Guidance for Federal Financial Assistance

Federal RegisterApr 22, 2024

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OFFICE OF MANAGEMENT AND BUDGET

2 CFR Parts 1, 25, 170, 175, 180, 182, 183, 184, 200

Guidance for Federal Financial Assistance

AGENCY:

Office of Federal Financial Management, Office of Management and Budget

ACTION:

Final rule; notification of final guidance.

SUMMARY:

The Office of Management and Budget (OMB) is revising the OMB Guidance for Grants and Agreements, which is now called the OMB Guidance for Federal Financial Assistance. The final guidance reflects public comments received in response to the OMB Notification of Proposed Guidance published in October 2023 and comments received from Federal agencies. In response to comments, OMB is revising and updating the guidance to incorporate recent OMB policy priorities related to Federal financial assistance and to reduce agency and recipient burden. OMB is also incorporating certain statutory requirements and clarifying certain sections of the prior version of the guidance that recipients or agencies have interpreted in different ways. OMB is also making revisions to use plain language, improve flow, and address inconsistent use of terms within the guidance text. Finally, OMB is making revisions to improve Federal financial assistance management, transparency, and oversight through more accessible and readily comprehensible guidance.

DATES:

The effective date for the final guidance is October 1, 2024. Federal agencies may elect to apply the final guidance to Federal awards issued prior to October 1, 2024, but they are not required to do so. For agencies applying the final guidance before October 1, 2024, the effective date of the final guidance must be no earlier than June 21, 2024.

FOR FURTHER INFORMATION CONTACT:

Andrew Reisig or Steven Mackey at the OMB Office of Federal Financial Management via email at

MBX.OMB.Grants@OMB.eop.gov

SUPPLEMENTARY INFORMATION:

Executive Summary

The Office of Management and Budget (OMB) is revising several parts of the OMB Guidance for Grants and Agreements, now called the OMB Guidance for Federal Financial Assistance, located in title 2 of the Code of Federal Regulations (CFR). These revisions provide clarity and updated guidance to Federal agencies regarding the consistent and efficient use of Federal financial assistance. This document includes revisions to Part 1 (About Title 2 of the Code of Federal Regulations and Subtitle A); Part 25 (Unique Entity 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 Government-Wide Debarment and Suspension (Non-procurement); Part 182 (Government-Wide Requirements for Drug-Free Workplace (Financial Assistance); Part 183 (Never Contract with the Enemy); Part 184 (Buy America Preferences for Infrastructure Projects); and Part 200 (Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards).

As explained in further detail below, OMB is revising its guidance in 2 CFR for the purpose of: (1) incorporating statutory requirements and administration priorities; (2) reducing agency and recipient burden; (3) clarifying sections that recipients or agencies have interpreted in different ways; and (4) rewriting applicable sections in plain language, improving flow, and addressing inconsistent use of terms within the guidance. OMB's revisions are intended to improve Federal financial assistance management, transparency, and oversight through more accessible and easily understandable guidance.

OMB summarizes its policy changes in this document below. OMB also explains its general methodology for plain language revisions. OMB sought to maintain the existing structure of the 2 CFR guidance, which remains generally intact and mostly consistent with earlier iterations of the guidance in this final version. For example, OMB generally maintained the structure of parts, subparts, and sections of the guidance. Except in cases where OMB made policy changes or other edits for consistency with statutory requirements, OMB also generally sought to maintain the existing content of the 2 CFR guidance. In many cases throughout the guidance, however, OMB included plain language revisions to simplify the guidance text, avoid or reduce technical jargon where feasible, provide greater consistency, and make the text more succinct.

The revisions align with OMB's authority to: (i) issue guidance promoting consistent and efficient use of Federal financial assistance instruments; and (ii) provide overall direction and leadership to Federal agencies on policies and requirements related to Federal financial assistance.

See

31 U.S.C. 6307 and 31 U.S.C. 503(a)(2). Additional authorities for the revisions are set forth below. Many of OMB's proposed revisions reflected comments received from Federal agencies and those received from the public in response to the OMB Notice of Request for Information published in the

Federal Register

in February 2023.

See

88 FR 8480 (Feb. 9, 2023). In the final revisions provided through this document, OMB responds to public comments received in response to the OMB Notification of Proposed Guidance published in the

Federal Register

in October 2023.

See

88 FR 69390 (Oct. 5, 2023).

Background

Between 2012 and 2013, OMB worked with Federal agencies to revise and streamline existing guidance to develop the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance) located in part 200 of 2 CFR. 79 FR 78589 (Dec. 26, 2013). This effort was intended to assist programs in delivering better outcomes on behalf of the American people while simultaneously reducing administrative burden and the risk of fraud, waste, and abuse. The Uniform Guidance in part 200, which OMB established in 2013, consolidated, streamlined, and superseded requirements from several earlier OMB Circulars and guidance documents related to Federal financial assistance management and implementation of the Single Audit Act. OMB explained in 2013 that its guidance intended to improve both the clarity and accessibility of these requirements across the Federal government. Federal award-making agencies implemented the Uniform Guidance through an interim final rule, which became effective on December 26, 2014. 79 FR 75867 (Dec. 19, 2014).

OMB periodically reviews the Uniform Guidance in accordance with 2 CFR 200.109. For example, OMB made further revisions to the Uniform Guidance in 2020. 85 FR 49506 (Aug. 13, 2020). The 2020 revisions addressed topics including program development and design, as well as measuring recipient performance to assist Federal awarding agencies and non-Federal entities to improve program goals and objectives, share lessons learned, and adopt promising performance practices.

On February 9, 2023, OMB issued a Notice of Request for Information in the

Federal Register

, which explained that OMB was beginning the process of

seeking public input for its proposed revisions to OMB's guidance in 2 CFR.

See

88 FR 8480 (Feb. 9, 2023).

On October 5, 2023, OMB issued a Notification of Proposed Guidance in the

Federal Register

, which explained that OMB was proposing revisions to parts 1, 25, 170, 175, 180, 182, 183, and 200 in 2 CFR, subtitle A. 88 FR 69390 (Oct. 5, 2023). OMB established these parts of the 2 CFR guidance at different times in the last 20 years. See, for example, 69 FR 26276 (May, 11, 2004) (establishing 2 CFR for guidance on grants and other financial assistance and nonprocurement agreements); 70 FR 51863 (Aug. 31, 2005) (establishing part 180); 75 FR 55671 (Sep. 14, 2010) (establishing part 25); and 75 FR 55663 (Sep. 14, 2010) (establishing part 170).

Based on OMB's review of the many public comments received and ongoing engagement with Federal agencies, OMB finds that revisions are warranted to subtitle A of 2 CFR—including parts 1, 25, 170, 175, 180, 182, 183, 184, and 200—to further streamline, clarify, and update the guidance, including raising certain thresholds, where permissible under law, in recognition of inflation and other contributing factors. Further information on OMB's objectives for the revisions is provided below.

OMB Objectives

OMB's objectives for the current round of revisions to several parts of subtitle A of 2 CFR include: (1) incorporating statutory requirements and administration priorities; (2) reducing agency and recipient burden; (3) clarifying sections that recipients or agencies have interpreted in different ways; and (4) rewriting applicable sections in plain language, improving flow, and addressing inconsistent use of terms.

The revisions to the Uniform Guidance in part 200 and other parts of 2 CFR generally support these four objectives. In support of objective (1)—incorporating statutory requirements and administration priorities—OMB made changes throughout the Uniform Guidance and other parts of 2 CFR to ensure consistency with statutory authorities. For example, OMB revised Parts 25, 170, and 175 to ensure its guidance properly aligns with underlying statutes, as amended. These revisions further align OMB's guidance with the authorizing statutes to ensure proper implementation. OMB also made several structural changes to individual parts within Chapter I to provide further structural consistency throughout OMB's guidance in 2 CFR.

In support of objective (2)—reducing agency and recipient burden—OMB increased several monetary thresholds that have not been updated for many years. For example, OMB increased the single audit threshold from $750,000 to $1,000,000 and also increased the threshold for determining items that are considered to be equipment from $5,000 to $10,000. OMB reviewed previous increases to the thresholds and considered current economic data in making these determinations. In further support of reducing burden, OMB provided a complete revision to the template text for a Notice of Funding Opportunity (NOFO) located in Appendix I of the Uniform Guidance in part 200. With this revision, OMB intends to reduce administrative burden and unnecessary obstacles to applying for Federal financial assistance.

In support of objective (3)—clarifying sections that recipients or agencies have interpreted in different ways—OMB made revisions to 2 CFR to clarify areas of misinterpretation. Many of these clarifications do not represent a change in policy but are intended to eliminate ambiguity and clarify the intent of specific sections of the Uniform Guidance in part 200, and other parts in 2 CFR. In issuing its proposed revisions, OMB had incorporated feedback from Federal agencies and the public stating that Federal agencies and the recipient community interpret many sections inconsistently. After reviewing comments received in response to its proposed revisions, OMB is now implementing many of these changes.

In support of objective (4)—rewriting applicable sections in plain language, improving flow, and addressing inconsistent use of terms—OMB revised the guidance to better follow plain language principles. OMB focused on using simple words and phrases, avoiding jargon, using terms consistently, and being concise.

As a result, throughout subparts A through E of part 200, OMB now uses the terms “recipient,” “subrecipient,” or both in place of “non-Federal entity.” OMB found that using the term “non-Federal entity” in subparts A through E of the prior version of part 200 presented challenges to readers and made it difficult to quickly understand which entity was being addressed, especially in situations in which Federal agencies apply part 200 to Federal agencies, for-profit organizations, foreign public entities, or foreign organizations under 2 CFR 200.101. In the revisions to part 200, OMB now uses the term “non-Federal entity,” as defined in section 200.1, only when that entity is specifically intended, such as in subpart F implementing the Single Audit Act. In many cases in part 200, OMB replaced “non-Federal entity” with either “recipient and subrecipient” or “recipient or subrecipient.” In cases where the guidance in part 200 relates specifically to only either “recipients” or “subrecipients,” but not both, OMB refers specifically to the applicable entity.

Revisions in the final guidance relating to use of the terms “non-Federal entity,” “recipient,” and “subrecipient” do not change the existing scope or applicability of the guidance. The applicability provision for part 200, at section 200.101, continues to provide Federal agencies discretion on whether to apply subparts A through E of part 200 to Federal agencies, for-profit entities, foreign public entities, or foreign organizations. In the same section, the final guidance encourages Federal agencies to apply the requirements in subparts A to E of part 200 to all recipients in a consistent and equitable manner, but does not require them to do so. In cases in which Federal agencies apply part 200 to such entities, OMB's final guidance now further clarifies how the guidance applies to those entities as either recipients or subrecipients.

Another example of plain language revisions is replacing the use of the general term “OMB designated governmentwide systems” with more specific terms to reduce ambiguity for those unfamiliar with the Uniform Guidance. In the final guidance OMB now specifically mentions the appropriate system, such as

SAM.gov, USASpending.gov,

the Contractor Performance Assessment Reporting System (CPARS), or

Grants.gov

The overall goal of OMB's plain language revisions was to make the Uniform Guidance more accessible to the general public and ensure more equitable access to Federal funding opportunities by making the guidance easier to understand. OMB does not specifically discuss each plain language revision in this preamble unless a revision represents a material change to the Uniform Guidance or is otherwise connected to OMB's response to a public comment.

