Transforming the Landscape of Federal Financial Assistance

Today, the Administration is implementing measures to significantly overhaul and strengthen Federal grant-making regulations to improve outcomes for the American people.  The culmination of a three-year collaborative effort across Federal agencies, the rule released today by the cross-agency Council on Financial Assistance Reform (COFAR) will effectively implement OMB guidance on grant-making across Federal agencies.  These measures will reduce the total volume of financial management regulations for Federal grants and other assistance by 75%, and reduce administrative burdens and risk of waste, fraud, and abuse for the approximately $600 billion in Federal grants expended annually.  

A key Administration priority, OMB has worked with agencies to focus Federal grant resources on improving performance and outcomes while ensuring the financial integrity of taxpayer dollars. Last December 2013, based on extensive public input, OMB published the guidance, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (“Uniform Guidance”),  to agencies in the Federal Register that would streamline eight Federal regulations into a single, comprehensive policy guide (2 CFR 200). OMB set a one-year timeline for the Uniform Guidance to take effect, allowing enough time for Federal grant-making agencies and award recipients to update their policies to fully realize the benefits of the Uniform Guidance. Today’s action implements the Uniform Guidance across Federal grant-making agencies through an interim final rule, which will allow for additional feedback on the rule during a 60-day public comment period. The interim final rule will be effective for new awards made on or after December 26, 2014.

Key policy reforms in the Uniform Guidance will:

• Allow state, local, and tribal governments to work in partnership with universities and non-profits to design the programs that best meet their local communities’ needs and obtain flexibility and enhanced coordination from the Federal government.
• Allow universities to hire staff to do the administrative work that directly benefits grants so that scientists can focus on science.
• Allow nonprofits and other organizations that have never been reimbursed for indirect costs to use a standard minimum rate that supports the fundamental operations of the organization; removing a key barrier to entry and opening up competition for Federal awards.
• Publish Single Audit reports online, eliminating a burdensome paper-chase for reporting and providing the public with key information to strengthen oversight of Federal tax dollars.
• Raise the threshold for required audits from $500,000 to $750,000 in Federal awards expended per year, maintaining oversight for 99% of dollars audited now, but focusing the resources to reduce risk of waste, fraud, and abuse.
• Emphasize the long-standing requirement for non-Federal entities to have strong internal controls that are appropriate to the organization, while relaxing overly prescriptive and obsolete procedural requirements.

Taken as a whole, this historic reform will transform the landscape for financial assistance for generations to come.  To realize today’s actions, the COFAR in coordination with OMB, engaged the larger public for direct input and worked directly with stakeholders to navigate between competing priorities, facilitate implementation, evaluate effectiveness, and push this important reform effort forward.

But the dialogue does not end today.  The COFAR has already begun work with Federal agencies and non-Federal stakeholders to evaluate the impact of this guidance based on key metrics.  We invite you to join the conversation at cfo.gov/COFAR as we provide resources to support smooth implementation of the guidance and identify further opportunities for improvement.

To comment on the rule within 60-days, please visit www.regulations.gov.

Dave Mader is the Controller of the Office of Management and Budget.