OMB Proposes Revisions to the Uniform Guidance 

October 12, 2023

On October 5, 2023, the federal Office of Management and Budget (OMB) published proposed revisions to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), 2 C.F.R. Part 200, that would affect all federal grant recipients, including Community Action Agencies (CAAs). OMB cited four main objectives for the proposed revisions, including (1) incorporating statutory requirements and administration priorities; (2) reducing agency and recipient burden; (3) clarifying differing interpretations; and (4) rewriting sections in plain language, improving flow, and addressing inconsistent use of terms.  

If implemented, the proposed revisions would make some key changes to the Uniform Guidance, including:  

• Increasing thresholds such as the: 
  • De minimis rate for indirect cost recovery from 10% to 15%; 
  • Amount of subaward costs counted within the Modified Total Direct Cost (MTDC) base from $25,000 to $50,000;  
  • Values for determining when equipment per unit or supplies in the aggregate can be retained, sold or disposed of without further responsibility to the Federal agency/pass-through from $5,000 to $10,000; and 
  • Federal funds expenditure amount that triggers a Single Audit from $750,000 to $1 million; 
     

• Replacing the term “non-federal entity” with recipient, subrecipient or both;  
   

• Adding new definitions, sometimes with examples, such as “continuation funding,” “key personnel,” “participant,” and “prior approval”; 
   

• Adding whistleblower protections for disclosures relating to a Federal contract or grant made by an employee who reasonably believes there is evidence of gross mismanagement, gross waste, abuse of authority, a substantial and specific danger to public health or safety, or a violation of law or regulation; 
   

• Removing the “simplified acquisition threshold” limit on the amount that a pass-through entity can issue as a subaward to provide greater flexibility in making programmatic and budgetary decisions;  
   

• Clarifying recovery of closing costs, including paying for certain closeout costs with program income, and charging administrative costs specifically associated with closeout and incurred until the due date of the final reports; 
   

• Removing certain prior written approval requirements to reduce Federal agency and recipient burden; 
   

• Encouraging recipients to purchase, acquire or use products and services that can be reused, refurbished or recycled; 
   

• Clarifying that recipients and subrecipients may notify OMB of any disputes with regards to a Federal agency’s application or acceptance of a federally negotiated indirect cost rate; and 
   

• Emphasizing some key policies regarding indirect costs and the use of indirect cost rates, including that pass-through entities must accept all federally negotiated indirect cost rates, and Federal agencies may not compel recipients and subrecipients to use an indirect rate lower than the proposed 15% de minimis rate, unless required by statute. 
   

CAPLAW is continuing to review the proposed changes and will keep the network updated regarding the potential impact of these changes on CAAs. OMB is currently seeking public comment on the proposed rule. Comments are due by December 4, 2023, and can be submitted via Regulations.gov here.