2024 Revised Uniform Guidance Becomes Effective for New Awards
Recipients and subrecipients receiving new federal financial assistance awards or modifications to existing awards will now follow the 2024 revisions to the uniform guidance (2 C.F.R. Part 200), which became effective Oct. 1. Amendments to other parts within subtitle A of Title 2 of the Code of Federal Regulations also now apply to these awards.
The Office of Management and Budget (OMB) issued final guidance on April 22 that revised the uniform guidance and the other parts of Title 2, which include Part 25, Universal Identifier and System for Award Management; Part 170, Reporting Subaward and Executive Compensation Information; Part 175, Award Term for Trafficking in Persons; Part 180, OMB Guidelines to Agencies on Governmentwide Debarment and Suspension (Nonprocurement); Part 182, Governmentwide Requirements for Drug-Free Workplace (Financial Assistance); Part 183, Never Contract with the Enemy; and Part 184, Buy America Preferences for Infrastructure Projects. The revisions aimed to simplify the guidance by putting it in “plain English”; reduce agency and recipient burdens; make notices of funding opportunity easier to understand to encourage submissions by a broader range of applicants; and promote administrative priorities.
The updated guidance includes one new provision at §200.217 on whistleblower protections. This provision states that “an employee of a recipient or subrecipient may not be discharged, demoted or otherwise discriminated against as a reprisal for disclosing to a person or body described in paragraph (a)(2) of 41 U.S.C. 4712 information that the employee reasonably believes is evidence of gross mismanagement of a federal contract or grant, a gross waste of federal funds, an abuse of authority relating to a federal contract or grant, a substantial and specific danger to public health or safety, or a violation of law, rule or regulation related to a federal contract (including the competition for or negotiation of a contract) or grant. The recipient and subrecipient must inform their employees in writing of employee whistleblower rights and protections under 41 U.S.C. 4712.”
In addition, the revised guidance also adds four new definitions under §200.1 in subpart A: continuation funding, for-profit organization, participant and prior approval.
Single Audit Threshold
One of the key updates in the guidance — which now generally uses the term “recipient and subrecipient” instead of “nonfederal entity” in subparts A-E — is the increase in the single audit threshold from $750,000 in federal funds awarded annually to $1 million, effective for recipient fiscal years starting Oct. 1, 2024 (§200.501). Therefore, awardees should be aware that this increase essentially will first apply to audits for many entities beginning with that Oct. 1, 2024-Sept. 30, 2025, fiscal year. For example, the single audit threshold for an entity with a July 1, 2024,-June 30, 2025, fiscal year would still be $750,000.
Another key change to note is the mandatory disclosure provision (§200.113) in subpart B, which OMB updated to better align the guidance with the mandatory disclosure requirement under the Federal Acquisition Regulations (FAR). This provision clarifies that applicants, recipients and subrecipients of a federal award must promptly disclose whenever, in conjunction with the federal award, it has credible evidence of the commission of a violation of federal criminal law involving fraud, conflict of interest, bribery or gratuity violations found in Title 18 of the U.S. Code or a violation of the civil False Claims Act. The provision requires recipients and subrecipients to report matters related to integrity and performance in accordance with Appendix XII, and failure to do so can result in the imposition of penalties (§200.339).
Emphasis on Cybersecurity
Within the post-award section (subpart D) of the guidance, OMB altered the internal control discussion at §200.303(e) to state that a recipient or subrecipient must “take reasonable cybersecurity and other measures to safeguard information including protected personally identifiable information (PII) and other types of information. This also includes information the federal agency or pass-through entity designates as sensitive or other information the recipient or subrecipient considers sensitive and is consistent with applicable federal, state, local and tribal laws regarding privacy and responsibility over confidentiality.”
Some grants consultants have urged recipients and subrecipients to be aware of the new cybersecurity requirement and thoroughly evaluate their accounting systems and email payment documentation in the wake of the new requirement and to ensure they are protecting PII. In addition, some federal agencies and pass-through entities may call for more-stringent cybersecurity measures compared to other agencies to achieve confidentiality.
