What Does Flexibility Mean for Grants Management?
The word “flexibilities” appears 12 times in Promoting Public Trust in the Federal Government through Effective Implementation of the American Rescue Plan Act and Stewardship of the Taxpayer Resources (M-21-20). Agencies are instructed to apply these flexibilities when appropriate and innovate with them, but what does that actually mean?
The purpose of these flexibilities is part of the recurring theme we’ve seen from the Office of Management and Budget (OMB) since the beginning of the Uniform Guidance development process — stressing performance over compliance and reducing recipient burden. This is not to say that compliance is not important, but rather that we should avoid compliance for its own sake, like checking off list items instead of making real progress.
OMB acknowledges that agencies know their programs and grantees best, and the Guidance is not one-size-fits-all. The Uniform Guidance grants agencies the power to make exceptions and ask for waivers. The most recent changes to the Uniform Guidance continues to build on this theme ― expanding use of the de minimis rate for indirect costs, among other changes.
COVID-19 Related Flexibilities
Last spring, OMB issued Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly Impacted by the Novel Coronavirus (COVID-19) (M-20-11), which established certain short-term flexibilities specifically for awards that were directly supporting research and services needed for the emergency response to the pandemic. Ten days later, OMB issued Administrative Relief for Recipients and Applicants of Federal Financial Assistance Directly Impacted by the Novel Coronavirus (COVID-19) due to Loss of Operations (M-20-17), expanding on this guidance and applying these flexibilities to all agencies and assistance programs affected by COVID-19, and a year later, we know that was most agencies.
A year later, M-21-20 seeks to update these flexibilities in the context of the American Rescue Plan and recent executive orders. Appendix 3 – Disaster Relief Flexibilities to Reduce Burden for Financial Assistance specifically outlines the options agencies have to reduce recipient burden and enact flexible grants management.
The intention of these flexibilities is not to loosen requirements merely to make things easier ― it is to reduce requirements or allow alternative arrangements to facilitate or expedite the effective use of funds.
OMB is saying not to let the process get in the way of the results. However, it is still important to understand the process and requirements. Here are a few example potential scenarios.
- Pre-approval Waiver – An agency is granting emergency funding to a grantee to set up COVID-19 testing sites. The grantee has already ordered testing supplies and paid the first month’s rent for a testing facility before the period of performance begins. Typically, these pre-award costs would need specific approval to be considered allowable. Under M-21-20, OMB is allowing agencies to waive pre-approval requirements as long as all costs charged to the award are consistent with the terms of the award and federal cost guidelines.
- Registration Extension – A non-profit wants to apply for funding from an agency but is not registered or certified in the System for Award Management (SAM) as required by 2 CFR 200. M-21-20 allows agencies to relax the timing of the requirement for active SAM registration and allows a one-time extension to entities whose registration expires between 4/1/2021 and 9/30/2021. Therefore, the agency can grant an award to this grantee as long as a pre-award risk assessment is conducted, and the non-profit can complete the SAM certification concurrently.
In addition, M-21-17 grants flexibility on compliance-related deadlines: extension of reporting deadlines such as the federal financial report (FFR), single audit submission, grant closeout, and management of physical inventories. In most cases (excluding single audit), this needs to be a conversation between the agency and the grantee. For all flexibilities, grantees and agencies should document the reasons for the adaptations (i.e., why the single audit extension was used, why an FFR was delayed, why they requested the closeout period to be extended). Strong communication between grantor and grantee is still expected, as is effective stewardship of the funds.
Now more than ever, OMB wants grant funds to be used quickly and effectively. These flexibilities are designed to allow that―to facilitate effective, results-oriented delivery that benefits agencies, grantees, and the American public.
Sarah K. Hluchan is the Grants Product Management Director for Management Concepts. She has spent her career facilitating effective grants management through process improvement, policy development, and education. She holds a BA in political science from Drew University and a Master of Public Policy from the McCourt School at Georgetown University.