OMB Uniform Guidance Hot Topics and Implementation. July 18, 2014: The University of Alabama in Huntsville

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Henry Gibbs
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2 Special attention will be paid to those sections of the that carry the most uncertainty and that may require significant institutional planning and preparation. The purpose of this session is not to provide guidance and/or best practices related to your institution preparation and implementation of the.

What should we be doing? Check in regularly with: https://cfo.

3 What should we be doing? Check in regularly with: Follow the Federal Register and agency plans Pay close attention to advice from your professional associations (eg: COGR, FDP, NCURA, SRA, etc.) By now, institutions should have a Point of Contact and Plan Leverage many in the institution Plan: PIs, all levels of Administration, IT, and your experts from Purchasing, Payroll, etc. Start developingyour InstitutionTrainingprogram Find comfort with uncertainty; there still is a lot to learn! DO NO HARM!

4 Hot Issues Effective/Applicability Date Conflict of Interest Program Income Procurement Standards Equipment Fixed Amount Subawards Closeouts Cost Accounting Standards and Disclosure Statements Compensation Fringe Benefits Depreciation

5 Effective/Applicability Date (a) Federal agencies must implement the policies and procedures applicable to Federal Awards by promulgating a regulation to be effective by December 26, 2014 unless difference provisions are required by statute or approved by OMB. Will apply to awards or funding increments after that date. Will not retroactively change the terms and conditions for funds already received. Timeframe allows inadequate opportunities to propose costs in compliance with the UG and agencies implementing regulations. After 12/26/14, grantees will be managing awards under both A110/A21 and the UG, if applicable. Applicability to F&A rates is unclear

6 Conflict of Interest The federal awarding agency must establish conflict of interest policies for Federal awards. The non-federal entity must disclose in writing any potential conflict of interest to the Federal awarding agency or pass-through entity in accordance with applicable Federal awarding agency policy. Potential for multiple policies across agencies UG uses the phrase, disclose any potential conflict. Current university investment in managing PHS financial conflict of interest policies is staggeringly high, and this new requirement could be a substantial new administrative burden. Universities will need to update COI policies. Good News: COFAR provided clarification that this section refers solely to business and procurement conflicts.

7 Program Income (e) Use of program income For Federal awards made to IHEs and nonprofit research institutions, if the Federal awarding agency does not specify in its regulations or the terms and conditions of the Federal award how program income is to be used, paragraph (e)(2) [i.e., Additional method] of this section must apply When the Federal awarding agency authorizes the approaches in paragraph (e)(2) and (3) [i.e., Cost sharing or matching] of this section, program income in excess of any amounts specified must also be deducted from expenditures. Bayh-Dole supersedes treatment of license fees and royalties. Statutory laws supersedes UG! Program income includes... the use or rental of real or personal property acquired under Federal awards, the sale of commodities or items fabricated under a Federal award, license fees and royalties on patents and copyrights, and principal and interest on loans made with Federal award funds (200.80). The federal awarding agency may negotiate agreements with recipients regarding appropriate uses of income earned after the period of performance as part of the grant closeout process.

8 Procurement Standards General Procurement Standards (c)(1) The non-federal entity must maintain written standards of conduct covering conflicts of interest and governing the performance of its employees engaged in the selection, award, and administration of contracts... (d) The non-federal entity s procedures must avoid acquisition of unnecessary or duplicative items (i) The non-federal entity must maintain records sufficient to detail the history of procurement. These records will include, but are not necessary limited to the following: rationale for the method of procurement, selection of contract type, contractor selection or rejection, and the basis for the contract price. Change in procedures/processes Processes/resources in place to track prior purchased to avoid duplication of items Requires documentation of price or rate quotes from multiple vendors for items over $3,000

9 Procurement Standards Competition (a) All procurement transactions must be conducted in a manner providing full and open competition consistent with the standards of this section (b) The non-federal entity must conduct procurement in a manner that prohibits the use of statutorily or administratively imposed state or local geographical preferences... (c) The non-federal entity must have written procedures for procurement transactions. These procedures must ensure.. (d) The non-federal entity must ensure that all prequalified lists of persons, firms, or products... Are current and include enough qualified sources to ensure maximum open and free competition Will require changes to current institutional practices. Potential conflict for public universities who follow State procurement laws and regulations. Subsequent burden to comply with the enhanced requirements.

