2 CFR 200 Turns Two: The Research Community Seeks Greater Independence
It seems like just yesterday that I was spending my vacation frantically reading the interim final rule for 2 CFR 200. As other members of my family were making final preparations for our holiday, I was busy trying to decipher the new personal compensation requirements and attempting to figure out how best to update Management Concepts grants curriculum.
As the Uniform Guidance turns two, the grants community is entering that familiar developmental stage known as the “terrible twos.” To borrow from the Mayo Clinic’s explanation of this phase, “The terrible twos is a normal stage in which toddlers begin to struggle between their reliance on adults and their desire for independence. One minute your child might be clinging to you, and the next he or she is running in the opposite direction.”
I think this is a great description for the current stage of the Uniform Guidance. With the implementation of 2 CFR 200, the Office of Management and Budget (OMB) sought to bring uniformity to grants management. What we are now beginning to see is the desire by some non-federal entities to begin exerting their independence and to have more flexibility with their federal awards.
This strive for independence is particularly apparent with the research community, as the research community faces challenges in managing federal awards not common to other entities
In December, Congress passed two bills that would provide the research community with specific exceptions to the requirements under 2 CFR 200.
The first bill that may impact the research community is the National Defense Authorization Act (NDAA) for Fiscal Year 2017. Section 217 of NDAA:
- Increases the micro-purchase threshold for basic research programs and activities under the Department of Defense; and
- Adjusts the micro-purchase threshold for universities, independent research institutes, and nonprofit research organizations by:
- Increasing the micro-purchase threshold to $10,000; or
- At a higher threshold as determined by an agency and consistent with clean audit findings, internal institutional risk assessment, or state law.
President Obama has not yet signed the NDAA into law.
The 21st Century Cures Act, which President Obama signed into law on December 13, also contains multiple provisions in Section 2034 related to the research community, including:
- Establishing a research policy board to make recommendations “[r]egarding the modification and harmonization of regulations and policies having similar purposes across research funding agencies” and to minimize recipient burden;
- Directing the Director of the National Institutes of Health (NIH) to implement measures to reduce the administrative burdens related to monitoring of subrecipients of grants, including a potential exemption from subrecipient monitoring requirements;
- Requiring the Secretary of Health and Human Services (HHS) to collaborate with the NIH Director to “evaluate financial expenditure reporting procedures and requirements for recipients of funding” from NIH and to minimize recipient burden; and
- Mandating that HHS clarify the applicability of the requirements under 2 CFR 200 “regarding documentation of personnel expenses, including clarification of the extent to which any flexibility to such requirements…applies to entities receiving grants” from HHS.
Any actions from HHS to implement the law’s requirements will take some time to come to fruition.
Based on the success of the research community in obtaining greater independence, it will be interesting to see if other non-federal entities will also begin to seek entity-specific exceptions to the Uniform Guidance. For example, might non-profit organizations seek exemption from negotiating indirect cost rates or could other non-federal entities seek to reduce subrecipient monitoring requirements?
As 2 CFR 200 enters the “terrible twos,” the grants community should follow the Mayo Clinic’s advice and stay calm. In 2017, OMB is expected to release additional Frequently Asked Questions (FAQs) to 2 CFR 200 which should provide additional guidance for complying with grants requirements.