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Business and Policy Areas
Business and Policy Areas

New Rules for Federal Awards Now Apply

January 8, 2015

The Office of Management and Budget (OMB), as well as dozens of federal departments and agencies, published regulations last month implementing OMB's uniform guidance—the "super circular"—for managing federal grants and awards. The uniform guidance streamlines requirements and supersedes eight previous OMB circulars.

Colleges and universities must comply with the uniform guidance's administrative requirements and cost principles for new awards and for new funding increments to existing awards (when the federal agency considers the increments to be an opportunity to modify the terms and conditions of the awards) made on or after December 26, 2014. Existing awards that do not receive incremental funding with new terms and conditions will continue to be governed by their original terms. For audit purposes, the guidance is effective for fiscal years beginning on or after December 26, 2014 (FY16 for most colleges and universities).

The implementing regulations were necessary in order to incorporate the uniform guidance into individual agencies' regulations and officially bring the guidance into effect to meet OMB's December 26 target date. OMB notes that the language in the 230-page notice is not new agency policy and is "consistent with either the policies in the uniform guidance or the agencies' existing policies and practices." (Technically, OMB guidance instructs the various federal agencies to establish certain policies relative to grants management and is not directly applied to nonfederal entities without conforming agency rules.)

OMB did, however, make a change to the uniform guidance. It revised the section explaining the effective date to allow nonfederal entities a one-year grace period to implement changes to their procurement policies. Without the grace period, a nonfederal entity receiving federal funds must comply with the new guidance, including the procurement policies, for its next fiscal year that begins after December 26, 2014. This means that a college or university with a June 30 year end may continue to comply with OMB's existing procurement standards through its FY16 (ending June 30, 2016) and would then have to comply with the uniform guidance's procurement standards beginning in FY17 (starting on July 1, 2016). The nonfederal entity would be required to document whether it is in compliance with the old standard or the new standard. This was also noted in an FAQ (updated in November 2014) published by the Council on Financial Assistance Reform.

Additionally, the implementing regulations changed the word "should" to "must" in several places in the guidance to "reflect longstanding policies that have been requirements in practice, but which may have been misinterpreted as optional with the usage of the word ‘should'."


Bryan Dickson
Senior Policy Analyst