2 CFR Ch. II (1-1-26 Edition) — Part 200 — Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards
Summary
Part 200 of Title 2 of the Code of Federal Regulations, in the 1-1-26 edition, holds the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. It runs in six subparts: acronyms and definitions, general provisions, pre-Federal award requirements and contents of Federal awards, post Federal award requirements (including procurement and property standards), cost principles, and audit requirements, followed by appendices that include the Compliance Supplement. The source note cites 89 FR 30136 of April 22, 2024. Under § 200.501, a non-Federal entity that expends $1,000,000 or more in Federal awards during its fiscal year must have a single audit, with stated exceptions. Recipients' micro-purchase and simplified acquisition thresholds are tied to the amounts set in the FAR.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Full text
CHAPTER II—OFFICE OF MANAGEMENT AND
BUDGET GUIDANCE
Part Page
200 Uniform administrative requirements, cost prin-
ciples, and audit requirements for Federal
awards .................................................................. 85
201–299 [Reserved]
rmajette on LAPJN3WLY3PROD with CFR
83
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00095 Fmt 8008 Sfmt 8008 Y:\SGML\268005.XXX 268005
rmajette on LAPJN3WLY3PROD with CFR
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00096 Fmt 8008 Sfmt 8008 Y:\SGML\268005.XXX 268005
PART 200—UNIFORM ADMINISTRA- 200.215 Never contract with the enemy.
200.216 Prohibition on certain telecommuni-
TIVE REQUIREMENTS, COST PRIN- cations and video surveillance equipment
CIPLES, AND AUDIT REQUIRE- or services.
MENTS FOR FEDERAL AWARDS 200.217 Whistleblower protections.
Subpart A—Acronyms and Definitions Subpart D—Post Federal Award
Requirements
ACRONYMS
200.300 Statutory and national policy re-
Subpart A—Acronyms and Definitions quirements.
200.301 Performance measurement.
ACRONYMS 200.302 Financial management.
200.303 Internal controls.
Sec.
200.304 Bonds.
200.0 Acronyms.
200.305 Federal payment.
200.1 Definitions.
200.306 Cost sharing.
200.307 Program income.
Subpart B—General Provisions 200.308 Revision of budget and program
200.100 Purpose. plans.
200.101 Applicability. 200.309 Modifications to Period of Perform-
200.102 Exceptions. ance.
200.103 Authorities.
PROPERTY STANDARDS
200.104 Supersession.
200.105 Effect on other issuances. 200.310 Insurance coverage.
200.106 Agency implementation. 200.311 Real property.
200.107 OMB responsibilities. 200.312 Federally owned and exempt prop-
200.108 Inquiries. erty.
200.109 Review date. 200.313 Equipment.
200.110 Effective date. 200.314 Supplies.
200.111 English language. 200.315 Intangible property.
200.112 Conflict of interest. 200.316 Property trust relationship.
200.113 Mandatory disclosures.
PROCUREMENT STANDARDS
Subpart C—Pre-Federal Award Require- 200.317 Procurements by states and Indian
ments and Contents of Federal Awards Tribes.
200.318 General procurement standards.
Sec. 200.319 Competition.
200.200 Purpose.
200.320 Procurement methods.
200.201 Use of grants, cooperative agree-
200.321 Contracting with small businesses,
ments, fixed amount awards, and con-
minority businesses, women’s business
tracts.
enterprises, veteran-owned businesses,
200.202 Program planning and design.
and labor surplus area firms.
200.203 Requirement to provide public no-
200.322 Domestic preferences for procure-
tice of Federal financial assistance pro-
ments.
grams.
200.323 Procurement of recovered materials.
200.204 Notices of funding opportunities.
200.324 Contract cost and price.
200.205 Federal agency review of merit of
200.325 Federal agency or pass-through enti-
proposals.
ty review.
200.206 Federal agency review of risk posed
200.326 Bonding requirements.
by applicants.
200.327 Contract provisions.
200.207 Standard application requirements.
200.208 Specific conditions. PERFORMANCE AND FINANCIAL MONITORING
200.209 Certifications and representations. AND REPORTING
200.210 Pre-award costs.
200.211 Information contained in a Federal 200.328 Financial reporting.
award. 200.329 Monitoring and reporting program
200.212 Public access to Federal award infor- performance.
mation. 200.330 Reporting on real property.
200.213 Reporting a determination that an
rmajette on LAPJN3WLY3PROD with CFR
SUBRECIPIENT MONITORING AND MANAGEMENT
applicant is not qualified for a Federal
award. 200.331 Subrecipient and contractor deter-
200.214 Suspension and debarment. minations.
85
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00097 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
Pt. 200 2 CFR Ch. II (1–1–26 Edition)
200.332 Requirements for pass-through enti- SPECIAL CONSIDERATIONS FOR STATES, LOCAL
ties. GOVERNMENTS AND INDIAN TRIBES
200.333 Fixed amount subawards. 200.416 Cost allocation plans and indirect
cost proposals.
RECORD RETENTION AND ACCESS
200.417 Interagency service.
200.334 Record retention requirements.
200.335 Requests for transfer of records. SPECIAL CONSIDERATIONS FOR INSTITUTIONS OF
HIGHER EDUCATION
200.336 Methods for collection, trans-
mission, and storage of information. 200.418 Costs incurred by states and local
200.337 Access to records. governments.
200.338 Restrictions on public access to 200.419 Cost accounting standards.
records.
GENERAL PROVISIONS FOR SELECTED ITEMS OF
REMEDIES FOR NONCOMPLIANCE COST
200.339 Remedies for noncompliance. 200.420 Considerations for selected items of
cost.
200.340 Termination.
200.421 Advertising and public relations.
200.341 Notification of termination require- 200.422 Advisory councils.
ment. 200.423 Alcoholic beverages.
200.342 Opportunities to object, hearings, 200.424 Alumni activities.
and appeals. 200.425 Audit services.
200.343 Effects of suspension and termi- 200.426 Bad debts.
nation. 200.427 Bonding costs.
200.428 Collections of improper payments.
CLOSEOUT 200.429 Commencement and convocation
200.344 Closeout. costs.
200.430 Compensation—personal services.
POST-CLOSEOUT ADJUSTMENTS AND 200.431 Compensation—fringe benefits.
CONTINUING RESPONSIBILITIES 200.432 Conferences.
200.433 Contingency provisions.
200.345 Post-closeout adjustments and con- 200.434 Contributions and donations.
tinuing responsibilities. 200.435 Defense and prosecution of criminal
and civil proceedings, claims, appeals
Collection of Amounts Due and patent infringements.
200.346 Collection of amounts due. 200.436 Depreciation.
200.437 Employee health and welfare costs.
Subpart E—Cost Principles 200.438 Entertainment and prizes.
200.439 Equipment and other capital expend-
GENERAL PROVISIONS itures.
200.440 Exchange rates.
200.400 Policy guide. 200.441 Fines, penalties, damages and other
200.401 Application. settlements.
200.442 Fundraising and investment man-
BASIC CONSIDERATIONS agement costs.
200.402 Composition of costs. 200.443 Gains and losses on the disposition
200.403 Factors affecting allowability of of depreciable assets.
costs. 200.444 General costs of government.
200.445 Goods or services for personal use.
200.404 Reasonable costs.
200.446 Idle facilities and idle capacity.
200.405 Allocable costs. 200.447 Insurance and indemnification.
200.406 Applicable credits. 200.448 Intellectual property.
200.407 Prior written approval (prior ap- 200.449 Interest.
proval). 200.450 Lobbying.
200.408 Limitation on allowance of costs. 200.451 Losses on other awards or contracts.
200.409 Special considerations. 200.452 Maintenance and repair costs.
200.410 Collection of unallowable costs. 200.453 Materials and supplies costs, includ-
200.411 Adjustment of previously negotiated ing costs of computing devices.
indirect cost rates containing unallow- 200.454 Memberships, subscriptions, and pro-
able costs. fessional activity costs.
200.455 Organization costs.
DIRECT AND INDIRECT COSTS 200.456 Participant support costs.