Statutory Authority for OMB Guidance for Grants and Agreements

The Director of OMB is authorized under 31 U.S.C. 6307 to “issue supplementary interpretative guidelines to promote consistent and efficient use of . . . grant agreements . . . and cooperative agreements.” The Deputy Director for Management of OMB is authorized under 31 U.S.C. 503 to, among other things, provide “overall

direction and leadership to the executive branch on financial management matters by establishing financial management policies and requirements.” 31 U.S.C. 503(a)(2).

OMB also relies on authorities including the Single Audit Act Amendments of 1996 (Pub. L. 104-156, as amended, codified at 31 U.S.C. 7501-7507) (the Single Audit Act); the Federal Funding Accountability and Transparency Act of 2006 (FFATA or the Transparency Act)

(Pub. L. 109-282), as amended (31 U.S.C. 6101 note); the Digital Accountability and Transparency Act of 2014 (DATA Act of 2014) (Pub. L. 113-101), as amended; the Federal Program Information Act (Pub. L. 95-220 and Pub. L. 98-169, as amended, codified at 31 U.S.C. 6101-6106); the Federal Grant and Cooperative Agreement Act of 1977 (Pub. L. 95-224, as amended, codified at 31 U.S.C. 6301-6309); the Office of Federal Procurement Policy Act (codified at 41 U.S.C. 1101-1131); the Budget and Accounting Procedures Act of 1950, as amended (codified at 31 U.S.C. 1101-1126); the Chief Financial Officers Act of 1990 (codified at 31 U.S.C. 503-504); the Trafficking Victims Protection Act of 2000 (TVPA), as amended (codified at 22 U.S.C. 7101-7115); and Executive Order 11541, “Prescribing the Duties of the Office of Management and Budget and the Domestic Policy Council in the Executive Office of the President.”

All references to FFATA or the Transparency Act in this document refer to the Act as most recently amended by the Congressional Budget Justification Transparency Act of 2021 (Pub. L. 117-40).

Summary of Comments

On October 5, 2023, OMB solicited feedback from the public through proposed guidance published in the

Federal Register

See

88 FR 69390 (Oct. 5, 2023). The period for public comments closed on December 4, 2023. OMB received comments via

Regulations.gov

at Docket No. OMB-2023-0017. OMB received approximately 829 public comments from a broad range of interested stakeholders, such as States, local governments, Indian Tribes, labor organizations, industry associations, nonprofit organizations, for-profit organizations, colleges, universities, and individuals.

Section-by-Section Discussion

OMB developed the revisions for this final guidance following review and consideration of comments received on the notification of proposed guidance published in October 2023. In this document, OMB summarizes significant comments received in response to its proposal and substantive changes made to each section of the final guidance. Generally, minor changes to the language of the guidance—such as minor plain language revisions—are not discussed. Sections of the guidance that OMB did not propose to revise in significant ways are also not discussed in many cases, except in response to commenters. For sections where no substantive changes or comments are discussed, the guidance from the notification of proposed guidance was adopted.

2 CFR Subtitle A—General

In the proposed guidance, OMB proposed revising the headings of: (i) title 2 of CFR; (ii) subtitle A of 2 CFR; and (iii) chapter I of subtitle A of 2 CFR. In the case of each heading, OMB proposed to replace “Grants and Agreements” with “Federal Financial Assistance.” OMB explained that this revision would help to ensure that 2 CFR is understood to be applicable beyond just grants and cooperative agreements—unless provided otherwise in the applicability provisions in the body of the guidance, such as section 200.101.

OMB received one comment questioning the proposal to revise the headings. The commenter stated that the reference to grants in the original heading was important to preserve the distinction between grants and contracts. OMB also received several comments supporting the revised headings. One commenter also questioned the inconsistent use of “government-wide” versus “governmentwide.”

OMB Response:

OMB finds that revising the headings to reference “Federal financial assistance” will not cause undue confusion or change the specific applicability of parts and sections of the guidance. The headings merely reflect the overall scope of 2 CFR. The specific applicability of parts and sections of the guidance is addressed within the body of the guidance, such as at 2 CFR 200.101. OMB made several revisions in the final guidance to change “governmentwide” to “government-wide” for consistency.

Part 1—About Title 2 of The Code of Federal Regulations and Subtitle A

Section 1.200—Purpose of Chapters I and II

OMB proposed to revise section 1.200 to remove paragraphs (b) and (c), which are no longer accurate. When OMB first established part 1 in 2004, see 69 FR 26276 (May, 11, 2004), it implemented the Federal Financial Assistance Management Improvement Act of 1999 (Pub. L. 106-107). That legislation ceased to be effective on November 20, 2007 based on a sunset date included in the law. In addition, chapter II of subtitle A in 2 CFR, which now contains part 200, was initially intended to contain OMB guidance in its “initial form” before it was “finalized.” That statement no longer accurately reflects the structure of subtitle A of 2 CFR nor the status of the OMB guidance in part 200. OMB did not receive significant comments on this section and included the proposed revisions in the final version.

Section 1.205—Applicability to Federal Financial Assistance

OMB did not propose significant revisions to section 1.205. OMB received two comments indicating that paragraph (b) contained an error regarding applicability to procurements under Federal awards. OMB also received one comment inquiring if section 1.205 means that agencies using Other Transaction Authority (OTA) instruments are permitted to make an award to a de-barred or suspended entity.

OMB Response:

In the final guidance, OMB removed both paragraphs (a) and (b) from section 1.205. The applicability of specific parts and sections of the guidance are best addressed in the relevant areas of the guidance—such as in Part 180 and at 200.101. Paragraphs (a) and (b) only provided a partial list of examples of the applicability of specific parts of 2 CFR. OMB finds that the remaining text in the introductory paragraph sufficiently addresses the topic of applicability overall, with more specific information provided in relevant parts and sections. The two examples in this section are not necessary.

The guidance in part 200 does not specifically address OTA instruments. Federal agencies using such authority are in the best position to answer questions and provide guidance on what specific requirements apply to OTA instruments—and under what circumstances any parts, subparts, or sections of 2 CFR may apply. The commenter seeking information on the applicability of 2 CFR part 180 to OTA instruments may also consider the definition of “nonprocurment transaction” at 2 CFR 180.970.

Section 1.215—Relationship to Previous Issuances

OMB proposed to provide a more succinct statement in section 1.215

explaining that some of the guidance was organized differently within previous OMB Circulars or other guidance documents, before the establishment of title 2 of the CFR. Because 2 CFR has now existed for almost 20 years in its current format and location, OMB did not find it necessary to continue to include the table showing earlier sources of certain elements of the OMB guidance in 2 CFR. The

Federal Register

notice establishing 2 CFR in 2004, see 69 FR 26276 (May, 11, 2004), and other subsequent

Federal Register

notices establishing and revising particular parts and provisions of subtitle A in 2 CFR, include that information. For example, the

Federal Register

notice establishing part 200 in 2013 explained that it superseded and streamlined requirements from OMB Circulars A-21, A-87, A-110, and A-122; Circulars A-89, A-102, and A-133; and the guidance in Circular A-50 on Single Audit Act follow-up.

See

78 FR 78590 (Dec. 26, 2013). OMB did not receive significant comments on this section and incorporated the proposed revisions.

Section—1.220 Federal Agency Implementation of This Subtitle

OMB did not propose significant revisions to section 1.220. OMB received one comment seeking clarification on the implementation of the 2 CFR revisions by Federal agencies, particularly in situations when a Federal agency has not specifically referenced the OMB 2 CFR guidance in the terms and conditions of a Federal award.

OMB Response:

OMB did not make substantial changes to the long-standing structure of agency implementation of OMB's 2 CFR guidance. OMB did not find it necessary to make additional revisions, but is issuing a memorandum to Federal agencies with implementation guidance concurrently with this document. OMB also provides some additional responsive information in other parts of the guidance text and within this preamble. In the case of individual Federal awards, the Federal agency making the award is the best source of information on agency implementation of 2 CFR and applicable agency regulations and requirements. Federal agencies are responsible for implementing the guidance for their Federal awards. The government-wide effective date of the final guidance is October 1, 2024, but Federal agencies may also elect to apply the final guidance to their Federal awards issued prior to October 1, 2024. For agencies applying the final guidance before October 1, 2024, the effective date must be no earlier than 60 days from the date of publication in the

Federal Register

—as specified above.

Section 1.231—Severability

OMB proposed to add section 1.231 to clarify its intent that if any provision of the final guidance were held to be invalid or unenforceable, such provision, or combination of provisions, are severable from the remaining provisions of the guidance. OMB did not receive significant comments on this section and made the change in the final guidance. OMB made a minor revision to replace the word “part” with “subtitle” in the final sentence of this section, which is consistent with other language in this section as both proposed and finalized. This change reflects how OMB intends this provision to apply.

In the final guidance provided through this document, OMB adopts a unified scheme addressing how Federal agencies will consistently and efficiently use Federal financial assistance in their programs across the Federal government. While the final guidance best serves OMB's objectives if left intact as adopted by OMB, the benefits of the guidance related to coordination across the Federal government do not hinge on any single provision. Accordingly, OMB considers individual provisions adopted in the final guidance to be separate and severable from one another. In the event of a stay or invalidation of any provision, or any provision as it applies to a particular person or circumstance, OMB's intent is to otherwise preserve the final guidance to the fullest possible extent. The provisions that remain in effect will continue to provide essential guidance and information to Federal agencies on consistently applying requirements for Federal financial assistance across the Federal government.

Section 1.300—OMB Responsibilities

OMB did not propose significant revisions to section 1.300. OMB received a comment requesting that OMB establish a policy and process for pass-through entities to submit questions to OMB. Another comment requested additional technical assistance in support of Federal financial assistance.

OMB Response:

Pass-through entities should direct all comments and questions pertaining to the implementation of specific Federal awards to the appropriate Federal agency making the award. Federal agencies are the best resource for questions related to specific Federal awards.

Section 1.305—Federal Agency Responsibilities

OMB proposed to revise section 1.305 to further clarify Federal agency responsibilities, such as coordinating with the Council on Federal Financial Assistance (see OMB Memorandum M-23-19), the Grants Quality Service Management Office (QSMO), and other governance committees.

OMB received one comment expressing support for the proposed revisions, such as including reference to the QSMO. OMB received another comment suggesting OMB require Federal agencies to report on subawards under their Federal awards. Another commenter recommended the inclusion of additional language with respect to tribal sovereignty and self-determination in this section.

OMB Response:

In response to comments, the pass-through entity, not the Federal agency, is responsible for subaward reporting.

See

2 CFR part 170, appendix A. OMB does not consider section 1.305, on Federal agency responsibilities, to be an appropriate place to address issues related to tribal sovereignty. Guidance related to tribal rights is included in other sections of the 2 CFR guidance such as section 200.101(d). OMB incorporated the proposed revisions in this section without additional changes.

