the Uniform Guidance**
- Burden Reduction: One of the primary objectives of the 2024 revisions is to reduce compliance costs and administrative overhead for recipients. The Guidance modifies several requirements to simplify compliance, including reducing the number of prior approvals needed from federal agencies for specific activities. The revision:
- Increased to a value of $10,000 for equipment which the grantee has no further responsibility to the Federal Agency
- Increased to a value of $10,000 for unused supplies which the grantee much sell at the end of the grant award period
- Increased the Single Audit threshold from $750,000 to $1,000,000
- Increased to $500,000 the amount of fixed subawards that a recipient may provide with prior written approval from the Federal Agency
- Increased the De Minimis indirect rate to 15%
- Increased the amount of subaward recipients can include as part of Modified Total Direct Costs to $50,000 per subaward
- Close Out Activities: The Uniform Guidance allows for certain administrative costs associated with close out activities to be charged to the final budget period and clarifies a recipient’s right to any remaining and available funds.
- Notices of Funding Opportunities (NOFOs): Federal agencies are now directed to simplify and shorten their NOFOs. The revised Guidance emphasizes the use of plain language and the inclusion of an Executive Summary section to make grant announcements more accessible to non-experts and smaller organizations. This change is particularly aimed at increasing participation from underserved communities.
- Evaluation and Data Gathering and Analysis Activities: The updated Guidance lets recipients use part of their funding for evaluation, data gathering, and analysis, helping them improve and understand program impacts. This encourages data-driven decision-making and program evaluation.
This update allows grantees to charge evaluation, data gathering, and analysis costs as direct costs instead of indirect costs.
- Community Engagement: Agencies and recipients are encouraged to conduct community engagement activities. The revisions allow federal funds to be used for public participation, ensuring that affected communities have a voice in program development and implementation.
- Internal Controls and Cybersecurity: A new rule requires recipients and subrecipients to take reasonable cybersecurity measures to protect information, without specifying a particular framework, but stressing the need to safeguard sensitive data.
- Procurement Standards: The revisions expand procurement flexibility, particularly for Indian Tribes, allowing them to follow their own procurement policies and procedures.
- The ban on using geographic preferences has been removed, as long as they comply with the law. This change allows construction contractors to give hiring preferences to people from disadvantaged areas.
- Contractors may also be required to use hiring preferences or goals for individuals with barriers to employment
- Additionally, recipients can now use practices like Project Labor Agreements
Also:
- Recipients are now allowed to include written procedures in procurement processes that reward bidders who commit to providing specific jobs, pay levels, benefits, and worker protections.
- Recipients and subrecipients must conduct cost and price analysis for any procurement over the simplified acquisition threshold, including contract changes; prior to receiving bids or proposals.
- Mandatory Disclosures: Recipients and subrecipients must promptly disclose credible evidence of violations related to the civil False Claims Act or federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations.
- Prohibition on Certain Equipment: The Guidance prohibits the purchase of specific telecommunications and video surveillance services or equipment using federal funds, aligning with broader federal efforts to secure information and communication technologies.
Implementation and Compliance
The OMB has issued an implementation memorandum directing agencies to put these revisions into effect by October 1, 2024. Agencies have the flexibility to apply the final guidance to federal awards issued prior to this date, with an effective date no earlier than 60 days after the final rule’s publication.
To facilitate compliance, the OMB is providing additional tools and resources, including reference guides and a redline document showing the 2024 revisions. Agencies are required to adopt the revised Uniform Guidance in full unless specific statutory provisions or OMB-approved exceptions apply.
The revisions to the OMB Uniform Guidance aim to improve federal financial assistance by reducing administrative burdens, increasing transparency, and promoting fair access. These updates help ensure federal funds are used effectively. Recipients and subrecipients should learn the new rules and use available resources to ensure compliance and maximize their program’s impact.
Rubino has extensive experience in ensuring that nonprofit organizations remain compliant with all requirements and are here to help you understand their full benefits and implications.
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