200.457 Plant and security costs.
200.412 Classification of costs. 200.458 Pre-award costs.
rmajette on LAPJN3WLY3PROD with CFR
200.413 Direct costs. 200.459 Professional service costs.
200.414 Indirect costs. 200.460 Proposal costs.
200.415 Required certifications. 200.461 Publication and printing costs.
86
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00098 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.0
200.462 Rearrangement and reconversion APPENDIX IV TO PART 200—INDIRECT (F&A)
costs. COSTS IDENTIFICATION AND ASSIGNMENT,
200.463 Recruiting costs. AND RATE DETERMINATION FOR NONPROFIT
200.464 Relocation costs of employees. ORGANIZATIONS
200.465 Rental costs of real property and APPENDIX V TO PART 200— STATE/LOCAL GOV-
equipment. ERNMENTWIDE CENTRAL SERVICE COST AL-
200.466 Scholarships, student aid costs, and LOCATION PLANS
tuition remission. APPENDIX VI TO PART 200—PUBLIC ASSIST-
200.467 Selling and marketing costs. ANCE COST ALLOCATION PLANS
200.468 Specialized service facilities. APPENDIX VII TO PART 200—STATES AND
200.469 Student activity costs. LOCAL GOVERNMENT AND INDIAN TRIBE IN-
200.470 Taxes (including Value Added Tax). DIRECT COST PROPOSALS
200.471 Telecommunication and video sur- APPENDIX VIII TO PART 200—NONPROFIT OR-
veillance costs. GANIZATIONS EXEMPTED FROM SUBPART E
200.472 Termination and standard closeout OF PART 200
costs. APPENDIX IX TO PART 200—HOSPITAL COST
200.473 Training and education costs. PRINCIPLES
200.474 Transportation costs. APPENDIX X TO PART 200—DATA COLLECTION
200.475 Travel costs. FORM
200.476 Trustees. APPENDIX XI TO PART 200—COMPLIANCE SUP-
PLEMENT
Subpart F—Audit Requirements General APPENDIX XII TO PART 200—AWARD TERM AND
200.500 Purpose. CONDITION FOR RECIPIENT INTEGRITY AND
PERFORMANCE MATTERS
AUDITS AUTHORITY: 31 U.S.C. 503; 31 U.S.C. 6101–
200.501 Audit requirements. 6106; 31 U.S.C. 6307; 31 U.S.C. 7501–7507.
200.502 Basis for determining Federal
SOURCE: 89 FR 30136, Apr. 22, 2024, unless
awards expended.
otherwise noted.
200.503 Relation to other audit require-
ments.
200.504 Frequency of audits. Subpart A—Acronyms and
200.505 Remedies for audit noncompliance. Definitions
200.506 Audit costs.
200.507 Program-specific audits. ACRONYMS
AUDITEES
§ 200.0 Acronyms.
200.508 Auditee responsibilities.
200.509 Auditor selection. (a) CAS Cost Accounting Standards
200.510 Financial statements. (b) CFR Code of Federal Regulations
200.511 Audit findings follow-up. (c) F&A Facilities and Administra-
200.512 Report submission. tion
(d) FAC Federal Audit Clearinghouse
FEDERAL AGENCIES
(e) FAIN Federal Award Identifica-
200.513 Responsibilities. tion Number
AUDITORS (f) FAR Federal Acquisition Regula-
tion
200.514 Standards and scope of audit. (g) FASB Financial Accounting
200.515 Audit reporting.
200.516 Audit findings.
Standards Board
200.517 Audit documentation. (h) FFATA Federal Funding Ac-
200.518 Major program determination. countability and Transparency Act of
200.519 Criteria for Federal program risk. 2006 or Transparency Act, Public Law
200.520 Criteria for a low-risk auditee. 109–282, as amended (See 31 U.S.C. 6101,
statutory note)
MANAGEMENT DECISIONS
(i) FOIA Freedom of Information Act
200.521 Management decisions. (j) FR Federal Register
APPENDIX I TO PART 200—FULL TEXT OF NO- (k) GAAP Generally Accepted Ac-
TICE OF FUNDING OPPORTUNITY counting Principles
APPENDIX II TO PART 200—CONTRACT PROVI- (l) GAGAS Generally Accepted Gov-
SIONS FOR NON-FEDERAL ENTITY CON-
ernment Auditing Standards
TRACTS UNDER FEDERAL AWARDS
APPENDIX III TO PART 200—INDIRECT (F&A) (m) GASB Government Accounting
rmajette on LAPJN3WLY3PROD with CFR
COSTS IDENTIFICATION AND ASSIGNMENT, Standards Board
AND RATE DETERMINATION FOR INSTITU- (n) GAO Government Accountability
TIONS OF HIGHER EDUCATION (IHES) Office
87
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00099 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.1 2 CFR Ch. II (1–1–26 Edition)
(o) GSA General Services Adminis- recipient’s regular accounting prac-
tration tices.
(p) IBS Institutional Base Salary Advance payment means a payment
(q) IHE Institutions of Higher Edu- that a Federal agency or pass-through
cation entity makes by any appropriate pay-
(r) IRC Internal Revenue Code ment mechanism and payment method
(s) ISDEAA Indian Self-Determina- before the recipient or subrecipient dis-
tion and Education and Assistance Act burses the funds for program purposes.
(t) MTC Modified Total Cost Allocation means the process of as-
(u) MTDC Modified Total Direct Cost signing a cost, or a group of costs, to
(v) NFE Non-Federal Entity one or more cost objective(s), in rea-
(w) NOFO Notice of Funding Oppor- sonable proportion to the benefit pro-
tunity vided or other equitable relationship.
(x) OMB Office of Management and The process may entail assigning a
Budget cost(s) directly to a final cost objective
(y) PII Personally Identifiable Infor- or through one or more intermediate
mation cost objectives.
(z) PMS Payment Management Sys- Assistance Listings refer to the pub-
tem licly available listing of Federal assist-
(aa) SAM System for Award Manage- ance programs managed and adminis-
ment (SAM.gov) tered by the General Services Adminis-
(bb) UEI Unique Entity Identifier tration (GSA) at SAM.gov.
(cc) U.S.C. United States Code Assistance Listing number means a
(dd) VAT Value Added Tax unique number assigned to identify an
Assistance Listing.
§ 200.1 Definitions. Assistance Listing program title means
The following is a list of definitions the title that corresponds to the As-
of key terms frequently used in 2 CFR sistance Listing number.
part 200. Definitions found in Federal Audit finding means deficiencies
statutes or regulations that apply to which the auditor is required to report
particular programs take precedence in the schedule of findings and ques-
over the following definitions. How- tioned costs. (See § 200.516(a))
ever, where the following definitions Auditee means any non-Federal enti-
implement specific statutory require- ty that must be audited under this
ments that apply government-wide, part. (See § 200.501)
such as the Single Audit Act, the fol- Auditor means an auditor who is a
lowing definitions take precedence public accountant or a Federal, State,
over Federal regulations. For purposes local government, or Indian Tribe
of this part, the following definitions audit organization that meets the gen-
apply: eral standards specified for external
Acquisition cost means the (total) cost auditors in generally accepted govern-
of the asset including the cost to ready ment auditing standards (GAGAS). The
the asset for its intended use. For ex- term auditor does not include internal
ample, acquisition cost for equipment auditors of nonprofit organizations.
means the net invoice price of the Budget means the financial plan for
equipment, including the cost of any the Federal award that the Federal
modifications, attachments, acces- agency or pass-through entity approves
sories, or auxiliary apparatus nec- during the Federal award process or in
essary to make it usable for the pur- subsequent amendments to the Federal
pose for which it is acquired. Acquisi- award. It may include the Federal and
tion costs for software include those non-Federal share or only the Federal
development costs capitalized in ac- share, as determined by the Federal
cordance with generally accepted ac- agency or pass-through entity.
counting principles (GAAP). Ancillary Budget period means the time inter-
charges such as taxes, duty, protective val from the start date of a funded por-
in transit insurance, freight, and in- tion of an award to the end date of that
rmajette on LAPJN3WLY3PROD with CFR
stallation may be included in or ex- funded portion, during which recipients
cluded from the acquisition cost in ac- and subrecipients are authorized to
cordance with the recipient’s or sub- incur financial obligations of the funds
88
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00100 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.1
awarded, including any funds carried (ii) The adjustment or interpretation
forward or other revisions pursuant to of the terms and conditions of the Fed-
§ 200.308. eral award; or
Capital assets means: (iii) Other relief arising under or re-
(1) Tangible or intangible assets used lating to a Federal award.
in operations having a useful life of (2) A request for payment not in dis-
more than one year which are capital- pute when submitted.
ized in accordance with GAAP. Capital Class of Federal awards means a group
assets include: of Federal awards either awarded under
(i) Land, buildings (facilities), equip- a specific program or group of pro-
ment, and intellectual property (in- grams or to a specific type of recipient
cluding software), whether acquired by or group of recipients to which specific
purchase, construction, manufacture, provisions or exceptions may apply.
exchange, or through a lease accounted Closeout means the process by which
for as financed purchase under Govern- the Federal agency or pass-through en-
ment Accounting Standards Board tity determines that all applicable ad-
(GASB) standards or a finance lease ministrative actions and all required
under Financial Accounting Standards work of the Federal award have been
Board (FASB) standards; and completed and takes actions as de-
(ii) Additions, improvements, modi- scribed in § 200.344.
fications, replacements, rearrange- Cluster of programs means a grouping
ments, reinstallations, renovations, or of closely related programs that share
alterations to capital assets that mate- common compliance requirements. The
rially increase their value or useful life types of clusters of programs are re-
(not ordinary repairs and mainte- search and development (R&D), student
nance). financial aid (SFA), and other clusters.