Part 25—Unique Entity Identifier and System for Award Management

Part 25 of 2 CFR provides guidance on requirements for applicants, recipients, and subrecipients to obtain a unique entity identifier (UEI), as required by statute in the Transparency Act, and for applicants and recipients to register in the System for Award Management (

SAM.gov

) website of the General Services Administration, which is the repository for standard information about applicants and recipients of Federal awards. OMB proposed to revise part 25 to ensure it properly aligns with the authorizing statutes, as amended, including the Transparency Act and the DATA Act of 2014. OMB also proposed to revise the title of part 25 to replace “universal identifier” with “unique entity identifier.” OMB received no significant comments on these proposals. OMB incorporated these changes in the final guidance.

Part 25—General Comments

OMB received several general comments on 2 CFR part 25 that did not apply to a specific section. One commenter recommended that the U.S.

government develop a national strategy on the use of persistent identifiers (PIDs) to articulate how they can be leveraged in the U.S. research ecosystem and globally to support American science leadership. Another commenter remarked that clarification is needed under part 25 that pass-through entities and others should not require a UEI of second-tier contractors. Another commenter asked OMB to remove barriers to access for newer and smaller organizations for low-dollar subawards, such as by removing UEI requirements.

OMB Response:

The suggestion to develop a national strategy on the use of PIDs is beyond the scope of OMB's proposed revisions. Section 25.300 requires a UEI for first-tier subrecipients receiving a subaward from a recipient, as defined at section 25.400, but does not impose a requirement for a second-tier subrecipient to obtain a UEI before receiving a subaward from a subrecipient. OMB finds that additional clarification is not needed within the text of the guidance on this point.

On the final comment regarding removing additional barriers for newer and smaller organizations: statutory requirements under the Transparency Act and other laws put firm limits on OMB's ability to provide additional flexibility. The exceptions provided in section 25.110 generally reflect the flexibilities permitted under controlling statutory law.

Subpart A—General

Section 25.100—Purposes of This Part

OMB proposed only minor plain language revisions to section 25.100. One commenter asked OMB to align the terminology used to describe “direct” subawards in 2 CFR part 25 with the “first-tier” subaward terminology used in 2 CFR part 170 Appendix A. Specifically, the commenter asked OMB to amend this section by replacing “direct subrecipients” with “first-tier subrecipients.” The commenter also asked OMB to change the reference to “subawards” at section 170.100 to “first-tier subawards.”

OMB Response:

In response to comments, OMB added first-tier subrecipients in a parenthetical following direct subrecipients. OMB otherwise made changes in this section as proposed.

Section 25.105—Applicability

In this section OMB proposed to clarify that the requirement to obtain a UEI does not apply to second-tier subrecipients or contractors. OMB also proposed to clarify that recipients of loan guarantees must obtain a UEI and register in

SAM.gov.

OMB also proposed to state that a Federal agency may use discretion when determining to apply the requirements to beneficiary borrowers.

In response to OMB's proposed changes, some commenters expressed concern that not requiring second-tier subrecipients to obtain a UEI could potentially put certain recipients at risk because those recipients have ultimate responsibility for monitoring all subrecipients. Some commenters stated that obtaining a UEI should be a universal requirement for subrecipients at any tier. OMB also received multiple comments expressing concern that the new proposed language, while exempting second-tier subrecipients from obtaining an UEI, did not address audit requirements, which a commenter stated may require subrecipients to have a UEI for submission. Other commenters also asked OMB to further clarify language in this section.

OMB Response:

In response to comments asking OMB to make obtaining a UEI a universal requirement for all tiers of subrecipients, OMB disagrees and did not make a change. The requirements for obtaining a UEI do not flow down beyond the first-tier subawards of a Federal award. This is consistent with prior OMB guidance on this topic in the “2 CFR Frequently Asked Questions” (2 CFR FAQ) published on May 3, 2021.

In response to the comment regarding audit requirements: OMB is not requiring second-tier subrecipients to obtain a UEI under this section of the final guidance, but if a UEI is needed or likely to be needed for other purposes, second-tier subrecipients may still obtain one. If second-tier subrecipients are likely to need a UEI for other purposes, it would be best to obtain a UEI at the very start of the Federal award process. It may be infeasible to retroactively apply a UEI to awards made prior to obtaining one. After consideration of other comments requesting further clarification in this section, OMB did not make additional changes. OMB finds that this section, as revised, is sufficiently clear.

Section 25.110—Exceptions to This Part

In section 25.110, OMB proposed to clarify that, even if an exception is granted, a Federal agency remains responsible for reporting data to comply with the Transparency Act, except that it may use a generic entity identifier in the circumstances described.

Although not included in the text of the proposed revisions, OMB also stated in the preamble that it was considering other ways of reducing the administrative burden associated with obtaining a UEI and registering in

SAM.gov

for foreign organizations or foreign public entities. OMB described two potential revisions allowing expanded exceptions for these entities. The first expanded exception would have allowed an agency to grant a one-time exception from the requirement to obtain a UEI, register in

SAM.gov,

or both for foreign organizations or foreign public entities applying for or receiving an award between $25,000 and $250,000 for a project or program performed outside the U.S. This would have increased the threshold in use under the prior version of the guidance for this exception. The second exception would have expanded the existing exigent circumstances exception to provide recipients with additional time to obtain a UEI and complete

SAM.gov

registration if exigent circumstances persisted beyond 30 days. Specifically, OMB proposed to allow Federal agencies with the option to provide recipients an additional 90 days if exigent circumstances persisted. For both proposed exceptions, the preamble explained that the exceptions would only be finalized in a way that would allow agencies to continue following Transparency Act reporting requirements.

OMB received many comments in response to the proposed changes in this section. One commenter simply noted that the process to obtain a UEI number and maintain active

SAM.gov

registration is excessively complicated. Another commenter recommended that OMB grant Federal agencies the authority to exempt subrecipients from the requirement to obtain a UEI under this section. Another commenter requested OMB to allow recipients, rather than the Federal agencies, to make determinations on providing exceptions for subrecipients. Other commenters noted that obtaining a UEI and registering in

SAM.gov

are major barriers for many foreign entities.

OMB also received many comments supporting the modified exceptions for obtaining a UEI and registering in

SAM.gov

described in the preamble to the proposed guidance. In general, commenters were supportive of both the modified exception that would have allowed a higher threshold of $250,000 for a project or program performed outside the U.S., and the proposed expansion of the “exigent circumstances” exception, which would have allowed recipients additional time beyond 30 days.

Commenters also provided many alternative suggestions related to raising the threshold for an exception above

$25,000. For example, some commenters requested clarification on why a threshold of $25,000 is established in this section while a threshold of $30,000 is used in 2 CFR part 170 for reporting subawards. Some commenters suggested using a threshold of $30,000 for subawards in both parts for consistency. Many commenters also requested a blanket or class exemption to the UEI requirement for all entities receiving an award or subaward valued under a specified amount, with many citing $30,000 as the appropriate amount. Other commenters suggested increasing the threshold for subawards to $50,000, which they stated was the applicable threshold for subawards in certain programs under the American Rescue Plan Act of 2021 (Pub. L. 117-2).

Other commenters also requested a variety of minor clarifications and revisions to this section. For example, one commenter requested a citation be changed from “25.110(a)(2)(ii)(A)(5)” to “25.110(a)(2)(ii)(A)(4).” Another commenter requested certain language to be further clarified in paragraph (a)(1)(i). A different commenter suggested adding “by section 6202 of Public Law 110-252” after “as amended” in paragraph (a)(1)(i) to provide more information to readers. One commenter requested clarification that the requirement to obtain a UEI does not apply to contractors that have a procurement relationship with a recipient.

Lastly, a commenter asked for a complete exception from obtaining a UEI for all foreign organizations or foreign public entities applying for or receiving a subaward below the Transparency Act threshold of $25,000 for a project or program performed outside the U.S. The commenter explained that establishing a

SAM.gov

user account and requesting a UEI is often extremely challenging for small foreign organizations with limited internet access or limited English proficiency.

OMB Response:

In response to these comments, OMB policy on this topic is constrained by the Transparency Act, which limits what exceptions and deviations OMB can allow regarding the requirement to obtain a UEI and the timeframe in which a UEI must be obtained. In the final guidance, OMB allowed exceptions only within the parameters permitted under the statute.

Within these statutory limits, OMB made some adjustments to the proposed guidance in this section. First, OMB agrees with the comment asking OMB to allow Federal agencies to exempt subrecipients from the requirement to obtain a UEI in the circumstances described in paragraph (a)(2). Recognizing that OMB already refers to subawards in the proposed text at paragraph (a)(2)(ii), OMB made this revision to the introductory paragraph. The exceptions in this section are based on the statutory exceptions and other limited flexibilities under the Transparency Act, which generally applies in similar ways to awards and subawards.

Regarding the request to allow recipients rather than Federal agencies to make determinations on granting exceptions under this section, OMB did not make this change. OMB finds that Federal agencies are able to apply a risk-based approach more consistently across their programs when evaluating exceptions.

In response to comments requesting clarification on why a threshold of $25,000 is used in this section for obtaining a UEI, while a threshold of $30,000 is used in part 170 for reporting subawards, OMB previously increased the reporting threshold for subawards under part 170 to $30,000 based on the pilot authority in section 5(b) of the Transparency Act, as amended by the Data Act of 2014.

See

Public Law 113-101;

See also

2 CFR 25.200(b) and 25.300.

OMB accepted the suggestion to renumber paragraph (a)(2)(ii)(A)(5) as paragraph (a)(2)(ii)(A)(4). OMB made minor clarifying edits in paragraph (a)(1)(i). OMB did not find it necessary to specify which act amended the Transparency Act, which has been amended multiple times. Lastly, OMB renumbered paragraphs in this section based on the addition of a new exception at paragraph (a)(2)(iii) as discussed above. Except as noted, OMB otherwise included revisions in this section as proposed.

Subpart B—Policy

Section 25.200—Requirements for Notice of Funding Opportunities, Regulations, and Application Instructions

OMB did not propose significant updates to section 25.200. OMB rearranged some language to provide clarity and made plain language revisions. OMB received a comment requesting clarification on whether the requirement that a recipient be registered in

SAM.gov

prior to application is passed through to sub-recipients. This commenter also stated that sub-recipients need to register in

SAM.gov

to allow States and territories to complete reporting for Transparency Act purposes. Another commenter asked OMB to provide guidance that low-risk auditees only need to update their

SAM.gov

registrations once every three years, instead of annually, unless there is a material change that causes the auditee's

SAM.gov

registration to become outdated or otherwise inaccurate.

OMB also received comments requesting other minor clarifying edits in paragraph (c), which caused confusion for some commenters as initially proposed by OMB. For example, OMB received a recommendation to delete the first sentence of paragraph (c) and strike certain language from the second sentence.

OMB Response:

Regarding comments requesting clarification on applicability to subrecipients, OMB finds that revisions are not needed in the guidance text. As a subrecipient does not directly apply to a Federal agency for an award, it is sufficiently clear that this provision is not addressing subrecipients. A subrecipient must only provide a UEI to the recipient in accordance with subpart C. Next, OMB does not agree with the comment stating that updating

SAM.gov

registration on an annual basis presents excessive burden and made no change to this policy. Finally, OMB agrees with commenters that paragraph (c) should be clarified. OMB made minor edits in the guidance text to clarify intent.

