The Office of Management and
Budget (OMB) establishes federal grant management policies and cost principles
through OMB circulars and common rules. These policies and cost principles are
then incorporated into each relevant agency's applicable Federal regulations.
Recently, the OMB revised these policies and cost principles.
OMB issued Federal Register Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Final Rule (Uniform Guidance) on December 26, 2013. The Uniform Guidance applies to all Federal awards made on or after December 26, 2014.
The Uniform Guidance supersedes and streamlines requirements from the following eight OMB Circulars applicable to the administration, use, and audit of federal grant funds by nonprofit organizations, state, local and tribal governments, and colleges and universities:
- A-122 (Cost Principles for Non-Profit Organizations)
- A-87 (Cost Principles for State, Local, and Indian Tribal Governments)
- A-21 (Cost Principles for Educational Institutions)
- A-110 (Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profits)
- A-102 (Grants and Cooperative Agreements with State and Local Governments)
- A-89 (Federal Domestic Assistance Program Information)
- A-133 (Audits of States, Local Governments, and Non-Profit Organizations)
- A-50 (Audit Follow-Up)
The Uniform Guidance is the first consolidation of federal grant management requirements since they were first issued as circulars in the 1980s. Federal grant financial and administrative requirements used to be found in eight separate documents, and the Uniform Guidance represent not only the first time they've been consolidated into a single set of regulations, but also the first time they've been updated in a number of years.
The Uniform Guidance applies to federal agencies that make federal awards to non-federal entities (such as states) as well as to non-federal entities that receive federal grant funds. Under Uniform Guidance, a non-federal entity receiving federal grant funds may be a pass-through entity of those funds (such as a state receiving WIOA funds from USDOL) or a subrecipient receiving federal funds through a subaward (such as Local Workforce Development Boards receiving WIOA funds from a state). Unless the terms and conditions of a federal award (WIOA) state differently, all non-federal entities that provide a subaward to carry out part of a federal program are required to follow Uniform Guidance requirements. A grace period of one year is allowed for procurement revision adoptions. Additionally, a grace period of one year is allowed for audit implementation requirements.
It's important to distinguish this Final Rule notification from the later issued implementation publication. OMB issued Federal Register implementation notification on December 19, 2014, containing OMB's technical amendments as well as USDOL exceptions to the Final Rule codified at 2 CFR 2900. So, the Final Rule was published on December 26, 2013, and made effective in the publication on December 19, 2014.
Federal cost principles are intended to establish a uniform approach for determining costs and promoting effective program delivery, efficiency, and better relationships between grant recipients, subrecipients, and the Federal government. The principles are promulgated to determine allowable costs, enforce compliance with Federal grant requirements, and ensure that the Federal Government bear its fair share of costs except where restricted or otherwise prohibited by law. Additionally, Federal cost principles are applied by all Federal agencies in determining costs incurred by state governmental units under performance of a federal award. These principles are likewise applicable to all subawards and affiliated subrecipient organizations.
The Office of Management and Budget's website can be accessed by clicking here.
Federal Cost Principles and relevant circulars applicable to the
Workforce Investment Act prior to Uniform Guidance implementation are listed below. Click on the appropriate link to
access the individual cost principle related to your particular
type of organization.
OMB Circular A-21: Cost
Principles for Educational Institutions (2 CFR Parts 215 and 220), click here
OMB Circular A-87: Cost
Principles for State and Local Governments (2 CFR Part 225), click here
OMB Circular A-122: Cost
Principles for Non-Profit Organizations (2 CFR Part 230), click here
48 CFR Chapter 1, Part 31:
Contract Cost Principles and Procedures, click
All four cost principles contain
similar allocability, reasonableness, consistency, and documentation
requirements. Each OMB circular contains allowability determinations for
individual cost items, most of which remain uniform across all three circulars.