(2) For purpose of this part, capital ‘‘Other clusters’’ are defined by OMB in
assets do not include intangible right- the compliance supplement or des-
to-use assets (per GASB) and right-to- ignated by a State for Federal awards
use operating lease assets (per FASB). the State provides to its subrecipients
For example, assets capitalized that that meet the definition of a cluster of
recognize a lessee’s right to control the programs. When designating ‘‘other
use of property or equipment for a pe- clusters,’’ a State must identify the
riod of time under a lease contract. See Federal awards included in the cluster
§ 200.465. and advise the subrecipients of compli-
Capital expenditures means expendi- ance requirements applicable to the
tures to acquire capital assets or ex- cluster, consistent with § 200.332. A
penditures to make additions, improve- cluster of programs must be considered
ments, modifications, replacements, one program when determining major
rearrangements, reinstallations, ren- programs as described in § 200.518, and
ovations, or alterations to capital as- with the exception of R&D as described
sets that materially increase their in § 200.501(d), whether a program-spe-
value or useful life. cific audit may be elected.
Central service cost allocation plan Cognizant agency for audit means the
means the documentation identifying, Federal agency designated to carry out
accumulating, and allocating or devel- the responsibilities described in
oping billing rates based on the allow- § 200.513(a). The cognizant agency for
able costs of services provided by a audit is not necessarily the same as the
State, local government, or Indian cognizant agency for indirect costs. A
Tribe to its departments and agencies list of Federal agency Single Audit
on a centralized basis. The costs of contacts can be found on the Federal
these services may be allocated or Audit Clearinghouse (FAC) website.
billed to users. Cognizant agency for indirect costs
Claim means, depending on the con- means the Federal agency responsible
text, either: for reviewing, negotiating and approv-
(1) A written demand or assertion by ing cost allocation plans or indirect
rmajette on LAPJN3WLY3PROD with CFR
one of the parties to a Federal award cost proposals on behalf of all Federal
seeking as a matter of right: agencies. The cognizant agency for in-
(i) The payment of money; direct cost is not necessarily the same
89
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00101 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.1 2 CFR Ch. II (1–1–26 Edition)
as the cognizant agency for audit. For 6101(3)); and not to acquire property or
assignments of cognizant agencies, see services for the Federal Government or
the following: pass-through entity’s direct benefit or
(1) For Institutions of Higher Edu- use;
cation (IHEs): Appendix III, paragraph (2) Is distinguished from a grant in
C.11. that it provides for substantial involve-
(2) For nonprofit organizations: Ap- ment of the Federal agency or pass-
pendix IV, paragraph C.2.a. through entity in carrying out the ac-
(3) For State and local governments: tivity contemplated by the Federal
Appendix V, paragraph F.1. award.
(4) For Indian Tribes: Appendix VII, (3) The term does not include:
paragraph D.1. (i) A cooperative research and devel-
Compliance supplement means an an- opment agreement as defined in 15
nually updated authoritative source of U.S.C. 3710a; or
information for auditors that identifies (ii) An agreement that provides only:
existing important compliance require- (A) Direct United States Government
ments that the Federal Government cash assistance to an individual;
expects to be considered as part of an (B) A subsidy;
audit. Auditors use it to understand (C) A loan;
the Federal program’s objectives, pro- (D) A loan guarantee; or
cedures, and compliance requirements, (E) Insurance.
as well as audit objectives and sug- Corrective action means action taken
gested audit procedures for deter- by the auditee that:
mining compliance with the relevant (1) Corrects identified deficiencies;
Federal program. (2) Produces recommended improve-
Computing devices means machines ments; or
that acquire, store, analyze, process, (3) Demonstrates that audit findings
and publish data and other information are either invalid or do not warrant
electronically, including accessories auditee action.
(or ‘‘peripherals’’) for printing, trans- Cost allocation plan means a central
mitting and receiving, or storing elec- service or public assistance cost alloca-
tronic information. See also the defini- tion plan.
tions of supplies and information tech- Cost objective means a program, func-
nology systems in this section. tion, activity, award, organizational
Contract means, for the purpose of subdivision, contract, or work unit for
Federal financial assistance, a legal in- which cost data are desired and for
strument by which a recipient or sub- which provision is made to accumulate
recipient conducts procurement trans- and measure the cost of processes,
actions under a Federal award. For ad- products, jobs, and capital projects. A
ditional information on subrecipient cost objective may be a major function
and contractor determinations, see of the recipient or subrecipient, a par-
§ 200.331. See also the definition of ticular service or project, a Federal
subaward in this section. award, or an indirect cost activity, as
Contractor means an entity that re- described in subpart E. See also the
ceives a contract. definitions of final cost objective and in-
Continuation funding means the sec- termediate cost objective in this section.
ond or subsequent budget period within Cost sharing means the portion of
an identified period of performance. project costs not paid by Federal funds
Cooperative agreement means a legal or contributions (unless authorized by
instrument of financial assistance be- Federal statute). This term includes
tween a Federal agency and a recipient matching, which refers to required lev-
or between a pass-through entity and els of cost share that must be provided.
subrecipient, consistent with 31 U.S.C. See § 200.306.
6302–6305: Disallowed cost means charges to a
(1) Is used to enter into a relation- Federal award that the Federal agency
ship the principal purpose of which is or pass-through entity determines to
rmajette on LAPJN3WLY3PROD with CFR
to transfer anything of value to carry be unallowable in accordance with ap-
out a public purpose authorized by a plicable Federal statutes, regulations,
law of the United States (see 31 U.S.C. the provisions of this part, or the
90
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00102 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.1
terms and conditions of the Federal (B) Services performed by employees,
award. contractors, subrecipients, and other
Discretionary award means an award payees; and
in which the Federal agency, in keep- (C) Programs for which no current
ing with specific statutory authority services or performance are required,
that enables the agency to exercise such as annuities, insurance claims, or
judgment (‘‘discretion’’), selects the re- other benefit payments.
cipient or the amount of Federal fund- Federal agency means an ‘‘agency’’ as
ing awarded through a competitive defined at 5 U.S.C. 551(1) and further
process or based on merit of proposals. clarified by 5 U.S.C. 552(f). The term
A discretionary award may be selected generally refers to the agency that pro-
on a non-competitive basis, as appro- vides a Federal award directly to a re-
priate. cipient unless the context indicates
Equipment means tangible personal otherwise. See also definitions of Fed-
property (including information tech- eral award and recipient.
nology systems) having a useful life of Federal Audit Clearinghouse (FAC)
more than one year and a per-unit ac- means the repository of record des-
quisition cost that equals or exceeds ignated by OMB where non-Federal en-
the lesser of the capitalization level es- tities must transmit the information
tablished by the recipient or sub- required by subpart F.
recipient for financial statement pur- Federal award has the meaning, de-
poses, or $10,000. See the definitions of pending on the context, in either para-
capital assets, computing devices, general graph (1) or (2) of this definition:
purpose equipment, information tech- (1)(i) The Federal financial assistance
nology systems, special purpose equip- that a recipient receives directly from
ment, and supplies in this section. a Federal agency or indirectly from a
Expenditures means charges made by pass-through entity, as described in
a recipient or subrecipient to a project § 200.101; or
or program for which a Federal award (ii) The cost-reimbursement contract
is received. under the Federal Acquisition Regula-
(1) The charges may be reported on a tion that a non-Federal entity receives
cash or accrual basis as long as the directly from a Federal agency or indi-
methodology is disclosed and consist- rectly from a pass-through entity, as
ently applied. described in § 200.101.
(2) For reports prepared on a cash (2) The instrument setting forth the
basis, expenditures are the sum of: terms and conditions. The instrument
(i) Cash disbursements for direct is the grant agreement, cooperative
charges for property and services; agreement, other agreement for assist-
(ii) The amount of indirect expense ance covered in paragraph (2) of the
charged; definition of Federal financial assistance
(iii) The value of third-party in-kind in this section, or the cost-reimburse-
contributions applied; and ment contract awarded under the Fed-
(iv) The amount of cash advance pay- eral Acquisition Regulations.
ments and payments made to sub- (3) Federal award does not include
recipients. other contracts that a Federal agency
(3) For reports prepared on an ac- uses to buy goods or services from a
crual basis, expenditures are the sum contractor or a contract to operate
of: government-owned, contractor- oper-
(i) Cash disbursements for direct ated (GOCO) facilities.
charges for property and services; (4) See also definitions of Federal fi-
(ii) The amount of indirect expense nancial assistance, grant agreement,
incurred; and cooperative agreement.
(iii) The value of third-party in-kind Federal award date means the date
contributions applied; and when the authorized official of the Fed-
(iv) The net increase or decrease in eral agency signed (physically or
the amounts owed by the recipient or digitally) the Federal award or when
rmajette on LAPJN3WLY3PROD with CFR
subrecipient for: an alternative, consistent with the re-
(A) Goods and other property re- quirements of 31 U.S.C. 1501, is reached
ceived; with the recipient.
