EOP-OMB: Circular No. A-110, Letter 1

This is historical material, "frozen in time." The web site is no longer updated and links to external web sites and some internal pages will not work.

NARA is disabling support for IPv4 and will support only IPv6 protocols for accessing this website after September 24, 2021. If you receive a network error or have other issues when attempting to access this site, please contact your Internet Service Provider for assistance.

Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals and Other Non-Profit Organizations

ACTION: Final Revision to OMB Circular A-110, "Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals and Other Non-Profit Organizations."

SUMMARY: Office of Management and Budget (OMB) Circular A-110 provides standards for obtaining consistency and uniformity among Federal agencies in the administration of grants and agreements with institutions of higher education, hospitals, and other non-profit organizations.

OMB issued Circular A-110 in 1976 and, except for a minor revision in February 1987, the Circular contains its original provisions. To update the Circular, OMB established an interagency task force to review the Circular. The task force solicited suggestions for changes to the Circular from university groups, non-profit organizations and other interested parties and compared, for consistency, the provisions of similar provisions applied to State and local governments. The proposed revised Circular reflects the results of these efforts.

DATES: Provisions that affect Federal agencies are effective (30 days after publication). Provisions that affect grantees will be adopted by agencies in codified regulations by (6 months after publication). Earlier implementation is encouraged.

ADDRESSES: Office of Management and Budget, Office of Federal Financial Management, Financial Standards and Reporting Branch, Room 10235, New Executive Office Building, Washington, DC 20503. For a copy of this Circular, contact Office of Administration, Publication Office, Room 2200, New Executive Office Building, Washington, DC 20503, or telephone (202)395-7332.

FOR FURTHER INFORMATION CONTACT: Financial Standards and Reporting Branch, Office of Federal Financial Management, Office of Management and Budget (telephone: 202-395- 3993).

OMB published a notice in the Federal Register (57 FR 39018) on August 27, 1992, requesting comments on proposed revisions to OMB Circular A-110. Interested parties were invited to submit comments. OMB received over 200 comments from Federal agencies, non-profit organizations, professional organizations and others. All comments were considered in developing this final revision.

The following section presents a summary of the major comments, grouped by subject, and a response to each comment. Other changes have been made to increase clarity and readability.

Comment: Provide Federal agencies the necessary discretion to grant waivers on a case-by-case basis.

Response: Amended Circular to provide Federal agencies the authority to grant exceptions on a case-by-case basis.

Comment: Clarify the provisions concerning the allowability of fees or profits.

Response: No change. Generally fees and profits are not paid to recipients unless authorized by legislation. Fees and profits are discussed in the various cost principles.

Comment: Delete or revise section on "Advance Public Notice and Priority Setting."

Comment: Amend the section on "Special Award Conditions" to: (1) include quantifiable, objective measures which may trigger special award conditions; (2) provide for an appeals process; and, (3) conform to the grants management common rule covering State and local governments to the extent practicable.

Response: OMB expanded this section to require Federal agencies to provide more information to recipients including an explanation of how recipients may request reconsideration of additional requirements. However, OMB does not believe it is practical to provide quantifiable measures. Most of the additional requirements are based on qualitative considerations rather than quantitative ones. Also, OMB amended this section to conform to the grants management common rule to the extent practicable.

Comment: The definition of "in-kind contribution" is not the same as the one used in the grants management common rule for State and local governments.

Response: Redefined third party in-kind contributions to mean the value of non-cash contributions from third parties. All grantee contributions whether in the form of property or cash are referred to as "contributions" and are subject to the respective cost principles. This change is consistent with the provisions of the Common Rule.

Comment: Allow grantees to use unrecovered indirect cost as cost sharing or matching.

Response: Added a provision to the Circular which provides that unrecovered indirect cost may be included as part of cost sharing or matching with the Federal agency's prior approval.

Comment: In identifying contributed services to federally-funded programs, university recipients should be entitled to assign fringe benefits on the same basis as they would if services were compensated, as long as such costs meet all other stated criteria.

Response: No change. The Circular provides that paid fringe benefits for volunteer services that are reasonable, allowable and allocable may be included in the valuation of the services. This is a liberalization of the current Circular. It recognizes that some donated services originate from third parties that pay fringe benefits.

Comment: The requirement to develop unit cost information is not applicable to scientific research and related activities.

Response: No change. The Circular covers many programs, other than research where unit cost data are useful. The Circular does not require the development of unit cost data for those programs where it is not practical to do so.

Comment: The criteria for informing the Federal agency of unneeded property should be changed to conform to the criteria in the grants management common rule for State and local governments.

Response: Changed the criteria used for reporting unneeded property. The Circular now provides for recipients to use the fair market value of unneeded property rather than its acquisition cost to determine whether the property must be reported to the Federal agency. This change is consistent with the provisions of the Common Rule.

Comment: Interest earned on Federal advances of grant funds should be returned to a single entity (e.g., the Department of the Treasury) rather than each individual Federal awarding agency.

Response: Amended Circular to provide that all interest earned on Federal advances shall be remitted to the Department of Health and Human Services (DHHS). DHHS is the largest granting agency and administers a sophisticated payment management system.

Comment: The definition of program income should provide for deduction of costs incidental to program income.

Response: No change. Because of the different amounts and types of program income, OMB believes the accounting for costs incurred in connection with program income should be considered on a program-by-program basis.

Comment: All program income regardless of whether the deductive, matching, or additive alternative is authorized, should be used by recipients before they request additional cash payments.

Response: Amended the Circular to clarify that all program income should be used by recipients before they request additional cash payments.

Comment: The requirement for recipients to "... follow a procedure to avoid purchasing unnecessary or duplicative items" is resulting in costly delays in purchasing research equipment. Federal auditors have interpreted this requirement to mean recipients must establish a costly equipment screening process.

Response: Amended the Circular to provide that recipients must determine, through an appropriate process, that existing equipment is not available to meet the new requirement. The original requirement was not intended to establish a costly equipment screening process.

Comment: Authority to incur pre-award costs, to initiate one time extensions of assistance agreements, and to carry forward unobligated balances should not require prior approval unless specifically required by the Federal agency.

Response: Amended the Circular to provide that recipients of research awards, because of the nature of the programs, are not required to obtain prior approval to: (1) incur pre-award costs, (2) extend an assistance program, or (3) carry forward unobligated balances unless specifically required by the Federal agency.

Comment: The Circular allows Federal agencies to recover funds on the basis of a later audit or review. A number of commenters said the only way funds should be recovered after the closeout of an award is on the basis of an audit.

Response: No change. Grantees which certify that rate agreements contain no unallowable cost are required to reimburse the Federal Government for any cost that is later found to be unallowable through legal means other than audit.