OMB Allows Indirect Cost Base Exception for CRF Funds
The Office of Management and Budget (OMB) this week responded to concerns raised by Coronavirus Relief Fund (CRF) recipients related to indirect costs.
Section 200.102(a) of the OMB uniform guidance enables OMB to allow exceptions for classes of federal awards or nonfederal entities that are subject to the uniform guidance as long as the exceptions are not prohibited by statute. Referring to this clause, OMB has approved a class exception to the allocable costs provisions at §200.405(b), which states that “all activities which benefit from the nonfederal entity’s indirect (F&A) cost, including unallowable activities and donated services by the nonfederal entity or third parties, will receive an appropriate allocation of indirect costs.
State, local and tribal governments receiving CRF funds from the departments of Health and Human Services and Interior can now exclude from the direct cost base in the indirect cost rate calculation any CRF funds.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub. L. 116-136) established the $150 billion CRF program, which does not allow for federal reimbursement of indirect costs. The fund distributed $8 billion to 709 tribal governments and $142 billion to all 50 states, 171 local governments with populations exceeding 500,000, the District of Columbia, and the U.S. territories (the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands).
OMB had received requests from the governmental entities that received these CRF funds to exclude from the computation of indirect cost rates all the CRF funding that does not allow the recovery of indirect costs, since including them would result in unintended reductions to the actual amount of indirect cost of funding received by these entities. This week's announcement allows for that exclusion. Entities seeking any additional information and instructions on the application of this exception are advised to refer to the Department of Interior and the Department of Health and Human Services websites.
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