91
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00103 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.1 2 CFR Ch. II (1–1–26 Edition)
Federal financial assistance means: (1) All Federal awards which are as-
(1) Assistance that recipients or sub- signed a single Assistance Listings
recipients receive or administer in the Number.
form of: (2) When no Assistance Listings
(i) Grants; Number is assigned, all Federal awards
(ii) Cooperative agreements; from the same agency made for the
(iii) Non-cash contributions or dona- same purpose must be combined and
tions of property (including donated considered one program.
surplus property); (3) Notwithstanding paragraphs (1)
(iv) Direct appropriations; and (2) of this definition, a cluster of
(v) Food commodities; and programs. The types of clusters of pro-
(vi) Other financial assistance (ex- grams are:
cept assistance listed in paragraph (2) (i) Research and development (R&D);
of this definition).
(ii) Student financial aid (SFA); and
(2) For § 200.203 and subpart F of this
(iii) ‘‘Other clusters,’’ as described in
part, Federal financial assistance also in-
the definition of cluster of programs in
cludes assistance that recipients or
subrecipients receive or administer in this section. Federal share means the
the form of: portion of the Federal award costs paid
(i) Loans; using Federal funds.
(ii) Loan Guarantees; Final cost objective means a cost ob-
(iii) Interest subsidies; and jective that has allocated to it both di-
(iv) Insurance. rect and indirect costs and, in the re-
(3) For § 200.216, Federal financial as- cipient’s or subrecipient’s accumula-
sistance includes assistance that re- tion system, is one of the final accumu-
cipients or subrecipients receive or ad- lation points, such as a particular
minister in the form of: award, internal project, or other direct
(i) Grants; activity of a recipient or subrecipient.
(ii) Cooperative agreements; See also the definitions of cost objective
(iii) Loans; and and intermediate cost objective in this
(iv) Loan Guarantees. section.
(4) Federal financial assistance does Financial obligations means orders
not include amounts received as reim- placed for property and services, con-
bursement for services rendered to in- tracts and subawards made, and simi-
dividuals as described in § 200.502(h) and lar transactions that require payment
(i). by a recipient or subrecipient under a
(5) For part 184 of this title, in addi- Federal award that will result in ex-
tion to the forms of assistance listed in penditures by a recipient or sub-
paragraph (1) of this definition, Federal recipient under a Federal award.
financial assistance also includes assist- Fixed amount award means a type of
ance that recipients or subrecipients grant or cooperative agreement pursu-
receive or administer in the form of: ant to which the Federal agency or
(i) Loans; and pass-through entity provides a specific
(ii) Loan Guarantees. amount of funding without regard to
Federal interest means, for purposes of actual costs incurred under the Federal
§ 200.330 or when used in connection award. This type of Federal award re-
with the acquisition or improvement of duces some of the administrative bur-
real property, equipment, or supplies den and record-keeping requirements
under a Federal award, the dollar for both the recipient or subrecipient
amount that is the product of the: and the Federal agency or pass-through
(1) The percentage of Federal partici- entity. Accountability is based pri-
pation in the total cost of the real marily on performance and results. See
property, equipment, or supplies; and §§ 200.102(c), 200.101(b), 200.201(b), and
(2) Current fair market value of the 200.333.
property, improvements, or both, to For-profit organization generally
the extent the costs of acquiring or im- means an organization or entity orga-
rmajette on LAPJN3WLY3PROD with CFR
proving the property were included as nized for the purpose of earning a prof-
project costs. it. The term includes but is not limited
Federal program means: to:
92
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00104 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.1
(1) An ‘‘S corporation’’ incorporated technical activities. Examples include
under subchapter S of the Internal office equipment and furnishings, mod-
Revenue Code; ular offices, telephone networks, infor-
(2) A corporation incorporated under mation technology equipment and sys-
another authority; tems, air conditioning equipment, re-
(3) A partnership; production and printing equipment,
(4) A limited liability company or and motor vehicles. See also the defini-
partnership; and tions of equipment and special purpose
(5) A sole proprietorship. equipment in this section.
Foreign organization means an entity Generally accepted accounting prin-
that is: ciples (GAAP) has the meaning specified
(1) A public or private organization in accounting standards issued by the
located in a country other than the Government Accounting Standards
United States and its territories that is Board (GASB) and the Financial Ac-
subject to the laws of the country in counting Standards Board (FASB).
which it is located, irrespective of the Generally accepted government auditing
citizenship of project staff or place of standards (GAGAS), also known as the
performance; Yellow Book, means generally accepted
(2) A private nongovernmental orga- government auditing standards issued
nization located in a country other by the Comptroller General of the
than the United States that solicits United States, which apply to financial
and receives cash contributions from audits.
the general public; Grant agreement or grant means a
(3) A charitable organization located legal instrument of financial assist-
in a country other than the United ance between a Federal agency and a
States that is nonprofit and tax-ex- recipient or between a pass-through en-
empt under the laws of the country tity and a subrecipient, consistent with
where it is registered and is not a uni- 31 U.S.C. 6302, 6304:
versity, college, accredited degree- (1) Is used to enter into a relation-
granting institution of education, pri- ship, the principal purpose of which is
vate foundation, hospital, an organiza- to transfer anything of value to carry
tion engaged exclusively in research or out a public purpose authorized by a
scientific activities, church, syna- law of the United States (see 31 U.S.C.
gogue, mosque or other similar entities 6101(3)); and not to acquire property or
organized primarily for religious pur- services for the Federal agency or pass-
poses; or through entity’s direct benefit or use;
(4) An organization located in a coun- (2) Is distinguished from a coopera-
try other than the United States not tive agreement in that it does not pro-
recognized as a foreign public entity. vide for substantial involvement of the
Foreign public entity means: Federal agency in carrying out the ac-
(1) A foreign government or foreign tivity contemplated by the Federal
governmental entity; award.
(2) A public international organiza- (3) Does not include an agreement
tion, which is an organization entitled that provides only:
to enjoy privileges, exemptions, and (i) Direct United States Government
immunities as an international organi- cash assistance to an individual;
zation under the International Organi- (ii) A subsidy;
zations Immunities Act (22 U.S.C. 288– (iii) A loan;
288f); (vi) A loan guarantee; or
(3) An entity owned (in whole or in (v) Insurance.
part) or controlled by a foreign govern- Highest-level owner means the entity
ment; or that owns or controls an immediate
(4) Any other entity consisting whol- owner of an applicant or that owns or
ly or partially of one or more foreign controls one or more entities that con-
governments or foreign governmental trol an immediate owner of an appli-
entities. cant. No entity owns or exercises con-
rmajette on LAPJN3WLY3PROD with CFR
General purpose equipment means trol of the highest-level owner as de-
equipment that is not limited to re- fined in the Federal Acquisition Regu-
search, medical, scientific, or other lations (FAR) (48 CFR 52.204–17).
93
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00105 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.1 2 CFR Ch. II (1–1–26 Edition)
Hospital means a facility licensed as equitable result in consideration of rel-
a hospital under the law of any State ative benefits derived. For Institutions
or a facility operated as a hospital by of Higher Education (IHE), the term fa-
the United States, a State, or a sub- cilities and administrative (F&A) cost
division of a State. is often used to refer to indirect costs.
Improper payment means a payment Indirect cost rate proposal means the
that should not have been made or that documentation prepared by a recipient
was made in an incorrect amount to substantiate its request to establish
under statutory, contractual, adminis- an indirect cost rate as described in ap-
trative, or other legally applicable re- pendices III through VII and appendix
quirements. The term improper pay- IX to this part.
ment includes: any payment to an in- Information technology systems means
eligible recipient; any payment for an computing devices, ancillary equip-
ineligible good or service; any dupli- ment, software, firmware, and related
cate payment; any payment for a good procedures, services (including support
or service not received, except for services), and resources. See also the
those payments where authorized by definitions of computing devices and
law; any payment that is not author- equipment in this section.
ized by law; and any payment that does Institution of Higher Education (IHE)
not account for credit for applicable is defined at 20 U.S.C. 1001.
discounts. See OMB Circular A–123 Ap-
Intangible property means property
pendix C, Requirements for Payment In-
having no physical existence, such as
tegrity Improvement for additional defi-
trademarks, copyrights, data (includ-
nitions and guidance on the require-
ing data licenses), websites, IP li-
ments for payment integrity.
censes, trade secrets, patents, patent
Indian Tribe means any Indian Tribe,
applications, and property such as
band, nation, or other organized group
loans, notes and other debt instru-
or community, including any Alaska
ments, lease agreements, stocks and
Native village or regional or village
other instruments of property owner-
corporation as defined in or established
ship of either tangible or intangible
pursuant to the Alaska Native Claims
property, such as intellectual property,
Settlement Act (43 U.S.C. Chapter 33),
software, or software subscriptions or
which is recognized as eligible for the
licenses.