Section 25.205—Effect of Noncompliance With a Requirement To Obtain a UEI or Register in

SAM.gov

OMB made plain language revisions and minor clarifications to this section in the proposed guidance. Specifically, OMB explained that the requirement to have an active UEI does not apply to amendments to terminate or close a Federal award. OMB received a comment requesting clarification on whether the annual

SAM.gov

registration requirement is through project closeout or the record retention period.

OMB Response:

OMB finds that additional clarification is not needed in the guidance text. Section 25.200 explains that the registration requirement applies while a Federal award is “active” or “an application [is] under consideration by a Federal agency.” OMB added clarifying language unrelated to the comment received, but otherwise made revisions in the final guidance as proposed.

Section 25.215—Requirements for Agency Information Systems

OMB made plain language revisions to this section and updated citations to other 2 CFR sections. OMB received a comment recommending that OMB and Federal agencies ensure that the UEI required by part 25 can be linked with global registries for PIDs.

OMB Response:

OMB did not link UEIs with PIDs at this time. To do so would go beyond the scope of the changes proposed and is not necessary for this update.

Subpart C—Recipient Requirements of Subrecipients

Section 25.300—Requirement for Recipients To Ensure Subrecipients Have a Unique Entity Identifier

OMB made plain language revisions to this section in the proposed guidance. OMB received several comments on section 25.300. First, a commenter requested OMB define “full registration” in paragraph (a), stating that there is confusion over levels of registration. Next, OMB received multiple comments on the notification requirement in paragraph (b) and Appendix A. For example, one commenter stated that the requirement that recipients must notify any potential subrecipients that the recipient cannot make a subaward unless the subrecipient obtains and provides a UEI to the recipient, is unnecessary given the requirements of paragraph (a). The commenter stated this requirement imposed an unnecessary administrative burden on recipients. OMB also received a comment stating that paragraph (b) is unclear regarding whether this notification requirement applies during both the pre-award and post-award phases and to whom the

notification should be provided in each case.

OMB Response:

On the comment regarding defining “full registration” in paragraph (a), OMB did not find it necessary to further define this term in this update. With the exception of minor plain language revisions, this section remains similar to guidance as it existed before this update and OMB finds the meaning is sufficiently clear. The paragraph explains that subrecipients must obtain a UEI prior to receiving a subaward, but are not required to register in

SAM.gov.

Similarly, on the comments regarding the notification requirement in paragraph (b), this section remains similar to guidance as it existed before this update. OMB did not find it unclear or overly burdensome.

Subpart D—Definitions

Section 25.400—Definitions

In the proposed October 2023 revisions, OMB combined definitions from multiple sections within a single section at 25.400. OMB provided a definition for entity, updated and removed several other definitions, and made additional clarifying and plain language edits. Many of the revisions to this section aimed to more closely follow statutory language in the Transparency Act. OMB received comments requesting clarification on the definitions of “entity” and “Federal financial assistance.” For the definition of entity, commenters specifically raised questions about the applicability of the definition to tribes, consortium organizations, and individual recipients of Federal financial assistance. Another commenter asked OMB to add a definition for “internal recipient” for situations where a government recipient, such as a State, passes funds to another agency within the government recipient. OMB also received questions asking about this section's applicability to fixed award amounts and OTA instruments. Finally, a commenter suggested that OMB consider combining the definition sections for parts 25 and part 200.

OMB Response:

OMB made minor revisions to the definition of the term “entity” to more closely align with the statutory definition in the Transparency Act. Specifically, at paragraph (1)(x), OMB added “any subcontractor or subgrantee that is not excluded by paragraph (2).” Section 2 of the Transparency Act provides that this element of the definition applies on and after January 1, 2009. Other guidance in part 25 provides more specific information on which entities must obtain UEIs or register in

SAM.gov

in the context of this part, including the provisions at sections 25.105, 25.200(b), and 25.300. OMB also made minor technical edits to the definition of the term “entity” in the final guidance.

OMB did not add a definition for the term “internal recipient.” This is beyond the scope of OMB's proposed changes for this version of the guidance, but Federal agencies may be able to provide further guidance on this question in the context of specific awards if appropriate. On the question about applicability to fixed amounts awards: a fixed amount award is a form of Federal financial assistance and subject to this part.

OMB did not combine the definitions from section 25.400 and section 200.1. Some of the definitions in section 25.400 are specifically tailored to align with the Transparency Act, while some definitions in part 200 have a broader range of applications. Regarding the definition of Federal financial assistance, OMB did not find it necessary to explicitly address whether section 25.400 applies to OTA instruments. As discussed above, Federal agencies using such authority are in the best position to answer questions and provide guidance on what specific requirements apply to OTA instruments used by that agency—including to address whether part 25 applies to them. OTA instruments, and the authorities for such instruments, provide for unique flexibilities that might not be the same across all Federal agencies.

Appendix A to Part 25—Award Term

OMB proposed plain language revisions and minor clarifying edits to Appendix A to Part 25. Multiple commenters questioned OMB's usage of second-person pronouns (“you”) and second-person possessive adjectives (“your”) in the Appendix.

OMB Response:

OMB agrees with the commenters that further clarifying edits should be made to Appendix A. Because “you” and “your” generally referred to the award recipient in the proposed Appendix, OMB now uses the term “recipient” in place of both. OMB also made other conforming edits as necessary in the final guidance. OMB is also correcting a citation for the definition of entity.

Part 170—Reporting Subaward and Executive Compensation Information

In the proposed revisions, OMB proposed to revise the guidance in this part to ensure it properly aligns with authorizing statutes including the Transparency Act and the DATA Act of 2014. OMB proposed to clarify the specific Federal agency reporting requirements and to revise the award term to resolve issues related to which entities the award term applies to. OMB also proposed to revise certain sections to clarify their intended meaning. For example, OMB proposed to move certain requirements currently contained in section 170.110 to section 170.105, which OMB proposed to rename “Applicability.”

Part 170—General Comments

OMB received multiple comments on this part that did not focus on a particular section. First, OMB received comments stating that reporting requirements should be clarified to distinguish between reporting the amount obligated by a single award, which was referred to as an “action” in Appendix A, and the new total obligated amount. Second, another commenter noted certain difficulties encountered with the FFATA Subaward Reporting System (FSRS).

OMB Response:

Regarding the first comment, OMB added language in Appendix A to clarify that the total subaward amount under a Federal award must be reported for all reported subawards. Regarding the second comment, OMB can only update policy on reporting requirements in this part. OMB did not propose changes to FSRS through this update. This guidance is not the appropriate vehicle to address system challenges with FSRS or make changes to that system.

Subpart A—General

Section 170.100—Purpose of This Part

OMB proposed plain language revisions and minor technical edits to this section. OMB did not receive any significant comments. In the final guidance, OMB made a minor technical edit, but otherwise updated the guidance as proposed.

Section 170.105—Applicability

OMB proposed to move certain requirements contained in section 170.110 to section 170.105, which OMB proposed to rename “Applicability.” OMB also proposed plain language revisions and other clarifying edits. OMB further updated citations to other sections within the 2 CFR guidance.

OMB received multiple comments requesting that the guidance explicitly allow exceptions to the UEI requirement granted under 2 CFR part 25 to apply to first-tier subaward reporting requirements under 2 CFR part 170. The commenters stated that any exception to the requirement for a subrecipient to

obtain a UEI under part 25 should equate to an exception to report under part 170. Similarly, OMB received a comment requesting the addition of an exception in 2 CFR part 25 for awards and subawards less than $30,000, which would align with the threshold for first-tier subaward reporting under 2 CFR part 170.

OMB Response:

Regarding comments requesting OMB to allow UEI exceptions granted under part 25 to apply to subaward reporting requirements under part 170: OMB's response is provided in the section of the preamble on part 25 above. In general, the fact that a recipient or subrecipient is not required to obtain a UEI under part 25 does not necessarily affect reporting requirements under part 170, except that generic identifiers may be used in defined circumstances. Certain disclosure exceptions may also be available under the statutory text of the Transparency Act, which are discussed above.

See

31 U.S.C. 6101, statutory note. In cases of direct conflict between OMB's guidance and section 7 of the Transparency Act, the statutory text would prevail. Paragraph (a) of section 170.105 recognizes that such statutory exemptions for subaward reporting may be available in some circumstances. For example, when information is formally classified under criteria established by an Executive Order, 5 U.S.C. 552(b)(1), the statutory authority in section 7 of the Transparency Act would warrant withholding publication of information under part 170.

Regarding comments requesting that OMB create an exception in part 25 for awards and subawards less than $30,000, see discussion in this preamble above. OMB did not identify statutory authority that would allow increasing the threshold above $25,000 in part 25 in the final guidance.

Subpart B—Policy

Section 170.200—Federal Agency Reporting Requirements

OMB proposed plain language revisions to this section and other clarifying edits. OMB did not receive any comments on this section. In the final guidance, OMB updated the prior reference to the DATA Act Information Model Schema (DAIMS). The revised reference is to the Government-wide Spending Data Model (GSDM).

Section 170.210—Requirements for Notices of Funding Opportunities, Regulations, and Application Instructions

OMB proposed plain language revisions to this section and added a definition for “notice of funding opportunity.” OMB did not receive any comments on this section and revised the guidance as proposed.

Section 170.220—Use of Award Term

OMB proposed plain language revisions to this section and added certain clarifying language. A commenter suggested that it would be helpful to insert an example to illustrate the revised language in this subsection.

OMB Response:

OMB made changes to clarify that the total subaward amount must be reported. OMB otherwise revised the guidance as proposed.

Subpart C—Definitions

Section 170.300—Definitions

In the proposed October 2023 revisions, OMB combined definitions from multiple sections within a single section at 170.300. OMB also proposed plain language revisions within this section, added the definition of entity, and updated or removed other definitions from the prior version of the guidance. OMB received a comment that the CFR citation in the definition for “Total Compensation” was incorrect.

OMB Response:

OMB corrected the citation in the definition for “Total Compensation.” OMB otherwise revised the guidance in this section as proposed.

Appendix A to Part 170—Award Term

In Appendix A to Part 170, OMB proposed changes including reordering text, revising for plain language, removing definitions or citing to relevant 2 CFR sections, and adding the definition of entity. OMB received multiple comments on the Appendix. One commenter requested that OMB provide clear guidance on certain inconsistencies the commenter perceived between the FSRS system and

USAspending.gov.

Another commenter suggested that rather than subrecipients reporting executive compensation to and through the pass-through entity, when applicable, the subrecipient report this data directly into FSRS.

