Uniform Guidance Rewrite Part 1: Overview

On April 4, 2024, the Office of Management and Budget (OMB) issued final changes to 2 CFR 200, “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards” (Uniform Guidance). The final changes follow OMB’s proposed revision published in fall 2023 and the public comment period; and mark the most significant update to the Uniform Guidance since the guidance was issued in December 2013.

The changes will take effect on October 1, 2024. Federal agencies may elect, but are not required, to adopt the updated guidance for federal awards issued prior to October 1. The OMB’s stated objectives for the changes are to (i) incorporate recent OMB policy priorities related to federal financial assistance; (ii) reduce agency and recipient burden; (iii) incorporate certain statutory requirements and clarify certain sections of the existing guidance; and (iv) revise the text to use plain language, improve flow, and standardize use of terms.

BRG will continue to summarize relevant topics covered in the OMB’s updates in the coming weeks. Significant updates include:

• Increasing the de minimis indirect cost rate from 10 to 15 percent over modified total direct costs
  • Modifying the definition of modified total direct costs to include the first $50,000 of each subaward, up from $25,000
• Increasing the threshold for a single audit or program-specific audit from $750,000 to $1 million
• Increasing the value of fixed-amount subawards that a recipient may procure with prior written approval from the federal agency from $250,000 to $500,000
• Removing the prior written approval requirement for certain cost items
• Adding “veteran-owned” to the types of businesses encouraged to be considered under a federal award
• Increasing threshold value for equipment from $5,000 to $10,000
• Requiring prompt disclosure when there is credible evidence of a violation of the False Claims Act or Title 18 of the US Code
• Allowing Indian tribes to use their own procurement policies and procedures

The Uniform Guidance sets forth the administrative requirements, cost principles, and audit requirements for federal awards to nonfederal entities such as colleges and universities, state governments, tribal entities, and nonprofit organizations. The guidance applies to new grant awards and noncompeting continuations made on or after December 26, 2014. Companies required to comply with the Uniform Guidance that fail to do so may be subject to audit findings and penalties, suspension or termination, loss of future awards, legal action, corrective action plans, and/or repayment of funds. These consequences depend on the scope and consistency of the noncompliance.

BRG’s Government Contracts and Grants Advisory practice provides a wide range of advisory services to companies, nongovernmental organizations, and not-for-profit organizations that provide mission-driven services under federally funded grants, contracts, or cooperative agreements. These organizations face a unique challenge to balance the need for compliant practices with limited budgets and resources. Many of our clients have a broad geographic footprint and are faced with additional complexities and risks associated with decentralized field office operations.