special programs and services provided
Intermediate cost objective means a
by the United States to Indians be-
cost objective that is used to accumu-
cause of their status as Indians. See 25
late indirect costs or service center
U.S.C. 5304(e). This includes any Indian
costs that are subsequently allocated
Tribe identified in the annually pub-
to one or more indirect cost pools or
lished Bureau of Indian Affairs list of
final cost objectives. See this section’s
‘‘Indian Entities Recognized and Eligible
definitions of cost objective and final cost
to Receive Services’’ and other entities
objective.
that qualify as an Alaska Native vil-
lage or regional village corporation as Internal control for recipients and
defined in or established pursuant to subrecipients means processes designed
the Alaska Native Claims Settlement and implemented by recipients and
Act. subrecipients to provide reasonable as-
Indirect cost means those costs in- surance regarding the achievement of
curred for a common or joint purpose objectives in the following categories:
benefitting more than one cost objec- (1) Effectiveness and efficiency of op-
tive and not readily assignable to the erations;
cost objectives specifically benefitted, (2) Reliability of reporting for inter-
without effort disproportionate to the nal and external use; and
results achieved. It may be necessary (3) Compliance with applicable laws
to establish multiple pools of indirect and regulations.
costs to facilitate equitable distribu- Loan means a Federal loan or loan
tion of indirect expenses to the cost ob- guarantee received or administered by
rmajette on LAPJN3WLY3PROD with CFR
jectives served. Indirect cost pools a recipient or subrecipient, except as
must be distributed to benefitted cost used in this section’s definition of pro-
objectives on basis that will produce an gram income.
94
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00106 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.1
(1) The term ‘‘direct loan’’ means a (13) Any other agency or instrumen-
disbursement of funds by the Federal tality of a multi-, regional, or intra-
Government to a non-Federal borrower State or local government.
under a contract that requires the re- Major program means a Federal pro-
payment of such funds with or without gram determined by the auditor to be a
interest. The term includes the pur- major program in accordance with
chase of, or participation in, a loan § 200.518 or a program identified as a
made by another lender and financing major program by a Federal agency or
arrangements that defer payment for pass-through entity in accordance with
more than 90 days, including the sale of § 200.503(e).
a Federal Government asset on credit Management decision means the Fed-
terms. The term does not include the eral agency’s or pass-through entity’s
acquisition of a federally guaranteed written determination, provided to the
loan in satisfaction of default claims or auditee, of the adequacy of the
the price support loans of the Com- auditee’s proposed corrective actions
modity Credit Corporation. to address the findings based on its
(2) The term ‘‘direct loan obligation’’ evaluation of the audit findings and
means a binding agreement by a Fed- proposed corrective actions.
eral agency to make a direct loan when Micro-purchase means an individual
specified conditions are fulfilled by the procurement transaction for supplies
borrower. or services, the aggregate amount of
which does not exceed the micro-pur-
(3) The term ‘‘loan guarantee’’ means
chase threshold. Micro-purchases com-
any Federal Government guarantee, in-
prise a subset of a recipient’s or sub-
surance, or other pledges for the pay-
recipient’s small purchases using infor-
ment of all or a part of the principal or
mal procurement methods as set forth
interest on any debt obligation of a in § 200.320.
non-Federal borrower to a non-Federal Micro-purchase threshold means the
lender but does not include the insur- dollar amount at or below which a re-
ance of deposits, shares, or other cipient or subrecipient may purchase
withdrawable accounts in financial in- property, or services using micro-pur-
stitutions. chase procedures (see § 200.320). Gen-
(4) The term ‘‘loan guarantee com- erally, except as provided in § 200.320,
mitment’’ means a binding agreement the micro-purchase threshold for pro-
by a Federal agency to make a loan curement activities administered
guarantee when specified conditions under Federal awards is not to exceed
are fulfilled by the borrower, the lend- the amount set by the FAR at 48 CFR
er, or any other party to the guarantee part 2, subpart 2.1, unless a higher
agreement. threshold is requested by the recipient
Local government means any unit of or subrecipient and approved by the
government within a State, including cognizant agency for indirect costs.
a: Modified Total Direct Cost (MTDC)
(1) County; means all direct salaries and wages, ap-
(2) Borough; plicable fringe benefits, materials and
(3) Municipality; supplies, services, travel, and up to the
(4) City; first $50,000 of each subaward (regard-
(5) Town; less of the period of performance of the
(6) Township; subawards under the award). MTDC ex-
cludes equipment, capital expendi-
(7) Parish;
tures, charges for patient care, rental
(8) Local public authority, including costs, tuition remission, scholarships
any public housing agency under the and fellowships, participant support
United States Housing Act of 1937; costs, and the portion of each subaward
(9) Special district; in excess of $50,000. Other items may
(10) School district; only be excluded when necessary to
(11) Intrastate district; avoid a serious inequity in the dis-
rmajette on LAPJN3WLY3PROD with CFR
(12) Council of governments, whether tribution of indirect costs and with the
or not incorporated as a nonprofit cor- approval of the cognizant agency for
poration under State law; and indirect costs.
95
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00107 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.1 2 CFR Ch. II (1–1–26 Edition)
Non-discretionary award means an the direct funding represents less than
award made by the Federal agency to 25 percent of the total Federal expendi-
specific recipients in accordance with tures (as direct and sub-awards) by the
statutory, eligibility, and compliance recipient or subrecipient, then the Fed-
requirements, such that in keeping eral agency with the predominant
with specific statutory authority, the amount of total funding is the des-
Federal agency cannot exercise judg- ignated oversight agency for audit.
ment (‘‘discretion’’). A non-discre- When there is no direct funding, the
tionary award amount could be specifi- Federal agency that is the predomi-
cally determined or by formula. nant source of pass-through funding
Non-Federal entity (NFE) means a must assume the oversight responsibil-
State, local government, Indian Tribe, ities. The duties of the oversight agen-
Institution of Higher Education (IHE), cy for audit and the process for any re-
or nonprofit organization that carries assignments are described in
out a Federal award as a recipient or § 200.513(b).
subrecipient. Participant generally means an indi-
Nonprofit organization means any or- vidual participating in or attending
ganization that: program activities under a Federal
(1) Is operated primarily for sci- award, such as trainings or con-
entific, educational, service, chari- ferences, but who is not responsible for
table, or similar purposes in the public implementation of the Federal award.
interest; Individuals committing effort to the
(2) Is not organized primarily for development or delivery of program ac-
profit; tivities under a Federal award (such as
(3) Uses net proceeds to maintain, consultants, project personnel, or staff
improve, or expand the organization’s members of a recipient or subrecipient)
operations; and are not participants. Examples of par-
(4) Is not an IHE. ticipants may include community
Notice of funding opportunity means a members participating in a community
formal announcement of the avail- outreach program, members of the pub-
ability of Federal funding through a fi- lic whose perspectives or input are
nancial assistance program from a Fed- sought as part of a program, students,
eral agency. The notice of funding op- or conference attendees.
portunity provides information on the Participant support costs means direct
award, such as who is eligible to apply, costs that support participants (see
the evaluation criteria for selecting a definition for Participant in § 200.1) and
recipient or subrecipient, the required their involvement in a Federal award,
components of an application, and how such as stipends, subsistence allow-
to submit the application. The notice ances, travel allowances, registration
of funding opportunity is any paper or fees, temporary dependent care, and
electronic issuance that an agency uses per diem paid directly to or on behalf
to announce a funding opportunity, of participants.
whether it is called a ‘‘program an- Pass-through entity means a recipient
nouncement,’’ ‘‘notice of funding avail- or subrecipient that provides a
ability,’’ ‘‘broad agency announce- subaward to a subrecipient (including
ment,’’ ‘‘research announcement,’’ lower tier subrecipients) to carry out
‘‘solicitation,’’ or some other term. part of a Federal program. The author-
Office of Management and Budget ity of the pass-through entity under
(OMB) means the Executive Office of this part flows through the subaward
the President, Office of Management agreement between the pass-through
and Budget. entity and subrecipient.
Oversight agency for audit means the Performance goal means a measurable
Federal agency that provides the pre- target level of performance expressed
dominant amount of funding directly as a tangible, measurable objective,
(direct funding) (as listed on the sched- against which actual achievement can
ule of expenditures of Federal awards, be compared, including a goal ex-
rmajette on LAPJN3WLY3PROD with CFR
see § 200.510(b)) to a recipient or sub- pressed as a quantitative standard,
recipient unless OMB designates a spe- value, or rate. In some instances (for
cific cognizant agency for audit. When example, discretionary research
96
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00108 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.1
awards), this may be limited to the re- not program income. Except as other-
quirement to submit technical per- wise provided in Federal statutes, regu-
formance reports (to be evaluated in lations, or the terms and conditions of
accordance with agency policy). the Federal award, program income
Period of performance means the time does not include rebates, credits, dis-
interval between the start and end date counts, and interest earned on any of
of a Federal award, which may include them. See § 200.407. See also 35 U.S.C.
one or more budget periods. Identifica- 200–212 ‘‘Disposition of Rights in Edu-
tion of the period of performance in the cational Awards,’’ which applies to in-
Federal award consistent with ventions made under Federal awards.