Another commenter noted this Appendix requires reporting executive total compensation of first-tier subrecipients unless the subrecipient is exempt as provided in Section I, paragraph (d). The commenter stated that this exemption—using a threshold of $300,000 in gross income—is not necessary because a higher threshold is established elsewhere in the Appendix. Specifically, the commenter pointed to Section I, paragraph (c)(1)(ii)(B), which uses a threshold of $25,000,000 or more in annual gross revenues in the subrecipient's preceding fiscal year. The commenter further noted Section I, paragraph (d), addresses the reader directly as “you,” which is inconsistent with paragraphs (b) and (c) being applicable to both recipients and subrecipients. Lastly, this commenter suggested that in Section I, paragraph (d), if OMB continues to apply the exemption to subrecipients, it should modify the language to clarify that it applies to both recipients and first-tier subrecipients.

Next, another commenter suggested adding an example to the Appendix for clarity. A commenter also requested clarification on what specific action triggers the requirement for Transparency Act subaward reporting, which requires the recipient to report a subaward action. OMB received another comment requesting a clearer definition of subaward to recognize different reporting timeframes. An additional commenter suggested that there is a lack of clarity about the amount of time recipients have to report a subrecipient's compensation information to FSRS and stated that this may lead to recipients issuing unsigned subawards.

One commenter requested further clarification in Section I, paragraph (d), noting that the proposed language appeared to indicate that the prime recipient and the first-tier subrecipient are exempt from reporting executive compensation if their gross income from all sources is under $300,000. However, the commenter noted that paragraph (d) is referring to the reporting of subawards and executive compensation.

OMB also received a question on the significance of the changes regarding reporting subawards. The commenter noted that the current version of the Award Term required reporting “each obligating action” or “obligation” that equals or exceeds $30,000, while the proposed Award Term deleted those words and substituted “subaward” in their place.

OMB Response:

Throughout Appendix A, in the final guidance OMB replaces “you” and “your” with references to the “recipient” to which the award term is addressed. OMB also made other conforming edits as necessary throughout Appendix A.

OMB also made certain clarifying edits in Section I, paragraph (d) of Appendix A in response to comments. Consistent with the rest of the Appendix, OMB clarifies that “you” refers to the recipient. Consistent with the Transparency Act, OMB also clarified that the relevant period for gross income is “the previous tax year.”

OMB did not add an example to this paragraph and finds the revised text is now sufficiently clear.

In response to commenters: first, regarding the question about FSRS and

USAspending.gov,

instructions on using FSRS are provided on

FSRS.gov.

Next, the comment about subrecipients reporting executive compensation directly to FSRS is beyond the scope of changes proposed by OMB. OMB did not make this change in the final guidance.

Regarding the comment maintaining that there is a discrepancy between the thresholds in Section I, paragraph (c)(1)(ii)(B) and paragraph (d) for reporting subaward information: the threshold in paragraph (c)(1)(ii)(B) refers to certain annual gross revenues in the subrecipient's preceding fiscal year, while the threshold in paragraph (d) refers to the recipient's gross income in the previous tax year. Because each threshold has a different subject, neither is superfluous. Both thresholds are provided by the Transparency Act.

On the question regarding the trigger for subaward reporting under the Transparency Act, OMB did not make additional changes. OMB finds the clarifying edits made throughout Appendix A sufficient to explain its intent.

On comments regarding specific Federal financial assistance programs, OMB did not make changes in part 170. OMB is unable to accommodate all requests for individual programs. The Federal agencies implementing these programs are in the best position to address program-specific questions and concerns.

Regarding the comment requesting further clarity on the timeframe recipients have to report a subrecipient's compensation information to FSRS, OMB did not make revisions to the guidance text. OMB understands that some variation may exist in the actions by which recipients obligate subawards, and that delays may occur in some circumstances. However, the Transparency Act requires reporting within 30 days of a Federal award. As a result, part 170 sets the expectation on when this information must be submitted. The recipient must determine when an action constituting a legal obligation of the subaward has occurred, which begins the reporting clock.

Finally, in response to questions about the significance of the changes in terminology regarding the reporting of subawards under the Award Term, OMB finds that the references to “subawards” are sufficiently clear when read in the context of this part and other clarifying edits in the Appendix. As noted in the preceding paragraph, recipients must still use some discretion and reasonable judgement to determine when an action constituting a legal obligation of the subaward has occurred. OMB did not find it necessary to specifically address this topic in part 170.

Part 175—Award Term for Trafficking in Persons

OMB proposed to revise the guidance in part 175 to ensure it properly aligns with the authorizing statutes that have been amended since it was published.

See

the Trafficking Victims Protection Act (TVPA) of 2000, as codified at 22 U.S.C. 7101 to 7115. OMB proposed to update the policy and Award Term to ensure alignment with the current statute and to further align with the format of the guidance. For example, at section 175.105, OMB proposed adding provisions related to a compliance plan and requiring notification to Inspectors Generals under certain circumstances to further align with the TVPA.

Several commenters questioned the inclusion of the compliance plan and annual certification requirements. One commenter noted that the certification threshold is inconsistent with the threshold in the Federal Acquisition Regulation (FAR).

OMB Response:

OMB appreciates the comments received on this part. The compliance plan and annual certification requirements are required by law. OMB does not have the same authority in the context of Federal financial assistance as exists under the FAR, in the context of Federal procurement, to increase statutory thresholds.

See

41 U.S.C. 1908. OMB retained the certification threshold at $500,000, which is set by statute.

In the final guidance, OMB revised the compliance plan and certification requirements in section 175.105(b) to clarify, consistent with law, that the requirements apply to subrecipients, contractors, and subcontractors. 22 U.S.C. 7104a. OMB also made conforming changes to the notification requirement at section 175.105(b). Next, OMB also revised section 175.105(c)(1) to clarify that a recipient must immediately inform the Federal agency, in addition to the Inspector General of the Federal agency, of any information it receives from any source that alleges credible information that the recipient, or any subrecipient, contractor, or subcontractor of the recipient, has engaged in conduct that is prohibited in this part.

OMB revised section 175.200(b) to clarify that a Federal agency may include the compliance plan and certification requirements in the award term when applicable—or other information consistent with statutory requirements. Finally, OMB also added a reference to the compliance plan and certification requirements in the award term. Federal agencies may decide to expand or relocate this information in the award term in appendix A to part 175 consistent with the guidance in 175.200(b).

Part 180—OMB Guidelines to Agencies on Government-Wide Debarment and Suspension (Nonprocurement)

OMB proposed minimal revisions to this part based on feedback received from the Interagency Suspension and Debarment Committee (ISDC) in accordance with section 180.40. Considering the role of the ISDC in recommending changes, OMB did not propose extensive plain language revisions in part 180. Sections in part 180 that OMB proposed to revise included sections 180.635 and 180.640 to clarify available administrative actions in lieu of debarment. OMB proposed amending section 180.705 to include “other indicators of adequate evidence that may include, but are not limited to, warrants and their accompanying affidavits” for officials to consider before initiating a suspension. OMB proposed additional clarifying edits to sections 180.710, 180.815, and 180.860, including adding text to section 180.860 to address factors influencing a debarment decision. This revision proposed to add text onto “whether your business, technical, or professional license(s) has been suspended, terminated, or revoked.” OMB proposed changes to this part generally in response to an ISDC recommendation to provide additional clarifications to 2 CFR to reflect current practice. OMB did not propose to establish new policy in part 180 that would negatively impact the ability of Federal agencies or recipients to adhere to this guidance.

OMB received a variety of comments and suggestions on part 180. For example, a commenter requested revisions on what individuals may be eligible to serve as “the suspending official or designee” and “the debarring official or designee.” OMB also received requests to modify notice requirements, revise definitions, increase thresholds, expand the list of enumerated causes for debarment, fix references, make grammatical changes, and include other changes in this part.

OMB Response:

OMB appreciates the comments it received on this part, but generally considers them beyond the limited scope of the clarifying changes

that OMB proposed for this update. More substantive changes will require additional engagement with the ISDC in accordance with section 180.40 to develop appropriate language. At this time, OMB finds that the changes requested by commenters are not necessary to understand the policy under part 180. Except for a minor grammatical change, OMB made revisions in this section as proposed. OMB will consider whether additional changes to Part 180 are warranted in the future, and may consider the comments received in response to the proposed guidance.

Part 182—Government-Wide Requirements for Drug-Free Workplace (Financial Assistance)

OMB proposed limited plain language and technical revisions to this part. A commenter pointed out a minor typographical error, which OMB fixed in the final guidance. Another commenter suggested changes to how workplaces are identified in section 182.230, which OMB did not find it necessary to incorporate at this time. Other than the typographical error, OMB incorporated the proposed revisions in the final guidance.

Part 183—Never Contract With the Enemy

OMB proposed limited plain language and technical revisions to this part. OMB did not receive significant comments regarding the proposed changes. OMB revised its guidance in this part as proposed.

Part 184—Buy America Preferences for Infrastructure Projects

OMB established this part on Buy America preferences for infrastructure projects through a separate process. 88 FR 57750 (Aug. 23, 2023). OMB did not propose changes to part 184 through the proposed guidance. However, in the final guidance, OMB made minor technical edits to align Part 184 with the definitions in Part 200 as revised. Specifically, OMB replaced the term “Federal awarding agency” with “Federal agency.”

OMB received several comments relating to the applicability of the Build America, Buy America Act (BABA), including questions on its application to for-profit recipients. Commenters also raised concerns about the equitable application of Part 184 to different types of entities. As explained in the preamble to OMB's proposed revisions, OMB did not propose any substantive changes to BABA applicability or part 184 through this guidance-making process, and OMB did not make any substantive changes through this update on those topics.

For reasons unrelated to part 184, OMB replaced “non-Federal entity” with “recipients or subrecipients” in the revised definition of Federal financial assistance in section 200.1 discussed below. Section 70912(4) of BABA incorporates the definition of Federal financial assistance from the Uniform Guidance at 2 CFR 200.1 or successor regulations. In cases in which Federal agencies apply subparts A through E of part 200 to for-profit organizations, this revision may provide further clarity on the applicability of BABA to Federal awards made to for-profit organizations. OMB did not materially change the sentence in the applicability section of the Uniform Guidance at 200.101(a)(2) providing Federal agencies with discretion on whether to apply the guidance in part 200 to for-profit organizations. Thus, OMB did not substantively change the status quo on applicability of BABA to for-profit recipients as described in the preamble for the part 184 guidance at 88 FR 57774 and in OMB Memorandum M-24-02,

Implementation Guidance on Application of Buy America Preference in Federal Financial Assistance Programs for Infrastructure

(Oct. 25, 2023). As explained in Memorandum M-24-02, Federal agencies may consider applying BABA requirements to for-profit entities consistent with their legal authorities, but are not required by OMB to do so. For additional information on BABA and OMB's guidance in 2 CFR part 184, see also 88 FR 55750 (Aug. 23, 2023).

Subpart A—Acronyms and Definitions

Section 200.0—Acronyms

OMB proposed to update section 200.0 to remove acronyms that either appeared only once or were used infrequently in the guidance. At the same time, OMB proposed to add several acronyms that were used more frequently, but have been omitted from this section in past updates, such as UEI. OMB received a few comments that suggested incorporating acronyms excluded from this section in the proposed guidance.

OMB Response:

OMB did not find it necessary to expand on the list of acronyms. OMB only included in this section if used in multiple sections throughout the guidance. However, if multiple uses of an acronym were confined to a single section of the guidance, OMB did not find it necessary to include the acronym in this section. With the exception of simplifying the citation for FFATA (the Transparency Act), OMB included acronyms in this section in the final guidance as proposed.