10 Procurement Standards Method of procurement to be followed (a) Procurement by micro-purchase. Procurement by micropurchase is the acquisition of supplies or services, the aggregate dollar amount of which does not exceed $3,000 (or $2,000 in the case of acquisition for construction subject to the Davis-Bacon Act). To the extent practicable, the non-federal entity must distribute micro-purchases equitably among qualified suppliers. Micro-purchases may be awarded without soliciting competitive quotations if the non-federal entity considers the price to be reasonable. (b) Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the Simplified Acquisition Threshold ($150,000). If small purchase procedures are used, price or rate quotations must be obtained from an adequate number of qualified sources. Requires some type of competitive analysis of different vendor prices and products for items ordered between $3,000- $150,000. Effectively limits the use of the procurement cards to transactions of less than $3,000 Will impact your institution established competitive bid threshold. Will have significant implications for acquisitions made using procurement cards. May have implications for procurement card cash back programs. Modification of procurement systems.

11 Procurement Standards Method of procurement to be followed (f) Procurement by noncompetitive proposals. Procurement by noncompetitive proposals is procurement through solicitation of a proposal from only one source and may be used only when one or more of the following circumstances apply: (1) The item is available only from a single source; (2) The public exigency or emergency for the requirement will not permit a delay resulting from competitive solicitation; (3) The Federal awarding agency or pass through entity expressly authorizes noncompetitive proposals in response to a written request from the non-federal entity; or (4) After solicitation of a number of sources, competition is determined inadequate. Sponsors approval required for sole source justification. Delay in purchasing essential research supplies and services. Words To The Wise: Establish an institution approved definition of vendor vs subcontractor.

12 Research Administrators With Blindfolds The : What do you see?

13 Gina Hedberg, Director, Office of Sponsored Projects Administration University of South Alabama Post Award

14 Closeout The Federal agency or pass-through entity will close-out the Federal award when it determines that all applicable administrative actions and all required work of the Federal award have been completed by the non-federal entity (a) The non-federal entity must submit, no later than 90 calendar days after the end date of the period of performance, all financial, performance, and other reports as required by the terms and conditions of the Federal award. The Federal awarding agency or pass-through entity may approve extensions when requested by the non-federal entity. Language modifies to extend the closeout period from an award from 180 days to one year begins with final reports received from non-federal entity. Subaward impact coordinating all to meet deadline Added pressure on agencies to ensure timely closeout rather than a focus on compliant closeout Enforcement may include withholding future awards or restricting draw down of funds beyond the 90-day timeline. (g) The Federal awarding agency or pass-through entity should complete all closeout actions for Federal awards no later than one year after receipt and acceptance of all required final reports.

15 Fixed amount Subawards With prior written approval from the Federal awarding agency, a pass-through entity may provide subawards based on fixed amounts up to the Simplified Acquisition Threshold, provided that the subawards meet the requirements for fixed amounts awards in Use of fixed subawards up to the SAT (see Subpart A, Definitions, ) requires prior written approval from agency. What standards will agencies use to approve fixed subawards? What about subawards exceeding $150,000? What is the treatment of subawards initiating below $150,000 but then exceeding that amount later?

16 Equipment (a) Title Subject to the obligations and conditions set for the in this section, title to equipment acquired under a Federal award will vest upon acquisition in the non-federal entity the title must be a conditional title. (d) Management requirements. Procedures for managing equipment (including replacement equipment) whether acquired in whole or in part under a Federal award. (1) Property records must be maintained that include a description of the property, a serial number or other identification number, the source of funding for the property (including the FAIN), who hold the title, the acquisition date, and the cost of the property, percentage of Federal participation in the project costs for the Federal award under which the property was acquired, the location, use and condition of the property, and any ultimate disposition data including the date of disposal and sale price of the property. Change in terminology requires clarification. How is the new term conditional title applied? Property record requirements could change procedures addressing inventory additional burden? Groups are seeking clarification on percentage of Federal participation in the project costs and use and condition.