§ 200.211(b)(5) does not commit the Fed- Project cost means total allowable
eral agency to fund the award beyond costs incurred under a Federal award
the currently approved budget period. and all cost sharing, including third-
Personal property means property party contributions.
other than real property. It may be Property means real property or per-
tangible or intangible. sonal property. See this section’s defi-
Personally Identifiable Information nitions of real property and personal
(PII) means information that can be property.
used to distinguish or trace an individ- Protected Personally Identifiable Infor-
ual’s identity, either alone or when mation (Protected PII) means PII (see
combined with other personal or iden- definition in this section), except for
tifying information that is linked or PII that must be disclosed by law. Ex-
linkable to a specific individual. Some amples of PII include, but are not lim-
PII is available in public sources such ited to, social security number; pass-
as telephone books, websites, and uni- port number; credit card numbers;
versity listings. The definition of PII is clearances, bank numbers; biometrics;
not attached to any single category of date and place of birth; mother’s maid-
information or technology. Instead, it en name; criminal, medical and finan-
requires a case-by-case assessment of cial records; and educational tran-
the specific risk that an individual can scripts.
be identified. Non-PII can become PII Questioned cost has the meaning given
whenever additional information is in paragraphs (1) through (3).
made publicly available, in any me- (1) Questioned cost means an amount,
dium and from any source, that could expended or received from a Federal
be used to identify an individual when award, that in the auditor’s judgment:
combined with other available infor- (i) Is noncompliant or suspected non-
mation. compliant with Federal statutes, regu-
Prior approval means the written ap- lations, or the terms and conditions of
proval obtained in advance by an au- the Federal award;
thorized official of a Federal agency or (ii) At the time of the audit, lacked
pass-through entity of certain costs or adequate documentation to support
programmatic decisions. compliance; or
Program income means gross income (iii) Appeared unreasonable and did
earned by the recipient or subrecipient not reflect the actions a prudent per-
that is directly generated by a sup- son would take in the circumstances.
ported activity or earned as a result of (2) The questioned cost amount under
the Federal award during the period of (1)(ii) is calculated as if the portion of
performance except as provided in a transaction that lacked adequate
§ 200.307(c). Program income includes documentation were confirmed non-
but is not limited to income from fees compliant.
for services performed, the use or rent- (3) There is no questioned cost solely
al of real or personal property acquired because of:
under Federal awards, the sale of com- (i) Deficiencies in internal control; or
modities or items fabricated under a (ii) Noncompliance with the report-
Federal award, license fees, and royal- ing type of compliance requirement
ties on patents and copyrights, and (described in the compliance supple-
rmajette on LAPJN3WLY3PROD with CFR
principal and interest on loans made ment) if this noncompliance does not
with Federal award funds. Interest affect the amount expended or received
earned on advances of Federal funds is from the Federal award.
97
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00109 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.1 2 CFR Ch. II (1–1–26 Edition)
(4) Known questioned cost means a produce useful materials, devices, sys-
questioned cost specifically identified tems, or methods, including designing
by the auditor. Known questioned costs and developing prototypes and proc-
are a subset of likely questioned costs. esses.
(5) Likely questioned cost means the Simplified acquisition threshold means
auditor’s best estimate of total ques- the dollar amount below which a re-
tioned costs, not just the known ques- cipient or subrecipient may purchase
tioned costs. Likely questioned costs property or services using small pur-
are developed by extrapolating from chase methods (see § 200.320). Recipients
audit evidence obtained, for example, and subrecipients adopt small purchase
by projecting known questioned costs procedures to expedite the purchase of
identified in an audit sample to the en- items at or below the simplified acqui-
tire population from which the sample
sition threshold. The simplified acqui-
was drawn. In evaluating the effect of
sition threshold set in the FAR at 48
questioned costs on the opinion on
CFR part 2, subpart 2.1 is used in this
compliance, the auditor considers the
part as the simplified acquisition
likely questioned costs, not just the
known questioned costs. threshold for secondary procurement
(6) Questioned costs are not improper activities administered under Federal
payments until reviewed and confirmed awards. The recipient or subrecipient is
to be improper payments as defined in responsible for determining an appro-
OMB Circular A–123 Appendix C. priate simplified acquisition threshold,
Real property means land, including which is less than or equal to the dol-
land improvements, structures, and ap- lar value established in the FAR, based
purtenances thereto, and legal inter- on internal controls, an evaluation of
ests in land, including fee interest, li- risk, and its documented procurement
censes, rights of way, and easements. procedures. Recipients and subrecipi-
Real property excludes moveable ma- ents should also determine if local gov-
chinery and equipment. ernment purchasing laws apply. This
Recipient means an entity that re- threshold must never exceed the dollar
ceives a Federal award directly from a value established in the FAR.
Federal agency to carry out an activity Special purpose equipment means
under a Federal program. The term re- equipment that is used only for re-
cipient does not include subrecipients search, medical, scientific, or other
or individuals that are participants or similar technical activities. Examples
beneficiaries of the award. of special purpose equipment include
Renewal award means a Federal microscopes, x-ray machines, surgical
award for which the start date is con- instruments, spectrometers, and asso-
tiguous with, or closely follows, the ciated software. See also the defini-
end of the expiring Federal award. The tions of equipment and general purpose
start date of a renewal award begins a equipment in this section.
new and distinct period of performance.
State means any State of the United
Research and Development (R&D)
States, the District of Columbia, the
means all basic and applied research
activities and all development activi- Commonwealth of Puerto Rico, U.S.
ties performed by a recipient or sub- Virgin Islands, Guam, American
recipient. The term research also in- Samoa, the Commonwealth of the
cludes activities involving the training Northern Mariana Islands, and any
of individuals in research techniques agency or instrumentality thereof ex-
where such activities use the same fa- clusive of local governments.
cilities as other research and develop- Student Financial Aid (SFA) means
ment activities and where such activi- Federal awards under those programs
ties are not included in the instruction of general student assistance, such as
function. ‘‘Research’’ is the systematic those authorized by Title IV of the
study directed toward fuller scientific Higher Education Act of 1965, as
knowledge or understanding of the sub- amended (20 U.S.C. 1070–1099d), which
rmajette on LAPJN3WLY3PROD with CFR
ject studied. ‘‘Development’’ is the sys- the U.S. Department of Education ad-
tematic use of knowledge and under- ministers, and similar programs pro-
standing gained from research to vided by other Federal agencies. It does
98
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00110 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.100
not include Federal awards under pro- (1) Benefit a project or program fund-
grams that provide fellowships or simi- ed by a Federal award; and
lar Federal awards to students on a (2) Are contributed by non-Federal
competitive basis or for specified stud- third parties, without charge, to a re-
ies or research. cipient or subrecipient under a Federal
Subaward means an award provided award.
by a pass-through entity to a sub- Unliquidated financial obligation
recipient for the subrecipient to con- means financial obligations incurred
tribute to the goals and objectives of by the recipient or subrecipient but not
the project by carrying out part of a paid (liquidated) for financial reports
Federal award received by the pass- prepared on a cash basis. For reports
through entity. It does not include prepared on an accrual basis, these are
payments to a contractor, beneficiary, financial obligations incurred by the
or participant. A subaward may be pro- recipient or subrecipient but for which
vided through any form of legal agree- expenditures have not been recorded.
ment consistent with criteria in with Unobligated balance means the
§ 200.331, including an agreement the amount of funds under a Federal award
pass-through entity considers a con-
that the recipient or subrecipient has
tract.
not obligated. The amount is computed
Subrecipient means an entity that re-
by subtracting the cumulative amount
ceives a subaward from a pass-through
of the recipient’s or subrecipient’s un-
entity to carry out part of a Federal
liquidated financial obligations and ex-
award. The term subrecipient does not
penditures under the Federal award
include a beneficiary or participant. A
from the cumulative amount of funds
subrecipient may also be a recipient of
the Federal agency or pass-through en-
other Federal awards directly from a
tity authorized the recipient or sub-
Federal agency.
recipient to obligate.