Section 200.1—Definitions

In section 200.1, OMB proposed to remove several definitions that were used only once or on a limited basis and instead moved such definitions to the appropriate section of the guidance where they appear. OMB also proposed deleting the definition of Federal awarding agency, which OMB incorporated within the definition of Federal agency. OMB also proposed adding several new definitions of commonly used terms including continuation funding, for-profit organization, key personnel, participant, and prior approval. OMB also proposed to revise several definitions to incorporate threshold increases referenced in other sections, such as the threshold increase for equipment to $10,000, the threshold for supplies to $10,000, and the definition of modified total direct costs, under which OMB proposed to exclude subaward costs above $50,000, as compared to $25,000 in the prior version of the guidance. OMB also proposed to revise several definitions for other reasons, including cost sharing, Federal agency, Federal award date, Federal financial assistance, financial obligations, improper payment, Indian Tribe, intangible property, participant support costs, period of performance, prior approval, questioned costs, real property, recipient, special purpose equipment, subaward, and termination.

OMB received many comments on the definitions in this section, including some suggestions for new definitions and other potential changes for future updates. OMB also received a few comments recommending the deletion of definitions and moving them to applicable sections of the guidance. Comments received on specific definitions and OMB's responses are provided below. OMB attempted to incorporate public comments where appropriate.

Advance Payment:

OMB received one comment suggesting that this definition exclude the reference to subrecipients as a disburser of funds. OMB disagrees with the commenter. Like recipients, subrecipients also disburse funds for program purposes. For example, subrecipients disburse cash for property and services. Accordingly, OMB finds this change is unwarranted and revised the definition as proposed.

Advisory Council:

OMB received a suggestion to include a definition for advisory council in this section, which is only defined in section 200.422. OMB

did not add a definition for this term. OMB is limiting the definitions to those terms used consistently throughout the guidance.

Bad Debt:

OMB received a suggestion to include a definition for bad debt in this section, which is only defined in section 200.426. OMB did not add a definition for this term. OMB is limiting the definitions to those terms used consistently throughout the guidance.

Beneficiary:

OMB received several comments suggesting that OMB define the term beneficiary. OMB did not propose to define the term, the meaning of which can vary widely between Federal agencies as well as within agencies between assistance programs. OMB defers to Federal agencies to determine who is or is not a beneficiary under their respective programs consistent with law. The definition of participant and participant support costs in this guidance is not intended to include beneficiaries. For the reasons summarized here, OMB defers to Federal agencies on the use and meaning of this term consistent with law for their programs.

Cognizant Agency for Audit:

One commenter asked OMB to clarify whether there is a list of cognizant agencies for audit. The commenter noted that this information is not available on the Federal Audit Clearinghouse (FAC) website. OMB revised the definition to clarify that the FAC website provides a list of Federal agency Single Audit contacts and not a list of cognizant agencies for audit.

Conditional Title:

A commenter asked OMB to include the definition of conditional title in section 200.1, which is currently defined in section 200.313. OMB did not add a definition for this term. OMB is limiting the definitions to those terms used consistently throughout the guidance.

Conference:

Another commenter asked OMB to define the term conference in section 200.1 because it is only defined in section 200.313. OMB did not add a definition for this term. OMB is limiting the definitions to those terms used consistently throughout the guidance.

Construction:

OMB received two comments requesting a definition of the term construction. OMB did not add a definition for this term. OMB is limiting the definitions to those terms used consistently throughout the guidance. OMB also did not define this term in part 200 because OMB did not want to inadvertently impact the implementation of Buy America requirements under part 184, which incorporate definitions from part 200, but which are not the focus of this update.

Contingency Provisions:

One commenter asked OMB to include the definition of contingency provisions or costs in section 200.1. OMB did not add a definition for this term. OMB is limiting the definitions to those terms used consistently throughout the guidance.

Continuation Funding:

One comment expressed concern that the proposed definition of continuation funding did not adequately capture the distinction between an agency's exercise of its discretion when making an award and subsequent determinations by the agency, pursuant to terms and conditions of the award, to provide funding for additional budget periods for that same award. In the final guidance, OMB revised the definition of continuation funding to simply mean “the second or subsequent budget period within an identified period of performance.” The proposed reference to a “discretionary decision by a Federal agency” is no longer included in the definition. Depending on the assistance program and the terms and conditions of the Federal award, agency discretion may be involved or legally available on whether to provide continuation funding. However, considering the potential for variation among Federal agencies and programs, OMB did not find it necessary to address this topic directly in the final definition of continuation funding.

Contract:

OMB made a minor revision to this term to clarify that contracts are utilized for conducting “procurement transactions” in general and are not limited to only purchasing “property and services.”

Conviction:

A commenter asked OMB to harmonize the definition of conviction across the guidance. The commenter noted that the definition of this term varies in different sections. For example, different definitions are used in sections 200.435(a)(1), 180.920, and 182.615. OMB did not add a definition for this term in part 200. OMB is limiting the definitions in section 200.1 to those terms used consistently throughout the part 200 guidance. For the purposes of this update, OMB did not find it necessary to provide a single definition of this term applicable across all parts of the OMB guidance in 2 CFR.

Cooperative Agreement:

OMB received several comments requesting clarification on the relationship between parties under both grants and cooperative agreements. OMB agrees with commenters that additional clarity is warranted and made minor clarifying revisions in the final guidance.

Cooperative audit resolution:

As proposed, OMB moved this definition to section 200.513(c), which outlines Federal agency responsibilities for audits. Considering its limited use in the guidance, OMB found it easier for the reader in this case if the definition is included in the same section where the responsibilities are outlined.

Cost of Idle Facilities:

One commenter asked OMB to insert a definition of cost of idle facilities in section 200.1 because a definition is provided in section 200.466(a)(4). OMB did not add a definition for this term. OMB is limiting the definitions to those terms used consistently throughout the guidance.

Cost objective:

OMB made a minor revision to this term by removing “((Facilities and Administration (F&A))” after “indirect” cost. The more general term “indirect costs” is not necessarily limited in all cases to the more specific F&A category. The definition of indirect cost now explains that the term facilities and administrative (F&A) cost is often used to refer to indirect costs by Institutions of Higher Education.

Cost sharing:

In the proposed guidance, OMB proposed minor revisions to this term, including clarifying that cost sharing includes matching. OMB made changes to the definition as proposed.

Credible Evidence:

At least one commenter asked OMB to provide a definition of credible evidence. OMB did not find it necessary to define the term in section 200.1. OMB intends to generally align the meaning of credible evidence under the Uniform Guidance in part 200 with the existing meaning under the FAR.

See

73 FR 67064 (Nov. 12, 2008) (explaining reasons for selecting the term “credible evidence” including discussion of alternatives considered). This topic is discussed further in the context of section 200.113 below.

Data Management and Sharing Costs:

One commenter asked OMB to add a definition of data management and sharing costs, which appears in section 200.455. OMB did not add a definition for this term. OMB is limiting the definitions to those terms used consistently throughout the guidance.

Depreciation:

One commenter asked OMB to add a definition of depreciation, which is used in section 200.436(a). OMB did not add a definition for this term. OMB is limiting the definitions to those terms used consistently throughout the guidance.

Disallowed Cost:

Six commenters asked OMB to restore the version of disallowed cost under the prior version of the guidance, which is limited to costs determined to be unallowable in

accordance with applicable Federal statutes, regulations, or the terms and conditions of the Federal award. OMB agrees with commenters and restored that language in the final guidance.

Encumbrance:

Several commenters asked OMB to add a definition of encumbrance in section 200.1 in place of the proposed definitions in sections 200.311, 200.313, and 200.315. OMB discusses this topic further in those sections. Other commenters noted certain deficiencies with OMB's proposed definition included in sections 200.311, 200.313, and 200.315. For example, a commenter asked OMB to address the difference between encumbrances and “pre-existing encumbrances.”

OMB did not add a definition of encumbrance in section 200.1. OMB also removed its proposed definition from the later sections of the preamble. Like the prior version of the guidance, the term “encumbrance” is not formally defined in the final guidance text. OMB's decision was based in part on comments expressing concern that the proposed definition may not fit equally well in all contexts under part 200 in which it could be applied. For the present, OMB did not attempt to revise its definition to effectively address all scenarios and potential concerns.

For future updates, OMB will again consider exploring this topic and providing a definition. OMB may consider providing a single definition of this term or providing separate definitions in the specific sections in which it is used. OMB cautions, however, that its decision not to provide a definition of this term should not be interpreted to indicate any particular policy intent in the sections in which the terms “encumber” or “encumbrance” are used. For example, OMB's decision to remove the proposed definition is not based on any single comment received in response to the proposed guidance. Removing the definition also does not indicate that OMB now disagrees with its proposed definition, which may be reasonable to use in many contexts. OMB will continue to evaluate what definition, if any, should be provided in future updates to the Uniform Guidance.

Equipment:

OMB received three comments requesting that the threshold for equipment be raised above $10,000. OMB proposed to raise the threshold to $10,000 in the proposed guidance. OMB finds that an additional increase is not warranted at this time and revised the guidance as proposed.

Expenditures:

OMB proposed to revise this definition. One commenter asked OMB to restore a definition closer to the original, including restoring the reference to a “project or program” under a Federal award. OMB agrees with the comment and restored the use of “project or program” to the definition.

Facilities:

A commenter asked OMB to include a definition of facilities, which is used in section 200.446(a)(1). OMB did not add a definition for this term. OMB is limiting the definitions to those terms used consistently throughout the guidance.

Federal Agency:

OMB received two comments indicating that the new definition of Federal Agency was unclear. OMB agrees with commenters that the structure of the proposed definition could cause confusion. To simplify, OMB now defines the term to mean an “agency” as defined at 5 U.S.C. 551(1) and further clarified by 5 U.S.C. 552(f). The definition further explains that the term generally refers to the agency that provides a Federal award directly to a recipient unless the context indicates otherwise. OMB incorporated these revisions in the final guidance. Based on this change, OMB eliminated the term “Federal awarding agency,” which no longer appears in the guidance text.

Federal Award:

One commenter suggested revising paragraphs (1)(i) and (1)(ii) using both the terms recipient and subrecipient, rather than just recipient in (1)(i) and non‐Federal entity in (1)(ii). The commenter stated that this would more clearly identify the types of entities covered as well as provide flexibility should an agency wish to make subparts A through E applicable to other types of entities. OMB disagrees with the commenter that further clarification is needed for paragraph (1)(i) at this time. OMB retained the language from the proposed and prior versions of the guidance, which is widely known and understood in the Federal financial assistance community. OMB also did not further revise paragraph (1)(ii) from the proposed or prior version of the guidance, which refers to a cost-reimbursement contract under the FAR. In this case, OMB retained the original term non-Federal entity.

