Are You Ready for the Changes in Title 2 of the Code of Federal Regulations?
The Office of Management and Budget (OMB) has drafted proposed changes to several parts of the OMB Guidance for Grants and Agreements located in title 2 of the Code of Federal Regulations (CFR), the rules governing the administration of federal grants, contracts, and cooperative agreements. The goal of these changes is to streamline compliance, and reduce the administrative burden for both federal agencies and organizations receiving federal funds. OMB’s objectives for proposed revisions are as follows:
Incorporating statutory requirements and administration priorities
Reducing agency and recipient burden
Clarifying sections where recipients or agencies have had divergent interpretations
Rewriting applicable sections in plain language. Improving flow, and addressing inconsistent use of terms
Several significant proposed revisions raise dollar thresholds to reduce agency and recipient burden, including:
Increasing the de minimis indirect cost rate from 10% to 15% in section 200.414 of Subpart E (pg. 324). The proposed change seeks to ensure fairer recovery of indirect costs, especially for smaller or inexperienced organizations lacking resources for formal rate negotiations. The guidance also clarifies that the de minimis rate is not applicable to cost reimbursement contracts and is not mandatory for recipients and subrecipients. If an entity has negotiated a greater indirect cost rate, they may continue to use it.
Increasing the threshold from $5,000 to $10,000 for determining items that are equipment and supplies in sections 200.313 and 200.314 of Subpart D (pg. 260, 261). Equipment valued at $10,000 or less per unit can be retained, sold, or disposed of without further responsibility to the Federal agency or pass-through entity. If there is a surplus of unused supplies worth over $10,000 at the end of the performance period and they are not required for other Federal awards, the recipient or subrecipient may retain or sell them.
Increasing the Single Audit Act audit threshold from a threshold of $750,000 to $1 million in section 200.501 of Subpart F (pg. 406). OMB reviewed audit submission data as well as economic data to determine the increase to this threshold. This means that non-Federal entities that expend less than $1,000,000 during their fiscal year are not required to have a single or program-specific audit for that year by the provisions of this part.
Increasing the allowable subaward costs within the Modified Total Direct Cost (MTDC) base from $25,000 to $50,000, as specified in Appendix VII of Part 200 (pg. 468). MTDC includes all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and the first $50,000 of each subaward, regardless of the subaward's period of performance under the award.
OMB is seeking comments on the proposed changes, which must be submitted electronically via www.regulations.gov before December 4th, 2023. Check back for Bronner’s next blog analyzing the impact of OMB’s proposed changes. Our Grants Management and Compliance experts are closely monitoring these proposed changes and are ready to guide your team through a dynamic regulatory environment. Learn more about Bronner’s Grant Management and Compliance work here.