OMB Finalizes Major Grant Reforms

On December 26, 2013, the Office of Management and Budget (OMB) published final guidance in the Federal Register to implement specific reforms for federal policies relating to grants and cooperative agreements involving state and local governments as well as universities and nonprofit organizations. The reforms cover a wide range of areas, including administrative requirements, cost principles, and audit requirements.

The final guidance is similar to the notice of proposed guidance (NPG) that OMB published on February 1, 2013, although it does reflect some feedback received through the comment period. OMB received more than 300 responses from the grant community on both the NPG and the advanced notice of proposed guidance (ANPG) issued on February 28, 2012. The reforms are a result of several executive orders to reduce administrative burdens and increase flexibility, while at the same time targeting improper payments and improving program performance. Moreover, they reflect various ideas from OMB’s collaboration with federal, state, and local representatives and other key groups to evaluate potential federal grant reforms.

The final guidance streamlines requirements from eight existing OMB circulars into one document—Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards—that applies to grants and cooperative agreements made to state, local, and tribal governments, institutions of higher education, and nonprofit entities. The consolidation is intended to eliminate duplicative and conflicting provisions, clarify where policies are uniform, and highlight the differences that exist among entities. It also makes several modifications to existing requirements. The guidance is effective on December 26, 2014, for nonfederal entities, with some flexibility for a smooth transition period.