Another commenter asked OMB to clarify the distinction between a grant and contract based on ambiguity presented in paragraphs (1) and (3). Paragraph (3) of the definition of Federal award refers to contracts that a “Federal agency uses to buy goods or services,” which generally would be governed by the FAR. However, paragraph (1)(ii) of the definition helps to clarify that a cost-reimbursement contract awarded under the FAR to a non-Federal entity may be subject to certain specified provisions under part 200. This is more specifically described in section 200.101, which is referenced in paragraph (1)(ii). This is a long-standing feature of the definition of Federal award and section 200.101, which is not newly proposed by OMB in this update. OMB did not propose changes to this element of the definition and does not make any further changes in the final guidance.

Another commenter recommended that the definitions of Federal award, Federal financial assistance, Federal program, and grant agreement all be revised to specifically exclude funds and activities associated with self-determination compacts between Indian Tribes and the Federal government. The existing definitions do not provide the requested exclusion, nor did OMB propose to add the exclusion in the proposed guidance. OMB may consider this comment for future updates, but made no change in the final guidance. Section 200.101(d) provides that statutes or Federal agency regulations may govern in circumstances where they conflict with the provisions of part 200. This existing provision of the guidance recognizes that the provisions of the Indian Self-Determination and Education and Assistance Act (ISDEAA), as amended (see 25 U.S.C. 5301-5423) may govern in some circumstances.

Federal awarding agency:

See discussion of the term Federal agency.

Federal award date:

OMB proposed minor revisions to this term, which it mostly included in the final guidance. In the final version, OMB deleted “binding agreement” following the word alternative in recognition that 31 U.S.C. 1501 does not require this in all cases. The relevant alternatives are listed in 31 U.S.C. 1501.

Federal financial assistance:

OMB proposed a minor change to the definition of the term “Federal financial assistance.” As with other provisions in subparts A through E, OMB proposed the term to include assistance received or administered by recipients or subrecipients—as compared to assistance received or administered by non-Federal entities in the prior version of the guidance. OMB included this change in the final guidance.

OMB's response above under Federal award.

Federal program:

One commenter recommended that the definitions of Federal award, Federal financial assistance, Federal program, and grant agreement all be revised to specifically exclude funds and activities associated with self-determination compacts between Indian Tribes and the Federal government. See OMB's response above under Federal award.

Financial obligations:

A commenter asked OMB further clarify the definition of financial obligations by adding a table. OMB did not find this necessary or critical to understand the meaning of this term. In the final guidance, before the word “result,” OMB added the word “will.” This change simply recognizes that expenditures are not always contemporaneous with the financial obligation. Rather, an obligation will often require a future—but not immediate—expenditure or outlay of funds.

Fixed amount award:

A commenter asked OMB to incorporate policy requirements for fixed amount awards into the definition. OMB disagrees that this is necessary in the definition section and did not make a change. Specific requirements for fixed amount awards are addressed later in the guidance.

For-profit organization:

OMB proposed to add a definition of this term in the proposed guidance. That definition is included in the final guidance.

Fraud:

A commenter asked OMB to include the definition of fraud in section 200.1 based on use of that term in 200.435. OMB did not add a definition for this term. OMB is limiting the definitions to those terms used consistently throughout the guidance.

General Support Services:

A commenter asked OMB to add a definition for general support services. OMB did not add a definition for this term. OMB is limiting the definitions to those terms used consistently throughout the guidance.

Grant agreement:

OMB received a couple of comments requesting further clarity on the relationship between parties under the definitions of grants and cooperative agreements. OMB agrees with the commenters and made minor clarifying revisions in the final guidance.

Idle Capacity:

A commenter suggested including a definition for idle capacity based on its use in 200.446. OMB did not add a definition for this term in section 200.1. OMB is limiting the definitions to those terms used consistently throughout the guidance.

Idle Facilities:

A commenter suggested including a definition for idle facilities based on its use in 200.446(a)(2). OMB did not add a definition for this term in section 200.1. OMB is limiting the definitions to those terms used consistently throughout the guidance.

Improper Influence:

A commenter suggested including a definition for improper influence based on its use in section 200.450(b). OMB did not add a definition for this term in section 200.1. OMB is limiting the definitions to those terms used consistently throughout the guidance.

Improper payment:

A few commenters asked OMB to reinstate the previous definition of improper payment. OMB disagrees. As stated in the preamble for the proposed guidance, OMB proposed to shorten the definition of “improper payment” to ensure better alignment with in Appendix C to OMB Circular A-123, Requirements for Payment Integrity Improvement. OMB made changes to the definition as proposed. See also the definition of questioned costs, in which OMB clarifies that questioned costs are not considered improper until they are confirmed to be improper under A-123.

Indian Tribe:

OMB proposed minor revisions to this term. It includes the revised definition in the final guidance.

Indirect cost:

In the final guidance, OMB revised the definition of indirect cost to no longer include reference to facilities and administrative (F&A) cost directly in the name of the term itself. OMB's revision to the defined term has no substantive impact on how the term is applied under the final guidance relative to how it was applied under the prior version of the guidance. The term “indirect cost” continues to align with “F&A costs.” OMB explains within the definition that F&A costs and indirect costs are often used interchangeably at Institutions of Higher Education (IHE). OMB received multiple comments requesting this revision. OMB also received one comment that recommended amending the definition of indirect cost to note that the duplication of costs is unallowable. OMB did not find the latter change necessary in the context of this definition. Allowability is addressed later in the guidance.

Indirect cost rate proposal:

OMB received three comments that recommended adding “or subrecipient” to the definition of indirect cost rate proposal because indirect costs apply to both recipients and subrecipients. OMB acknowledges that one can be both a recipient and subrecipient and have a Federally negotiated rate. However, only recipients prepare proposals in accordance with the appendices. An organization that is exclusively a subrecipient would not negotiate a rate with a Federal agency under the appendices to this part.

Information technology systems:

One commenter requested inclusion of cybersecurity in the definition of information technology systems. Cybersecurity may already be included in the definition if provided through listed items such as software or firmware or a related procedure or service. OMB did not find it necessary to specifically list cybersecurity in this definition.

Initial equity contribution:

A commenter asked for a definition of initial equity contribution to be included in section 200.1 based on its use in 200.449(c)(7). OMB did not add a definition for this term in section 200.1. OMB is limiting the definitions to those terms used consistently throughout the guidance.

Intangible property:

A commenter expressed concern that the proposed inclusion of data under the definition of intangible property would make data subject to the requirements of section 200.315. OMB responds that data is included as an example under the definition of intangible property. Even under the prior definition, certain data could already have been considered intangible property and subject to section 200.315 if it met the criteria under the guidance. For example, section 200.315 refers to intangible property developed, or for which ownership was acquired, under a Federal award. With the exception of minor edits, OMB revised the definition as proposed.

Key personnel:

OMB proposed to add a definition for this term in the proposed guidance. OMB received several comments suggesting that the new definition caused confusion or was unclear. In the final guidance, OMB removes its proposed definition of this term in response to those comments. In section 200.308(f)(2), OMB clarified that, at least in the context of that provision, key personnel includes employees and contractors.

Less-than-arm's-length:

One commenter suggested including a definition of less-than-arm's-length in section 200.1 based on its use in 200.465(c). OMB did not add a definition for this term in section 200.1. OMB is limiting the definitions to those terms used consistently throughout the guidance.

Loan:

In the final guidance, OMB added “or subrecipient” following recipient to recognize that subrecipients may also receive or administer loans.

Local Partner:

One commenter suggested including a definition of local partner. OMB did not add a definition for this term in section 200.1. OMB is limiting the definitions to those terms used consistently throughout the guidance.

Micro-purchase:

A commenter asked OMB to revise the definition of a micro-purchase to aggregate the purchase of supplies needed over the life of a Federal award. Another commenter asked OMB to remove the language referring to an individual procurement transaction. OMB found that neither of these changes are necessary and revised the definition as proposed.

Micro-purchase threshold:

In the final guidance, OMB revised the definition of this term by revising language on the ceiling for the micro-purchase threshold. OMB received several comments noting that the definition of the micro-purchase threshold failed to recognize different ways of establishing higher rates under section 200.320. OMB agrees with commenters and revised the definition accordingly.

Modified total direct costs (MTDC):

A commenter suggested revising the definition to not require exclusion of the portion of each subaward above the threshold. Two commenters asked whether subcontracts would be included in the modified total direct costs definition based on earlier versions of the guidance. Several commenters sought clarification on the intended application of rental costs and patient care costs in the modified total direct cost definition and suggested that OMB define these terms. Another commenter suggested that OMB revise the definition of modified total direct cost to include the threshold amount for each year during the period of performance that the subaward is in effect. Several commenters also asked OMB to increase the threshold for each subaward to above $50,000.

In the final guidance, OMB revised the definition as proposed. Many of the suggestions are beyond the scope of OMB's proposed revision to this definition, which was limited to increasing the threshold for the portion of each subaward that may be included from $25,000 to $50,000. As proposed, OMB retained the exclusion of the portion of each subaward above the threshold. OMB does not include subcontracts in the revised definition, which were removed in earlier versions of the guidance. OMB leaves this policy unchanged.

Under the revised definition, only the first $50,000 of each subaward may be included—regardless of the period of performance of that subaward. OMB disagrees that recipients should be able to apply this threshold on an annual basis for subawards with longer periods of performance. OMB also disagrees with the proposal to further increase the threshold for each subaward. OMB finds that doubling the threshold, as proposed, is an appropriate increase for this update.

Notice of Funding Opportunity:

A commenter asked for clarity on what a pass-through entity should call a notice of funding opportunity (NOFO) as the definition does not include pass-through entities. Another commenter stated that the reference to subrecipient in the definition should be removed because Federal agencies do not select subrecipients.

Regarding the first comment: a pass-through entity is not required to call a solicitation of subaward proposals by a specific name. On the second comment, although OMB agrees that Federal agencies do not directly select subrecipients under a NOFO, some NOFOs do provide guidance or information on how recipients should select subrecipients for a particular assistance program. For this reason, OMB retained the reference to subrecipient in the definition. OMB made changes to the definition as proposed.

Participant:

OMB proposed to add a definition of participant in the proposed guidance. OMB made a few revisions to the final definition to provide further clarification of its intent. For example, OMB restructured the definition to begin with an affirmative definition of a participant generally, before providing a negative definition of what a participant is not. The order was reversed in the proposed guidance. Other revisions are addressed below.

Initially, the definition of participant cannot account for all variations on how participants are treated or defined by different Federal agencies or under specific assistance programs. For this reason, section 200.456 of the guidance specifies that the recipient must document its policies and procedures for making participant determinations. That section also provides that participant support costs must be treated consistently across all Federal awards. See also participant support costs below.

One commenter suggested changing the reference to “exchange students” in the definition to just “students.” The commenter stated this would be simpler and, in most cases, more appropriate for Federal programs. The reference to exchange students was just one potential example of a participant, but OMB made this change in the final guidance.

Another commenter stated the definition was unclear and overly broad. One commenter specifically pointed to the phrase “playing a role in the overall program activities” as overly broad and confusing. In addition to restructuring the definition, as explained above, OMB attempted to provide further clarity in the final definition. For example, OMB now begins the definition by stating that a participant is an individual participating in or attending program activities—but not an individual responsible for implementing those activities under the Federal award.

