NACUBO

My NacuboWhy Join: Benefits of Membership

E-mail:   Password:   

 Remember Me? | Forgot password? | Need an online account?

Initiatives
Initiatives
Loading

To OMB re: Cost Principles under Circulars A-21, A-87, and A-122

October 11, 2002

Mr. Gilbert Tran
Office of Federal Financial Management
Office of Management and Budget
Room 6025 New Executive Office Building
Washington, DC 20503

Dear Mr. Tran:

I am writing to provide comments on the proposal to revise the OMB cost principles under Circulars A-21, A-87, and A-122, on behalf of the National Association of College and University Business Officers (NACUBO). NACUBO represents chief financial officers at more than 2,200 colleges and universities, and is dedicated to promoting sound administrative and fiscal management of institutions of higher education.

NACUBO strongly supports your efforts to streamline the federal government grants management process under P.L. 106-107. This initiative promises to provide significant benefits to all parties including the federal government. Unfortunately, while the primary purpose behind the proposed revisions to the cost principles—consistency—seems to make sense on the surface, the details of the proposed changes go much further. Contrary to assurances in the August 12th Federal Register notice, in a number of instances the proposed changes impose new requirements that would create significant burdens on colleges and universities.

NACUBO endorses the comments filed by the Council on Governmental Relations and joins COGR in urging you to withdraw the proposed changes to Circular A-21. While we appreciate how much work went into comparing the three circulars, and commend you for sharing the matrix, the proposed changes are too far-reaching to be adopted with little or no explanation as to why they are needed or desirable. In addition, approaching revisions from the viewpoint of conformity overlooks additional opportunities for simplification that would increase efficiencies for all parties. We believe that it would be more effective for OMB to approach simplification of A-21 by entering into a dialogue with the higher education community and encourage you to do so.

NACUBO concurs with COGR’s analysis of the proposal and concerns about specific provisions.  We would like to emphasize several concerns:

  • Equipment (#16) – The proposal includes a new definition and requirements for "an original complement of low cost equipment" which would have to be capitalized if, in the aggregate, the cost exceeded $5,000. This language does not appear in any of the circulars, and runs contrary to previous changes to A-21 that raised the threshold for capitalization.
  • Idle Capacity (#24) – This provision would be added to A-21 under the proposal, but does not fit the collegiate environment and would add a new layer of scrutiny where it is not needed.
  • Specialized Service Facilities (#44) – The revision would add "motor pools" as an example of a specialized service facility. This is inappropriate, particularly for institutions that treat their motor pool as an auxiliary service.
  • Plant Security (#30) –We have never been so aware of the need to enhance security in many areas, particularly in research environments. With universities receiving little help in funding these needs directly, we were surprised to see changes proposed that would make security costs unallowable unless mandated by the federal government.
  • Prior Approval – In a number of instances, the proposal would require prior approval that colleges and universities do not currently need. These include pre-award costs (#31), overtime (#32), publication and printing costs (#41) and foreign travel (#48). Unless there is a demonstrable need to impose greater controls, additional approvals do not have a place in efforts to streamline requirements.
  • Detailed Guidance – We also note several instances where the proposed revisions add lengthy, prescriptive guidance to the circular that runs counter to the avowed purpose of streamlining guidance. Relocation (#37) and professional services (#32) are examples.

NACUBO appreciates the opportunity to comment on the proposed changes to Circular A-21 and hopes that you will agree that additional work is needed before going forward with changes. We would be happy to work with you and other members of the higher education community in such an effort. Please call me, or Anne Gross of my staff, at 202-861-2540 if you have questions or we can be of assistance.

Sincerely,

Mark A. Olson
Senior Vice President