Subsidiary means an entity in which
more than 50 percent of the entity is Voluntary committed cost sharing
owned or controlled directly by a par- means cost sharing specifically pledged
ent corporation or through another voluntarily in the proposal’s budget on
subsidiary of a parent corporation. the part of the recipient or sub-
Supply means all tangible personal recipient, which becomes a binding re-
property other than those described in quirement of the Federal award. See
the equipment definition. A computing § 200.306.
device is a supply if the acquisition [89 FR 30136, Apr. 22, 2024, as amended at 89
cost is below the lesser of the capital- FR 79732, Oct. 1, 2024]
ization level established by the recipi-
ent or subrecipient for financial state-
ment purposes or $10,000, regardless of
Subpart B—General Provisions
the length of its useful life. See this § 200.100 Purpose.
section’s definitions of computing de-
vices and equipment. (a) Purpose. (1) This part establishes
Telecommunications cost means the uniform administrative requirements,
cost of using communication tech- cost principles, and audit requirements
nologies such as mobile phones, for Federal awards. Federal agencies
landlines, and the internet. must not impose additional require-
Termination means the action a Fed- ments except as allowed in §§ 200.102,
eral agency or pass-through entity 200.211, or unless specifically required
takes to discontinue a Federal award, by Federal statute, regulation, or Ex-
in whole or in part, at any time before ecutive order.
the planned end date of the period of (2) This part provides Federal agen-
performance. Termination does not in- cies with the policy for collecting and
clude discontinuing a Federal award submitting information on all Federal
due to a lack of available funds. financial assistance programs to the
Third-party in-kind contributions Office of Management and Budget
rmajette on LAPJN3WLY3PROD with CFR
means the value of non-cash contribu- (OMB) and communicating this infor-
tions (meaning, property or services) mation to the public. It also estab-
that: lishes Federal policies related to the
99
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00111 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.101 2 CFR Ch. II (1–1–26 Edition)
delivery of this information to the pub- foreign organizations as permitted in
lic, including through the use of elec- agency regulations or program stat-
tronic media. It also sets forth how the utes, except when a Federal agency de-
General Services Administration termines that the application of these
(GSA), OMB, and Federal agencies im- subparts would be inconsistent with
plement the Federal Program Informa- the international responsibilities of
tion Act (31 U.S.C. 6101–6106). the United States or the laws of a for-
(b) Administrative requirements. Sub- eign government. Subpart F only ap-
parts B through D set forth the uni- plies to non-Federal entities as defined
form administrative requirements for in the Single Audit Act Amendments of
Federal financial assistance. This in- 1996 (31 U.S.C. 7501–7507). Federal agen-
cludes establishing requirements for cies should apply the requirements to
Federal agencies management of Fed- all recipients in a consistent and equi-
eral financial assistance programs be- table manner to the extent permitted
fore a Federal award is made, and re- within applicable statutes, regulations,
quirements that Federal agencies may and policies.
impose on recipients and subrecipients (3) Throughout subparts A through F,
throughout the lifecycle of a Federal the word ‘‘must’’ indicates a require-
award. ment. The words ‘‘should’’ or ‘‘may’’
(c) Cost principles. Subpart E estab- indicate a recommended approach and
lishes principles for determining allow- permit discretion.
able costs incurred by recipients and (4) Throughout subparts A through E,
subrecipients under Federal awards. when the word ‘‘or’’ is used between
These principles are for the purpose of the terms ‘‘recipient’’ and ‘‘sub-
cost determination. They do not ad- recipient,’’ any requirements or rec-
dress the circumstances nor dictate the ommendations in the relevant provi-
extent of Federal Government funding sions of this part apply to the recipi-
of a particular program or project. ent, the subrecipient, or both, as appli-
(d) Single Audit Requirements and cable. The use of ‘‘or’’ between recipi-
Audit Follow-up. Subpart F is issued ent and subrecipient does not mean
pursuant to the Single Audit Act that applicable requirements or rec-
Amendments of 1996 (31 U.S.C. 7501– ommendations only apply to one of
7507). Subpart F sets forth the stand- these entities unless the context clear-
ards for achieving consistency and uni- ly indicates otherwise.
formity among Federal agencies for (b) Applicability to Federal financial
the audit of non-Federal entities ex- assistance. (1) Paragraphs (b)(2) through
pending Federal awards. Subpart F also (b)(5) of this section describe what por-
provides the policies and procedures for tions of this part apply to specific
Federal agencies or pass-through enti- types of Federal financial assistance.
ties when using the results of these au- Paragraphs (d) and (e) of this section
dits. explain additional exceptions related
to governing provisions and Federal
§ 200.101 Applicability. program applicability. The terms and
(a) General applicability to Federal conditions of Federal awards (including
agencies. (1) Subparts A through F this part) flow down to subawards to
apply to Federal agencies that make subrecipients unless a particular sec-
Federal awards to non-Federal entities. tion of this part or the terms and con-
As provided in paragraph (a)(2), sub- ditions of the Federal award specifi-
parts A through E may also apply to cally indicate otherwise. Pass-through
Federal agencies that make Federal entities must comply with the require-
awards to other entities. ments described in subpart D, §§ 200.331
(2) Federal agencies must apply sub- through 200.333, and any other sections
parts A though F of this part to non- of this part addressing pass-through
Federal entities unless a particular entities.
section of this part or Federal statute (2) Subpart A (Acronyms and Defini-
provides otherwise. Federal agencies tions) and subpart B (General Provi-
rmajette on LAPJN3WLY3PROD with CFR
may apply subparts A through E of this sions) apply to all Federal financial as-
part to Federal agencies, for-profit or- sistance, except that §§ 200.111 (English
ganizations, foreign public entities, or language), 200.112 (Conflict of interest),
100
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00112 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.101
and 200.113 (Mandatory disclosures) do Federal agency to a non-Federal entity
not apply to agreements for loans, loan under the Federal Acquisition Regulations
guarantees, interest subsidies, and in- (FAR). (1) Paragraphs (c)(2) and (c)(3) of
surance. this section describe what portions of
(3) Subpart C (Pre-Federal Award Re- this part apply to specific types of con-
quirements and Contents of Federal tracts and subcontracts awarded by a
Awards) and subpart D (Post Federal Federal agency to a non-Federal enti-
Award Requirements) only apply to ty. See also paragraph (b)(5)(ii) on
grants and cooperative agreements audit requirements. For both para-
with the following exceptions: graphs (c)(2) and (c)(3):
(i) Section 200.203 (Requirement to (i) In cases of conflict between the re-
provide public notice of Federal finan- quirements of applicable portions of
cial assistance programs) also applies this part and the terms and conditions
to agreements for loans, loan guaran- of the contract, the terms and condi-
tees, interest subsidies, and insurance; tions of the contract and the FAR pre-
(ii) Section 200.216 (Prohibition on vail.
certain telecommunications and video (ii) When the Cost Accounting Stand-
surveillance equipment or services) ap- ards (CAS) are applicable to the con-
plies to loans and grants (see Pub. L. tract or subcontract, they also take
115–232, Div. A, Title VIII, § 889, as precedence over this part.
amended); and
(iii) In addition, costs that are identi-
(iii) Sections 200.303 (Internal con-
fied as unallowable under 41 U.S.C.
trols) and 200.331 through 200.333 (Sub-
4304(a) and as stated in the FAR (48
recipient monitoring and management)
CFR part 31, subpart 31.2, and 48 CFR
also apply to all types of Federal finan-
31.603) are always unallowable.
cial assistance.
(4) Subpart E (Cost Principles) ap- (2) Cost-reimbursement contract under
plies to grants and cooperative agree- the FAR awarded to a non-Federal entity.
ments, but does not apply to the fol- When a non-Federal entity is awarded
lowing: a cost-reimbursement contract under
(i) Food commodities provided the FAR, only subpart D, §§ 200.331
through grants and cooperative agree- through 200.333, and subparts E and F
ments; are applicable.
(ii) Fixed amount awards, except for (3) Fixed-price contract or subcontract
§§ 200.400(g), 200.402 through 200.405, and under the FAR awarded to a non-Federal
200.407(d), which do apply; entity. When a non-Federal entity is
(iii) Agreements for loans, loan guar- awarded a fixed-price contract or sub-
antees, interest subsidies, and insur- contract under the FAR, only subpart
ance; and A, subpart B (except for §§ 200.111,
(iv) Federal awards to hospitals (see 200.112, and 200.113), subpart D (only at
Appendix IX—Hospital Cost Prin- § 200.303 and §§ 200.331 through 200.333),
ciples). and subpart E are applicable to the
(5) Subpart F (Audit Requirements) contract, except that subpart E is not
only applies to the following items applicable to fixed-price contracts and
when awarded to a non-Federal entity: subcontracts that are not negotiated.
(i) Grants and cooperative agree- (d) Governing provisions. With the ex-
ments (including fixed amount awards); ception of subpart F, which is required
(ii) Contracts and subcontracts by the Single Audit Act, Federal stat-
awarded under the FAR (except for utes or regulations govern in any cir-
fixed price contracts and subcontracts); cumstances where they conflict with
(iii) Agreements for loans, loan guar- the provisions of this part. For agree-
antees, interest subsidies, and insur- ments with Indian Tribes, this includes
ance; and the provisions of the Indian Self-Deter-
(iv) Any other form of Federal finan- mination and Education and Assist-
cial assistance as defined by the Single ance Act (ISDEAA), as amended (see 25
Audit Act Amendment of 1996 (codified U.S.C. 5301–5423).
rmajette on LAPJN3WLY3PROD with CFR
at 31 U.S.C. 7501–7507). (e) Program applicability. Except for
(c) Applicability to different types of §§ 200.203, 200.216, and 200.331 through
contracts and subcontracts awarded by a 200.333, the requirements in subparts C,
101
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00113 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.102 2 CFR Ch. II (1–1–26 Edition)
D, and E do not apply to the following award listed in paragraph (f)(1) of this
programs: section.
