Blog
November 29, 2023
Gil Tran shares more insight into proposed revisions
On November 9, 2023, Attain Partners’ Gil Tran, formerly of the Federal OMB, hosted a tremendously informative webinar around the upcoming Uniform Guidance changes titled Extreme Makeover: Uniform Guidance 2 CFR 200 Edition – Proposed Revisions, where he did a deep dive into the notable specifics, logistics, and impacts of the proposed revisions.
As a follow-up to this detailed session, we brought Gil back for a live Q&A session, moderated by Amanda Seymour, to answer the burning questions that remained after the webinar. Read further for a sample of just a few of the topics discussed and questions answered during this interactive session.
Tell us a little bit more about how applying the indirect cost rate to the newly proposed increased threshold on the subawards of $50k would require a revision to the IDC rate.
How does that work and what about with the threshold of equipment potentially being increased, do you have to revise your MTDC as well, to apply the F&A rate for equipment up to $10k instead of $5k?
It’s very important to understand that the effective date of the final revision is going to be for all the awards that start after that day, so let’s pick April 1st, 2024. That’s when the final revision comes into place, including the definition for the MTDC to go from $25k up to $50k, and equipment from $5k up to $10k. It’s going to be for awards that go into effect after that date. However, for the indirect costs charge on a bigger amount of a subaward up to $50k, or a larger amount of supplies ($10k), you are required to get a new indirect cost rate.
There are two ways to do it. The automatic way is by doing it the next time you submit an indirect cost proposal with the Department of Health and Human Service cost allocation services (CAS) or the Office of Naval Research (ONR) to get an update—or, if you think that the indirect cost recovery amount is going to have a big impact, you can request a federal renegotiation and a revised rate.
What would the IDC treatment be if a five-year project has a subaward that runs for the same five years at $50K each year?
Can the passthrough entity charge IDC for each year of the same subaward, or only for year one?
If you have a subaward for five years, you can only charge in the first year as the subaward is a continuous thing. Let’s say the subaward is $1M, divided up in 10 years. In order to consider as separate ten subaward portions, you must have separate annual reviews—before you start the second year (i.e., you have to have some kind of stoppage with an end date and reviews prior to the beginning and funding of the next year’s award), then you can charge every year. But, if your subaward is for 10 years continuously, you can only charge the first $50k once in the initial year.
Can you clarify between the words “contract” and “grants” when referring to the de-minimus rate?
It’s not allowed on cost reimbursement contracts, but is it allowed on grants?
That’s a good distinction because cost reimbursement contracts have some special treatment under the Uniform Guidance. And this is cost reimbursement contracts under FAR. So in Section (201.01 (c)), the Uniform Guidance has a discussion on the treatment of cost reimbursement contracts, and basically says they are excluded for most of the 2 CFR subpart requirements, but the cost principle applies. Only certain subparts apply to the cost reimbursement contracts—the subpart E. However, under this proposal, OMB clarifies that the de-minimus rate is not available for cost reimbursement contracts.
What is the purpose of the limitation of pension costs for state and local governments when they are not limited for the private sector?
Has there been appropriate consideration of the administrative effort in burden?
You really can’t compare public with the private sectors, right? The Uniform Guidance is to provide cost treatment requirements for federal funds provided to a nonprofit, the state and local government, colleges, universities—not the private sector. From my familiarity with the Uniform Guidance, the purpose of allowing the pension cost is basically that you have pension plans that are used consistently for both sides, whether you’re funded by the state or the federal government. The second part is that the state really pays the cost for the pension plans. The Uniform Guidance policy is that it would not pay for liability that has not been funded or accrued by the grantees. During my entire career with the federal government, the pension issue is probably one of the most complicated cases and areas.
Watch the recorded follow-up Q&A session here.
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