The Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards from the Office of Management and Budget (2 C.F.R. § 200) (Uniform Guidance or simply UG) governs the management of federally funded sponsored projects across the entire project lifecycle and aims to reduce the administrative burden and cost of compliance for federal grantees. It generally provides for more flexibility in direct charging costs to federal awards. It also emphasizes the importance of solid documented institutional internal controls to ensure compliance with the terms and conditions of federal awards. Listed here are the major areas of reform and changes that may affect your federal awards:

Subrecipient Monitoring and Oversight  (200.331)
JMU as the pass-through entity must:

At proposal stage:

  • Make determination between subrecipient and Contractor classification

Prior to releasing subaward:

  • Make an assessment of subrecipient’s risk factors (high/medium/low) of noncompliance with federal regulations in consideration of following factors:
    • Prior experience with same or similar subawards
    • Results of previous audits
    • Whether new or substantially changed personnel or systems and the extent and results of Federal awarding agency monitoring
    • Put specific data elements  in the subaward from the Prime award
    • Include indirect cost rate of 10% de minimis (or the sub’s NICRA)
    • Do a risk assessment to determine appropriate subrecipient monitoring AND which parties must monitor subrecipients
    • Consider if specific subaward conditions are needed (additional terms and conditions)
    • Request most recent audit result
    • Verify sub has audits in accordance with Subpart F

Monitoring Phase of Subrecipient:

Principal Investigator’s Duties:

    • Review of subrecipients’ expenditures to ensure they are reasonable, allowable and allocable
    • Monitor technical progress and expenditures of subs to ensure level of expenditures represents technical progress made
    • Consider corrective action and notification to Office of Sponsored Programs if sub is not performing
    • Collect and review reports required from subs and forward to Office of Sponsored Programs
    • Closeout final expenditures within 30 days of project termination

Office of Sponsored Programs Duties:

    • Follow-up, in coordination with the PI, to ensure subrecipient takes appropriate action on all deficiencies pertaining to the subaward identified through audits, on-site reviews, and other means
    • Issue a management decision for audit findings pertaining to subawards
    • Collect annual audit results throughout life of award
    • Make any necessary adjustments to JMU's subaward or monitoring based on reviews and audits of subrecipient
    • Consider actions to address subrecipient noncompliance

Fixed Price Subawards (200.332 & 200.331) With prior written approval from the federal awarding agency, fixed price subawards of up to $150,000 are permissible under the UG.  Valid justification for this award vehicle must be presented before OSP will issue a fixed price subaward.

Facilties and Administrative (F&A ) or Indirect Costs on Subawards  (200.414)
The UG states that if a subrecipient does not already possess a federally Negotiated Indirect Cost Rate Agreement (NICRA), it requires the inclusion of at least a 10% de minimis F&A rate, except where the subrecipient is able to allocate and charge 100% of its costs directly.

JMU will budget for the 10% de minimis rate on all subawardees if they do not possess their own NICRA.

**It is not permissible for the PI/department to force or entice a proposed subrecipient without a negotiated rate to accept less than the de minimis rate. There is no change to JMUs recovery of its own F&A costs – this remains limited to receiving our F&A rate on the first $25,000 of each subaward. However, a subrecipient may voluntarily waive F&A recovery from the budget.

Cost Principles/DIRECT COSTS

The Uniform Guidance allows the direct charging of certain items to federal sponsored projects that could not be directly charged under the prior regulations. 

Administrative & Clerical Salaries (200.413)

  • As in the past, these costs should normally be treated as indirect (F&A) costs
  • May be charged as direct cost if ALL of the following are met:
    • Must be integral to a project or activity
    • Individuals involved can be specifically identified with the project or activity
    • Such costs are explicitly included in the budget or have prior written approval of the Federal awarding agency
    • The costs are not also recovered as indirect costs
    • The budget justification must include a narrative that explains how these services are integral to the project.  

For an existing full-time employee, JMU will budget allowable salaries at the employee's "per hour" rate and expenses can be "recovered" to the employee's department.  Should the employee earn overtime as a result of the additional sponsored program work, the overtime would be paid from the employee's department.

Computing Devices (200.453)
Computing devices are generally considered “Materials & Supplies” and can therefore be directly charged to federally sponsored projects as long as they are essential and allocable to the performance of a federal.  They do not have to be solely dedicated to the performance of a federal award.  Any computing device costing more than $5,000 should be treated as “Equipment.”  The devices should be itemized in the proposal budget and described in the budget justification. 

Dependent Care at Professional Conferences/Travel (200.474)
Temporary dependent care costs that result directly from travel to conferences and meet specified standards are allowable.

(c)(1)Temporary dependent care costs…above and beyond regular dependent care that directly results from travel to conferences is allowable provided that:

  • (i) The costs are a direct result of the individual’s travel for the Federal award;

  • (ii) The costs are consistent with the non-Federal entity’s documented travel policy for all entity travel; and

  • (iii) Are only temporary during the travel period.

To be reimbursable, these costs must also meet JMU and State regulations.

Entertainment Costs (200.438)
Unallowable unless:

  1. Those costs have a programmatic purpose and are authorized in the approved budget for the federal award, or
  2. Those costs have prior written approval from the federal awarding agency

Visa Costs (200.463)
Costs associated with short-term travel visas may charged as a direct cost as long as:

  1. Skills are critical and necessary for the project;
  2. Considered direct and allowable under Cost Principles; and
  3. Consistent with University cost accounting policy and procedure.

Expedited processing fees remain unallowable. 

Procurement Standards (200.317-326)

The UG contains prescriptive methods for methods to procure goods and services under federal awards costing $3,000 or more.

There are stricter requirements for sole-source purchases.

Increased documentation requirements and internal written procedures required for procurements.

PI and Office of Sponsored Programs must maintain records sufficient to document the rationale for the following, but not limited to:

  • Procurement method
  • Selection of contract type
  • Contractor selection or rejection
  • Basis for contract price.

Micro-purchases $3 000 or less do not require purchases, do not require competition or a cost/price analysis, but must be distributed equitability among qualified suppliers (to the extent practicable). Micro-purchases may be awarded without soliciting competitive quotations IF the non-Federal entity considers the price to be reasonable.

Small purchases, $3,000-$149,999, price and rate quotes must be obtained from an adequate number of qualified sources.

>$150,000, Every procurement in excess of the Simplified Acquisition Threshold ($150,000) must have a cost or price analysis performed, including contract modifications.  These actions will be handled through Procurement and not by Sponsored Programs.

Cost Sharing (200.306)

Cost sharing is the portion of the total project costs of a sponsored agreement borne by the University or third party, rather than by the sponsor. Two important types of cost sharing are: mandatory cost sharing required by the sponsor as a condition of the award and voluntary committed cost sharing not required by the sponsor but offered by the applicant. The Uniform Guidance reinforces the fact that voluntary committed cost sharing is neither expected nor considered during merit review of the proposal. Federal agencies must require mandatory cost share or not consider it at all.

Therefore JMU will continue to strongly discourage cost sharing unless it is mandatory in accordance with the sponsor’s solicitation or guideline. This is because of its high financial and administrative burden to the University and PI’s (once included in a proposal, if awarded, it must be tracked and is auditable) and potential to adversely affect negotiated indirect cost rates.

PI Disengagement (200.308) (Reduction of Effort)

PIs are often away from campus but still remain engaged in their projects. Be mindful that prior approval from federal awarding agencies must be obtained for the following program or budget-related reasons:

  • Change in scope or objective of the project or change in a key person identified in the grant application;
  • Disengagement from the project for more than 3 months, or a 25% reduction in committed time.

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