In January, the Office of Management and Budget (OMB) announced proposed changes to Title 2 of the Code of Federal Regulations (2 CFR). Should these changes go into effect, the requirements will apply to disasters declared after their publication date. The public comment period ends soon – this upcoming Monday, March 23, 2020.
The purpose of 2 CFR is to provide guidance for and uniformity of administrative requirements, cost principles, and audit requirements for almost all Federal awards. While OMB proposed changes to 2 CFR Parts 25, 170 and 183, Part 200 is most applicable to disaster grant awards and has been the Hagerty team’s area of focus.
The Hagerty team is taking this opportunity to provide our comments to the OMB to help shape the final changes to the 2 CFR. After reviewing the prosed changes, our team has highlighted the changes we find most significant below:
(1) Closeout Requirements – 2 CFR §§ 200.343, 200.344
- Requires Non-Federal entities (NFEs) to submit closeout reports and liquidate all financial obligations within 120 days of the period of performance end date (currently 90 days).
- Requires Subrecipients to submit to the pass-through entity required closeout documentation no later than 90 days after the end date of the period of performance.
- Encourages Federal awarding agencies to closeout all awards no later than one year after the period of performance ends and requires Federal awarding agencies to initiate closeout at such time if the NFE has not done so, and report to FAPIIS all NFEs not in compliance with the new timing requirements.
- Allows Federal awarding agencies to make financial adjustments to a previously closed award.
(2) Preference in Contracting – 2 CFR § 200.321
- Requires NFEs to provide a preference for the purchase, acquisition, or use of goods, products, or materials produced in the United States.
- The Section currently requires NFEs to “take all necessary affirmative steps to assure that minority businesses, women’s business enterprises, and labor surplus area firms are used when possible” – commonly known as MBE, WBE, small businesses requirement.
- The “domestic preference” requirements will replace, not supplement, the MBE, WBE, small business considerations requirement.
(3) Focus on Auditing Requirements – 2 CFR §§ 200.331, 200.513
- Requires more stringent monitoring, overseeing, and reviewing by pass-through entities of all awards provided to Subrecipients.
- Changes the criteria for determining which Federal agency is the “cognizant agency” for determining compliance and usage of indirect rate allocations.
(4) Prohibition on certain telecommunications and video surveillance services or equipment – 2 CFR § 200.216
- Prohibits Federal award recipients from using government funds via grant, cooperative agreement, and loan to enter into contracts (or extend or renew contracts) with entities that use covered technology.
The Hagerty Team encourages our readers to consider reviewing the changes here and provide comments to the OMB. Comments can be submitted directly through federalregister.gov and tips for submitting effective comments has been provided by regulations.gov. All comments submitted become part of a public record and you can see other public comments as they are posted here. Let your voices or concerns be heard before the changes to the 2 CFR are finalized!
Hagerty Consulting is an emergency management consulting firm that helps our clients prepare for and recover from disasters. Established in 2001, Hagerty Consulting’s work includes some of the nation’s largest recovery and preparedness projects in more than 30 states, including 9/11, Hurricane Katrina, and Hurricane Sandy. You can learn more about our disaster recovery practice here.