Next, a commenter stated the definition should specify that individuals who attend trainings and conferences may be treated as participants. OMB agrees and included such individuals as examples of participants.

Another commenter stated that the definition should exclude project personnel and those who commit effort on the implementation of the Federal award. OMB agrees and revised the definition. Another commenter asked OMB to replace “staff member” in the proposed definition with “employee.” OMB did not find this change was necessary.

One commenter stated the definition should provide that beneficiaries are also participants. OMB disagrees that this would always be true and does not consider the two terms to be equivalent or synonymous. Identification of beneficiaries is at the discretion of the Federal agency making the award to the extent consistent with authorizing law. See also discussion under the term “beneficiary” above, which is discussed in this preamble but not defined in section 200.1.

A commenter also asked OMB to clarify that the examples are provided for illustrative purposes only and that the classification is at the discretion of the recipient. Partially in response to this comment, OMB revised and restructured the definition to better identify where it is providing definitional elements of a participant and where it is just providing examples

that may fit those elements. OMB also revised some of the examples provided.

Other commenters asked OMB to provide additional examples of participants within the definition. OMB finds that an exhaustive list of examples is not necessary. For example, although examples such as teachers, scholars, or scientists may be participants in some cases, they could also be employees, consultants, or beneficiaries in others. OMB sought an appropriate balance in the final definition by providing a few illustrative examples but not providing—or attempting to provide—an exhaustive list.

Participant Support Costs:

One commenter asked OMB to revert to the prior definition of participant support costs. Another commenter sought clarification on whether the inclusion of stipends as an example in the definition indicates that stipends are considered participant support costs. Another comment asked OMB to provide examples of types of participants, associated with typical participant support costs. Another commenter asked for clarification on the inclusion of temporary dependent care in the participant definition. Specifically, the commenter questioned whether the use in this definition was intended to be synonymous with the use of the same term in section 200.475(c)(1).

OMB finds the proposed text for this definition was sufficiently clear and did not make significant changes. Only stipends paid to participants are considered participant support costs. OMB found that it was not necessary to specifically mention training and conferences in the definition as the costs may also be incurred in other contexts when allowed under the guidance. Participant support costs are any costs that are paid directly to or on behalf of a participant. OMB clarified the reference to “temporary” dependent care. Section 200.475 applies to dependent care for employees, not participants.

Pass-through entity:

OMB received several comments indicating that the definitions of recipient, subrecipient, and pass-through entity were unclear. OMB proposed only minor revisions to the definition of pass-through entity and disagrees with commenters that the term is unclear. While traditionally pass-through entity specifically referred to a non-Federal entities under earlier versions of the guidance, other entities may also be considered pass-through entities based on how a Federal agency implements the guidance for its programs.

In the final guidance, to address potential confusion on how the term will be applied, OMB added language to clarify that the authority of the pass-through entity under part 200 flows through the subaward agreement between the pass-through entity and subrecipient. OMB added this language to ensure that a pass-through entity will not erroneously apply the authorities available to the Federal agency under part 200. For example, if a provision in part 200 allows “the Federal agency or pass-through entity” to provide an approval or authorization for a “recipient or subrecipient,” the pass-through entity only has authority to provide the approval or authorization to its subrecipient. In this situation, the pass-through entity cannot provide the approval or authorization to itself, but rather would need to obtain approval or authorization from the Federal agency. For a more specific example, under section 200.343, the pass-through entity is not permitted to authorize its own costs for its own primary Federal award. The pass-through entity may expressly authorize these costs for subawards only.

Performance Based Payment:

One commenter asked OMB to include a definition of performance based payment. OMB did not add a definition for this term in section 200.1. OMB is limiting the definitions to those terms used consistently throughout the guidance.

Period of performance:

OMB proposed revisions to this term, but now provides a simplified definition in the final guidance. The final definition reinstates some familiar language from the definition in the prior version of the guidance, which OMB had proposed to remove. As now revised, period of performance means the time interval between the start and end date of a Federal award, which may include one or more budget periods. The final definition also recognizes that identification of the period of performance in the Federal award consistent with section 200.211(b)(5) does not commit the Federal agency to fund the award beyond the currently approved budget period. The period of performance is also sometimes referred to by Federal agencies as the performance period.

Personally Identifiable Information (PII):

Within the definition of Personally Identifiable Information (PII), in the final guidance OMB deleted the text defining Public PII. The term “Public PII” is never used in the guidance text. OMB seeks to avoid confusion by defining a term in section 200.1 that is never used in the body of the guidance—which could potentially prompt questions on whether Public PII should be treated differently than normal PII. The deletion of this text on Public PII does not represent a substantive change to the policy in the guidance. The remaining text in the definition continues to explain that some PII can be available in public sources.

Post-retirement health plan:

One commenter asked OMB to include a definition of post-retirement health plan in section 200.1 based on its use in 200.431(h). OMB did not add a definition for this term in section 200.1. OMB is limiting the definitions to those terms used consistently throughout the guidance.

Prior approval:

Several commenters asked OMB to clarify the definition of prior approval by adding the words “obtained in advance.” Some commenters also asked OMB to clarify and specify when ratification (after the fact approval) would be permissible. One comment requested that OMB specify that approval of the project narrative or budget constitutes prior written approval. A different comment requested that the guidance limit Federal agency or pass-through entity review of requests for budget or program revisions to 15 days. Several comments questioned whether the definition may cause misunderstanding for pass-through entities and subrecipients on who can approve which action.

OMB added the words “obtained in advance” to the definition to clarify that, generally, obtaining approval in advance is a definitional element of prior approval, which is required where stated in the guidance. However, this change is not intended to prohibit Federal agencies from using appropriate procedures to retroactively provide prior approval, if necessary, under a Federal award in specific cases. OMB does not directly address this topic in the definition of the term, but Federal agencies may exercise reasonable discretion in providing “after the fact” prior approval when warranted on a case-by-case basis under Federal awards and otherwise consistent with law.

Guidance provided in section 200.308 is already responsive to the comment regarding circumstances in which approval of the project narrative or budget may constitute prior written approval. In response to another commenter, OMB is not establishing a specific timeframe in which an agency should provide prior approval, but may consider the recommendation of a 15-day period in future updates. Regarding commenters expressing confusion on when pass-through entities may provide prior approval, in many instances the guidance text specifically states whether

the Federal agency or pass-through entity may provide the approval. In circumstances in which pass-through entities may provide prior approval, they have the same responsibility for monitoring and oversight as a Federal agency does. In some circumstances a change under a subaward will be significant enough to also require a change to the recipient's Federal award, which would also require prior approval by the Federal agency.

Program Evaluation:

Two commenters asked OMB to define the term program evaluation to align with OMB Circular A-11. OMB did not add a definition for this term directly in section 200.1. OMB is limiting the definitions to those terms used consistently throughout the guidance.

Program Income:

A commenter observed that usage of the phrase “under a Federal award” in the illustrative examples of program income was confusing and needed clarification. The phrase was used for some examples but not others. In response to the comment: the key definitional elements of program income are provided in the first sentence of the definition, including explaining its connection to a Federal award. But the repetition of “Federal award” in certain examples helps to provide context. For example, in relation to certain items, the examples identify program income “acquired” under Federal awards, “fabricated” under a Federal award, and “made with” Federal award funds. Deleting this language would make the examples less clear. Thus, OMB retains reference to “Federal award” in the case of some example, but not all, when it helps to provide context and explain what OMB means by the example.

Protected Personally Identifiable Information (Protected PII):

In the final guidance, OMB made minor revisions to the definition of

Protected Personally Identifiable Information (Protected PII)

to more accurately reflect the meaning of this term.

Questioned Cost:

Multiple commenters objected to the deletion of the statement that questioned costs are not improper payments until reviewed and confirmed to be improper payments. No policy change was intended by the deletion. OMB restored the original statement within the definition of questioned cost at paragraph (6).

Two comments expressed concern about situations in which an auditor identifies questioned costs, the auditee locates additional documentation, and the auditor reports the questioned costs without considering the documentation. This comment recommended stating more specifically when adequacy of documentation should be assessed. OMB finds that it is not necessary to specifically address in the guidance the point in time at which this would occur.

Several commenters expressed concern that introducing the concept of “likely questioned costs” could put auditees at risk from speculative or unsubstantiated audit findings. OMB responds that the concept of likely questioned costs is not new. The definition now appearing at section 200.1 is from section 200.516 in prior versions of OMB's guidance. It is also based on AU-C 935.11 in the auditing standards of the American Institute of Certified Public Accountants (AICPA). The requirements associated with this concept are not new, including the requirement for auditors to consider the likely questioned costs in formulating their opinion on compliance. OMB merely moved the existing language from section 200.516 to section 200.1. Speculative or unsubstantiated audit findings would not align with the AICPA's auditing standards.

Several commenters recommended that “known questioned cost,” rather than “questioned cost,” should be the defined term and used as a basis for defining the related term, “likely questioned cost.” OMB is not adopting this recommendation at this time. OMB did not find reason to restructure the definition in this way through this update, but may consider the suggestion in the future.

Several commenters suggested categorizing the compliance requirements in the compliance supplement (see definition in section 200.1) as monetary or non-monetary to facilitate consistent reporting of questioned costs. In paragraph (3)(ii) of the definition, OMB clarified that there is no questioned cost solely because of noncompliance with the “reporting type of compliance requirement” (as described in the compliance supplement) if this noncompliance does not affect the amount expended or received from the Federal award.

Several commenters also suggested clarifying that there is no questioned cost solely because of a misclassification of costs. OMB agrees that in some cases this may be consistent with the intent of paragraph (3)(ii), as revised, but also observes that misclassified costs may sometimes affect the amount expended and thus be considered questioned costs. This may occur, for example, if the misclassification resulted in noncompliance with matching requirements.

Real Property:

OMB received a comment on proposed revisions to the definition of real property. The commenter questioned the proposed addition of “legal interests in land.” The commenter stated these would only be considered intangible rights or intangible property, but not real property. In response to the comment, many Federal agency regulations recognize that “real property” may include legal interests in land.

Black's Law Dictionary also recognizes that real property “can be either corporeal (soil and buildings) or incorporeal (easements).” (11th ed. 2019). In the final guidance, OMB decided to retain the reference to “legal interests in land” followed by a short list of examples. Relative to the proposed guidance, OMB only made minor technical edits. As applied to other sections of the guidance, the revised definition clarifies, for example, that if an easement is acquired under a Federal award, the recipient must not dispose of the easement while it is being used for the originally-authorized purpose except as provided by the Federal agency—or as otherwise allowed under relevant sections of the guidance.

See

2 CFR 200.311(b). It is possible that not all provisions in the Uniform Guidance that apply to real property will equally apply to all legal interests in land. For example, section 200.310 on insurance coverage may have limited applicability in certain cases if insurance coverage would not ordinarily apply to a particular legal interest in land. Federal agencies may exercise discretion in appropriate application of the revised definition consistent with law.

See, e.g.,

the General Services Administration (GSA) regulation applicable to GSA's real property policies at 41 CFR 102-71.20 (Real property means “[a]ny interest in land, together with the improvements, structures, and fixtures located thereon . . . and appurtenances thereto . . .”).