17 OMB for Federal Awards In 2013, the Federal Office of Management and Budget (OMB) issued final guidance on administrative requirements, cost principles and audit requirements for federal awards (which includes research grant awards). Per the OMB website, this guidance will supersede requirements from OMB Circulars A-21, A-87, A-110 and A-122 (which have been placed in 2 C.F.R. Parts 220, 225, 215 and 230); Circulars A-89, A-102 and A-133; and the guidance in Circular A-50 on Single Audit Act follow-up. The announcement in the Federal Register, Volume 78, Number 248, on December 26, 2013 includes a long preamble that describes the objectives of OMB and the Council on Financial Assistance Reform (COFAR), the background surrounding the guidance and the major reforms. The actual text of the guidance as codified in 2 CFR Part 200 follows the preamble.

19 Valarie King, Director, Contracts and Grants Accounting The University of Alabama in Huntsville Cost Principles

20 Direct Cost The salaries of administrative and clerical staff should normally be treated as indirect (F&A) costs. Direct charging of these costs may be appropriate only if all of the following conditions are met: Departmental administrative pool may decrease and the MTDC base may 1) Administrative or clerical services are integral to a project or activity; (2) Individuals involved can be specifically identified with the project or activity; (3) Such costs are explicitly included in the budget or have the prior written approval of the Federal awarding agency; and (4) The costs are not also recovered as indirect costs

21 Indirect Cost Negotiated rates must be accepted by all Federal awarding agencies unless an exception is required by Federal statute or regulation or when approved by a Federal awarding agency head Institution that don t have negotiated rate may elect to charge a de minimis rate of 10% of MTDC Negotiated rates can be extended up to four years with cognizant agency approval Any deviation requires agency head approval and notification sent to OMB Institutions that elected to charge the 10% de minimis rate does not need to conduct an indirect cost rate calculation Onetime request of the current negotiated rate Entity may not request a rate review until the extension period ends

22 Certifications By signing this report, I certify to the best of my knowledge and belief that the report is true, complete, and accurate, and the expenditures, disbursements and cash receipts are for the purposes and objectives set forth in the terms and conditions of the Federal award. I am aware that any false, fictitious, or fraudulent information, or the omission of any material fact, may subject me to criminal, civil or administrative penalties for fraud, false statements, false claims or otherwise. (U.S. Code Title 18, Section 1001 and Title 31, Sections and ). Penalties under the False Claim Act Certification must be signed by an official who is authorized to legally bind the organization

23 Cost Accounting Standards (CAS) and Disclosure Statement Threshold to file a disclosure statement (DS-2) is raised to $50M Reduces the burden of filing or maintaining a DS-2 if federal awards are less than $50M An IHE must file amendments to the DS-2 to the cognizant agency for indirect costs six months in advance of a disclosed practices being changed Clarifies the process for making changes to the DS-2 and establishes a six month advance approval An IHE may proceed with implementing the change only if it has not been notified by the Federal cognizant agency for indirect costs that either a longer period will be needed for review or there are concerns with the potential change within the six months period change

24 Compensation Fringe Benefits When a non-federal entity uses the cash basis of accounting, the cost of leave is recognized in the period that the leave is taken and paid for. Payments for unused leave when an employee retires or terminates employment are allowable as indirect costs in the year of payment May require changes in the methodology for accounting for and treatment of leave when an employee retires or terminates employment Depreciation Restrictions on the use of indirect cost recovered for depreciation or use allowance are eliminated Eliminates the administrative burden associated with monitoring and accounting for depreciation or use allowance

25 References Crosswalk from Final Guidance to Existing Guidance Electronic Code of Federal Regulations Cost Principles Comparison Chart 2 CFR Part 225 (A-87), 2 CFR Part 220 (A-21), 2 CFR Part 230 (A-122), and Final Uniform Guidance OMB Policy Statement: : Audit Requirements Comparison Chart OMB Circular A-133 and Proposed Subpart F Council on Financial Assistance Reform (COFAR):

26 Presenters: Gloria Greene: Director, Office of Sponsored Programs - UAH greeneg@uah.edu ( ) Gina Hedberg, Director, Office of Sponsored Projects Administration - USA ghedberg@southalabama.edu ( ) Valarie King, Director, Contracts and Grants Accounting - UAH Valarie.King@uah.edu ( )

Uniform Guidance Super Circular 2 CFR Part 200

Uniform Guidance Super Circular 2 CFR Part 200 MSU First Looks and Future Plans May 27, 2014 Dan Evon, Contract & Grant Administration The Rules Contracts Federal Acquisition Regulations (FAR) Grants and