The new revisions combine the requirements in the previous uniform guidance for construction and nonconstruction awards under the “revision of budget and program plans” provision (§200.308), thereby creating greater uniformity in the requirements for all award types. Further, under §200.308(f)(6), recipients do not always need to obtain prior approval for a change in subrecipients under all circumstances. “A change in subrecipient only requires prior approval if the federal agency or pass-through entity includes the requirement in the terms and conditions of the federal award. In general, a federal agency or pass-through entity should not require prior approval of a change of subrecipient unless the inclusion was a determining factor in the merit review or eligibility process,” the guidance states. “This requirement does not apply to procurement transactions for goods and services.”
In §200.313, the revisions increase the threshold fair market value for equipment from $5,000 to $10,000, and define a “conditional title.” They also: (1) require Indian tribes — similar to states — to use, manage and dispose of equipment under a federal award in accordance with tribal laws and procedures, if available (§200.313(b)); (2) denote that a recipient is responsible for maintaining and updating property records when there is a change in the status of the property (§200.313(d)(1)); (3) raise the amount that a recipient or subrecipient may retain from selling equipment from $500 to $1,000 from the federal share of proceeds to cover expenses associated with selling and handling the equipment (§200.313(e)(2)); and (4) enable a recipient to retain equipment, or permit a subrecipient to retain equipment, with no further obligation to the federal government if included in the terms and conditions of the award, unless prohibited by federal statute or regulation (§200.313(f)).
Similar to equipment, the threshold for supplies under §200.314(a) is being raised from $5,000 to $10,000. The revised guidance also includes a definition of “unused supplies” (i.e., supplies that are in new condition and have not been used or opened before) and notes that the aggregate value of unused supplies consists of all supply types, not just like-item supplies. In cases where supplies are sold, a recipient or subrecipient may retain $1,000 from the federal share to cover selling and handling expenses (similar to the level for equipment).
Recognition of Tribes
Related to procurement, OMB now recognizes Indian sovereignty by allowing Indian tribes, similar to states, to follow their own procurement policies and procedures under §200.317, which is now titled “Procurements by States and Indian Tribes.” If such policies do not exist, they must follow the procurement standards in §200.318 through §200.327.
The 2024 revisions remove the previous prohibition at §200.319(c) on using geographic preference requirements, and add a paragraph at §200.319(f) noting that recipients and subrecipients, to the extent consistent with established practices and applicable legal requirements, are not prohibited from “developing written procedures for procurement transactions that incorporate a scoring mechanism that rewards bidders that commit to specific numbers and types of U.S. jobs, minimum compensation, benefits, on-the-job-training for employees making work products or providing services on a contract, and worker protections.” In addition, recipients and subrecipients are not prohibited from making inquiries of bidders about these subjects and assessing the responses.
In the subrecipient monitoring discussion at §200.332, OMB has included an opening paragraph (§200.332(a)) stating that pass-through entities must “verify that a subrecipient is not excluded or disqualified in accordance with 2 C.F.R. §180.300. Verification methods are provided in §180.300, which include confirming in SAM.gov that a potential subrecipient is not suspended, debarred or otherwise excluded from receiving federal funds.”
There are many other revisions within Title 2 (for more information about uniform guidance changes to indirect cost rates and the cost principles within subpart E, see “De Minimis Rate Increases To Up to 15% for New Awards”). Thompson Grants is currently updating its analysis within its Knowledge Center modules to comply with the revisions. Grantees receiving new awards going forward should ensure that they comply with their award terms and conditions, which will reference the revised guidance, and have updated internal policies, procedures and internal controls to meet the new requirements.
For More Information
The 2024 revised uniform guidance is available at https://www.thompsongrants.com/guidance-and-regulations/omb-uniform-grants-guidance/uniform-guidance-2024-version-updated-april-22-2024.
