Trying to Keep Federal Agencies in Line

February 11, 2013 | By Jerry Ashworth | Post a Comment

If you got a chance to view the Office of Management and Budget’s webinar on OMB’s proposed grants reform guidance, you got to see OMB’s Norman Dong respond to questions from a panel of key grant and audit organization heads about critical aspects of the reform. There were the expected discussions about combining the circulars, changes in indirect cost rates and the increased single audit threshold. However, there was a particular area of concern that raised a lot of attention — agency deviations.

It actually was good that they brought it up, because the OMB’s references to “deviations” are minimal. The Federal Register notice about the proposed guidance contains the word “deviation” only once, while the word appears only six times in the whole 244-page proposal.

Tony DeCrappeo, president of the Council on Governmental Relations, noted that agencies had often sought waivers not to pay the negotiated indirect cost rate that universities have established under Circular A-21. He asked whether OMB had considered whether agencies under the proposed guidance had the authority to make such deviations, and what process OMB is using to make this more transparent.

Dong said that OMB under the proposed guidance will still allow deviations from negotiated rates. However, to increase transparency and to give stakeholders a greater voice, OMB is proposing that if an agency is contemplating issuing a notice of funding availability, and eventually in the NOFA itself, the agency should flag the issue of deviations and raise that in policy discussions. “We would expect the agency to be transparent as to when, why and how it is deviating from the negotiated rate and put that on its website or make it publically accessible,” he explained. In addition, deviations should be approved at the highest level of an agency, so an agency director should approve the deviation and submit a notification to OMB.

This is a promising change. Grant applicants should be aware of agency policy up front.

Again, although the word “deviation” per se wasn’t used, another panelist expressed concerns about federal agencies using their discretion to thwart streamlining efforts in the proposed guidance to reduce administrative burden. The proposal would narrow the number of types of compliance requirements for single audits from 14 to seven. However, Kenney Poynter, executive director of the National Association of State Accountants, Comptrollers and Treasurers, said that some agencies may seek to add the eliminated requirements back under “special tests and provisions” for a certain program, thereby losing the efficiencies gained by narrowing the requirements.

Dong said that OMB would basically be the “gatekeeper” in such situations. If an agency wanted to add a requirement, OMB would ask whether it was required by statute; would ask the agency to justify why it should be added; and would require the agency to explain what particular area of risk is being addressed.

Trying to get all federal agencies to follow uniform guidance on all grant programs is akin to herding cats – they tend to go in all directions. However, maybe these measures will help bring a little sanity to the chaos and simplify the grant and audit process.

Do you have any ideas that would help prevent agencies from deviating from the guidance?


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