Federal Grant And Contract News For Nonprofits - November 2014

Two major developments affecting nonprofits this year have been the Office of Management and Budget's (OMB) adoption of large-scale changes to the uniform rules governing Federal grants, known as the "Super Circular," and President Obama's use of Executive Orders to impose new requirements on Federal contractors, including nonprofits. In this month's update, we focus on examples of how two agencies are responding to these developments.

Agencies Begin Issuing New Guidance Prompted by the Super Circular

Even though the December 2014 effective date approaches, agencies still have not issued corresponding regulations. However, the National Science Foundation (NSF) has issued preliminary revisions to its Proposal and Award Policies and Procedures Guide (PAPPG) to align NSF's grant procedures with the Super Circular. The revised PAPPG provides some insight into how agencies may address the changes prompted by the Super Circular. The first and most notable aspect of the revised PAPPG is that it is not a regulatory revision, as we will expect to see from several Federal agencies, but rather a policy revision. In the Federal Register notice announcing the revisions, NSF noted its "longstanding practice of implementing [grant requirements] via use of a policy rather than regulation." Thus, grantees should recognize that not all Federal grant making entities will issue new regulations to effectuate the Super Circular's requirements. Accordingly, grantees should keep an eye on their grantor entities - not just for regulatory revisions, but also for any revised policy documents or directives that might affect grant proposal and administration requirements. While the revisions to the PAPPG are not a wholesale redrafting of that guidance, they are too numerous to summarize here, and NSF grantees should review the revised PAPPG to understand the new requirements. The following are just a few examples of the changes in the revised document:

Salaries of administrative and clerical staff are treated as indirect costs and may be treated as direct costs only under circumstances outlined in the Super Circular that are now incorporated into the PAPPG. Proposers will be assessed for risk in accordance with procedures that conform to those set forth in the Super Circular. Among other criteria, these risk assessments will include pre-award financial and administrative reviews for all new proposers (or proposers who have not received NSF funding in the previous 5...