Last month we alerted you to grant regulation changes that are under consideration for Federal grant recipients.

• Most recently the Office of Management and Budget extended the comment period deadline from May 2, 2013 to June 2, 2013 so interested parties would have more time to get their comments submitted. The OMB has received over 350 responses so far.

While the new grant regulations have not yet been enacted, it seems like just a matter of time before at least some of the changes are put into place.

Let’s focus in on what is proposed for the Indirect Cost Rate Negotiation Process…

Big Changes to the Indirect Costs Rate Process Underway

If it’s not broke, why fix it?

The truth is that the process for getting negotiated indirect cost rate has been bogged down, back-logged and unwieldy for many years in many agencies for many grantees.

It comes down to un-complicating the process to save time and money.

Goal #1 Cost Savings by Less Negotiation

The OMB is looking to save money by simplifying the indirect cost rate negotiation process.

They looked at offering a mandatory flat rate discounted below the negotiated rate as an option to save both the Federal government and the grant recipient the time and money of going through the extensive indirect cost rate proposal and negotiation.

Less Reimbursement? Not So Fast!

Comments received by the grant community were overwhelmingly against the concept of a mandatory discounted rate and stated that they would generally pursue a negotiated rate rather than accept a discounted rate Indirect Cost Rates Negotiation.

As a result of the comments, three new options are being contemplated:

Option #1: Extend the Timeframe

The first option under serious consideration is to allow an option to extend the period of the cost rate agreement once it has been negotiated and put in place.

Option #2: Require Pass-Thru Entities to Accept Rates

The second option was to force pass-thru entities to honor rates agreements Indirect Cost Rates Negotiation which have been negotiated with the Federal government instead of allowing this to be optional.

Option #3: Establish a Minimum Flat Rate

The third option under consideration is to offer a minimum flat rate for organizations that have not yet received an indirect cost rate agreement through negotiation with their cognizant Federal agency until both the grantee and the Federal government go through the negotiated rate process.

Next week we’ll look at the result of all of the back and forth and what it could mean to you and your organization. .

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Author:

Lucy Morgan CPA, MBA

CEO, Compliance Warrior

Author of “Decoding Grant Management-The Ultimate Success Guide to the Federal Grant Regulations in 2 CFR Part 200” The 2nd Edition is now available on Amazon in Paperback and Kindle versions.