UW Research

September 26, 2024

Federal Uniform Guidance Changes Effective 10/01

OSP and Sponsored Programs Finance covered changes to the Uniform Guidance at the July 2024 MRAM.

We are sharing highlights from that presentation along with information on the changes that will NOT apply to the UW on October 1st.

Please see A Summary of Key Features of the 2024 Uniform Guidance, issued by OMB for more information.

While this is a summary of changes to Uniform Guidance, not all agencies have updated agency-specific requirements. Agency specific implementation occurs through Federal Register Notices and referred to in award terms.

Changes are for new awards issued on or after October 1st, 2024 and existing awards where the sponsor adds new funding. We do not expect these changes to apply retroactively.

Change Highlights

Uniform Guidance Name Change

  • The name Uniform Guidance… has changed to “OMB Guidance for Federal Financial Assistance”.

Voluntary Cost Share

  • Continues to state that voluntary committed cost sharing is not expected under federal research grants.
  • However, it also now indicates that Institutes of Higher Education (IHEs), like the UW, should treat voluntary uncommitted cost share differently from mandatory or voluntary committed cost share in our cost base (when negotiating F&A rate with our cognizant agency).

Cost Principles & Fixed Price Contracts

  • Sets out which part of cost principles apply to fixed-price contracts under the Federal Acquisition Regulations (FAR).

Fixed Price Awards

  • Budgets for fixed amount awards are negotiated and the total amount of federal funding is determined in accordance with the proposal and available pricing data.
  • Accountability must be based on performance and results.
  • There is no expected routine monitoring of the actual costs incurred by the non-federal entity in performance of recipient or subrecipient under the federal award.
  • Therefore, no financial reporting is required. However, this does not absolve the recipient of responsibilities of making records available for review during an audit.

Risk Assessment

  • The federal awarding agency must establish and maintain policies and procedures for conducting a risk assessment to evaluate the risks posed by applicants before issuing federal awards.
  • This assessment helps identify risks that may affect the advancement toward or the achievement of a project’s goals and objectives.
  • This assessment may incorporate elements such as the quality of the application, award amount, risk associated with the program, cybersecurity risks, fraud risks, and impacts on local jobs and the community.

Prior Approval Requirements

  • Some prior approval requirements are automatically waived for federal awards that support research, unless they are in the federal agency’s regulations or terms and conditions of the federal award. These waived actions are:
    • Pre-award costs
    • One-time extensions (with some exceptions)
    • Unobligated balances and carryforward of unobligated balances to subsequent budget periods
  • Additionally, prior approval requirements were removed for certain costs associated with entertainment; memberships, subscriptions, professional activity costs; and participant support costs.
  • Please review your Notice of Award and applicable terms and conditions to understand any sponsor or award-specific requirements with respect to the allowability of a cost and/or prior approvals.

Allowable Costs

  • Costs related to data and evaluation are allowable.
  • Data costs include (but are not limited to) the expenditures needed to gather, store, track, manage, analyze, disaggregate, secure, share, publish, or otherwise use data to administer or improve the program, such as data systems, personnel, data dashboards, cybersecurity, and related items.
  • Data costs may also include direct or indirect costs associated with building integrated data systems.

Separation Leave

  • It is anticipated that OMB will be issuing a technical correction to reverse this change by 09/30/24. If not, the unused leave costs for terminated employees will be excluded from the fringe benefit rate calculation and included in the GA pool, starting with Fiscal Year 26.

Subaward Changes

  • Subrecipient Monitoring:
    • A non-Federal entity that expends $1,000,000 or more during the non-federal entity’s fiscal year in federal awards must have a single or program-specific audit conducted for that year.
    • A non-federal entity expending more than $50 million a year in federal awards must have a cognizant agency for audit.
  • Criteria to exempt a foreign subrecipient from completing full SAM registration
  • Fixed Amount Subawards:
    • With prior written approval from the federal agency, the recipient may provide subawards based on fixed amounts up to $500,000.
  • De Minimis Indirect Rate:
    • Increases from 10% to 15% the maximum rate that recipients of federal funds may use for indirect costs without negotiating an alternative rate with the relevant federal agency.
  • Subaward activities not proposed in the application and approved in the federal award
    • A change of subrecipient only requires prior approval if the federal agency or pass-through entity includes the requirement in the terms and conditions of the federal award. In general, a federal agency or pass-through entity should not require prior approval of a change of subrecipient unless the inclusion was a determining factor in the merit review or eligibility process.
    • Certification that there is a compliance plan to combat human trafficking, whenever the work outside the U.S. will meet or exceed $500,000. This will primarily impact awards where we have substantial foreign subawards.

Changes that do NOT Apply to the UW on 10/01

Modified Total Direct Costs

The UW’s MTDC base is not changing at this time and will not follow the updates in the Uniform guidance. MAA will be submitting the FY23 F&A Rate Proposal in November 2024. Subsequently, MAA will submit an impact statement using the new thresholds for subawards and equipment capitalization thresholds in the MTDC base to calculate rates for FY26 and beyond in Q1 CY25, prior to negotiations beginning on the FY23 proposal.

New thresholds will go into effect the first FY of the new negotiated F&A rates.

Please note the implementation guidance for these revisions is fluid and we will continue to provide the latest updates as soon as they become available.

The UW’s MTDC base remains “all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs, and the portion of each subaward in excess of $25,000.

Subrecipients, however, may adopt the Uniform Guidance change to their MTDC.

Uniform Guidance change states:

“Modified Total Direct Cost” defined to mean “all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $50,000 of each subaward (regardless of the period of performance of the subawards under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs, and the portion of each subaward in excess of $50,000

Equipment

The UW’s equipment definition and threshold will remain the same at this time and is not changing.

The UW’s equipment definition remains the same, that is, “Equipment means tangible personal property (including information technology systems) having a useful life of more than one year and a per-unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non-Federal entity for financial statement purposes, or $5,000”.

Uniform guidance change states:

“that equipment increases from $5,000 to $10,000 the value of equipment that at the end of the grant period “may be retained, sold, or otherwise disposed of with no further responsibility to the federal agency”.