(1) The block grant awards author- (3) Federal awards under subsection
ized by the Omnibus Budget Reconcili- 412(e) of the Immigration and Nation-
ation Act of 1981 (including Community ality Act and subsection 501(a) of the
Services), except to the extent that Refugee Education Assistance Act of
subpart E apply to subrecipients of 1980 (Pub. L. 96–422, 94 Stat. 1809), for
Community Services Block Grant cash assistance, medical assistance,
funds pursuant to 42 U.S.C. and supplemental security income ben-
9916(a)(1)(B); efits to refugees and entrants and the
(2) Federal awards to local education administrative costs of providing the
agencies under 20 U.S.C. 7702–7703b, assistance and benefits (8 U.S.C.
(portions of the Impact Aid program); 1522(e)).
(3) Payments under the Department (4) Entitlement awards under the fol-
of Veterans Affairs’ State Home Per lowing programs of The National
Diem Program (38 U.S.C. 1741); and School Lunch Act:
(4) Federal awards authorized under (i) National School Lunch Program
the Child Care and Development Block (Section 4 of the Act, 42 U.S.C. 1753);
Grant Act of 1990, as amended: (ii) Commodity Assistance (Section 6
(i) Child Care and Development Block of the Act, 42 U.S.C. 1755);
Grant (42 U.S.C. 9858). (iii) Special Meal Assistance (Section
11 of the Act, 42 U.S.C. 1759a);
(ii) Child Care Mandatory and Match-
(iv) Summer Food Service Program
ing Funds of the Child Care and Devel-
for Children (Section 13 of the Act, 42
opment Fund (42 U.S.C. 9858).
U.S.C. 1761); and
(f) Additional program applicability.
(v) Child and Adult Care Food Pro-
Except for §§ 200.203 and 200.216, the
gram (Section 17 of the Act, 42 U.S.C.
guidance in subpart C does not apply to
1766).
the following programs:
(5) Entitlement awards under the fol-
(1) Entitlement Federal awards to lowing programs of The Child Nutri-
carry out the following programs of the tion Act of 1966:
Social Security Act: (i) Special Milk Program (Section 3
(i) Temporary Assistance for Needy of the Act, 42 U.S.C. 1772);
Families (Title IV–A of the Social Se- (ii) School Breakfast Program (Sec-
curity Act, 42 U.S.C. 601–619); tion 4 of the Act, 42 U.S.C. 1773); and
(ii) Child Support Enforcement and (iii) State Administrative Expenses
Establishment of Paternity (Title IV–D (Section 7 of the Act, 42 U.S.C. 1776).
of the Social Security Act, 42 U.S.C. (6) Entitlement awards for State Ad-
651–669b); ministrative Expenses under The Food
(iii) Federal Payments for Foster and Nutrition Act of 2008 (Section 16 of
Care, Prevention, and Permanency the Act, 7 U.S.C. 2025).
(Title IV–E of the Act, 42 U.S.C. 670– (7) Non-discretionary Federal awards
679c); under the following non-entitlement
(iv) Aid to the Aged, Blind, and Dis- programs:
abled (Titles I, X, XIV, and XVI–AABD (i) Special Supplemental Nutrition
of the Act, as amended); Program for Women, Infants and Chil-
(v) Medical Assistance (Medicaid) dren (Section 17 of the Child Nutrition
(Title XIX of the Act, 42 U.S.C. 1396– Act of 1966) 42 U.S.C. 1786;
1396w–5) not including the State Med- (ii) The Emergency Food Assistance
icaid Fraud Control program author- Programs (Emergency Food Assistance
ized by Section 1903(a)(6)(B) of the So- Act of 1983) 7 U.S.C. 7501 note; and
cial Security Act (42 U.S.C. (iii) Commodity Supplemental Food
1396b(a)(6)(B)); and Program (Section 5 of the Agriculture
(vi) Children’s Health Insurance Pro- and Consumer Protection Act of 1973) 7
gram (Title XXI of the Act, 42 U.S.C. U.S.C. 612c note.
1397aa–1397mm).
§ 200.102 Exceptions.
rmajette on LAPJN3WLY3PROD with CFR
(2) A Federal award for an experi-
mental, pilot, or demonstration project (a) OMB class exceptions. Except for
that is also supported by a Federal subpart F, OMB may allow exceptions
102
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00114 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.105
from requirements of this part for amended, codified at 31 U.S.C. 6101–
classes of Federal awards, recipients, 6106); the Federal Grant and Coopera-
or subrecipients when the exceptions tive Agreement Act of 1977 (Pub. L. 95–
are not prohibited by statute. For ex- 224, as amended, codified at 31 U.S.C.
ample, Federal agencies may request 6301–6309); 41 U.S.C. 1101–1131 (the Office
exceptions in support of innovative of Federal Procurement Policy Act);
program designs that apply a risk- Reorganization Plan No. 2 of 1970 and
based, data-driven framework to allevi- Executive Order 11541 (‘‘Prescribing the
ate select compliance requirements Duties of the Office of Management
and hold recipients accountable for and Budget and the Domestic Policy
good performance. See also § 200.206. Council in the Executive Office of the
Federal agencies may also request ex- President’’); and the Single Audit Act
ceptions in emergency situations. Amendments of 1996 (31 U.S.C. 7501–
When OMB allows an exception to re- 7507).
quirements of this part, the Federal (b) Subpart E is authorized under the
agency remains responsible for ensur- Budget and Accounting Act of 1921, as
ing the exception is applied to Federal amended; the Budget and Accounting
awards in a manner consistent with Procedures Act of 1950, as amended (31
Federal statutes and regulations. U.S.C. 1101–1126); the Chief Financial
(b) Statutory and regulatory exceptions. Officers Act of 1990 (31 U.S.C. 503–504);
A Federal agency may adjust require- Reorganization Plan No. 2 of 1970; and
ments to a class of Federal awards, re- Executive Order 11541, ‘‘Prescribing the
cipients, or subrecipients when re- Duties of the Office of Management
quired by Federal statutes or regula- and Budget and the Domestic Policy
tions, except for the requirements in Council in the Executive Office of the
subpart F. Except for provisions in sub- President.’’ OMB also relies on author-
part F, when a Federal statute requires ity under 31 U.S.C. 503 and 31 U.S.C.
exceptions to requirements of this part 6307.
for a class of Federal awards, recipi- (c) Subpart F is authorized under the
ents, or subrecipients, a Federal agen- Single Audit Act Amendments of 1996
cy does not need OMB approval to (codified at 31 U.S.C. 7501–7507). OMB
allow those exceptions. See also also relies on authority under 31 U.S.C.
§ 200.106. 503 and 31 U.S.C. 6307.
(c) Federal agency exceptions. Federal
agencies may allow exceptions to re- § 200.104 Supersession.
quirements of this part on a case-by-
case basis for individual Federal This part superseded previous OMB
awards, recipients, or subrecipients, ex- guidance issued under Title 2, subtitle
cept when the exceptions are prohib- A, chapter II of the Code of Federal
ited by law or other approval is ex- Regulations and certain OMB circulars
pressly required by this part. Only the related to uniform administrative re-
cognizant agency for indirect costs quirements, cost principles, and audit
may authorize exceptions related to requirements for Federal awards.
cost allocation plans or indirect cost
§ 200.105 Effect on other issuances.
rate proposals. A Federal agency may
also apply less restrictive requirements (a) Superseding inconsistent require-
when issuing fixed amount awards (see ments. For Federal awards made sub-
§ 200.1), except for those requirements ject to this part by a Federal agency,
imposed by statute or in subpart F. this part takes precedence over any ad-
ministrative requirements, program
§ 200.103 Authorities. manuals, handbooks, and other non-
This part is issued under the fol- regulatory materials that are incon-
lowing authorities. sistent with the requirements of this
(a) Subparts B through D are author- part upon implementation by the Fed-
ized under 31 U.S.C. 503 (the Chief Fi- eral agency, except to the extent that
nancial Officers Act, Functions of the they are required by statute or author-
rmajette on LAPJN3WLY3PROD with CFR
Deputy Director for Management); the ized in accordance with § 200.102.
Federal Program Information Act (b) Imposition of requirements on recipi-
(Pub, L. 95–220 and Pub. L. 98–169, as ents. Agencies may only impose legally
103
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00115 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.106 2 CFR Ch. II (1–1–26 Edition)
binding requirements on recipients and indirect cost rates must be based upon
subrecipients through: the date a newly re-negotiated rate
(1) Notice and public comment proce- goes into effect for the recipient’s or
dures through an approved agency subrecipient’s fiscal year. Therefore,
process, including as authorized by this for indirect cost rates and cost alloca-
part, other statutes, or regulations; or tion plans, the revisions to this part
(2) Incorporating requirements into (as of the publication date for revisions
the terms and conditions of a Federal to this guidance) become effective in
award as permitted by Federal statute, generating proposals and negotiating a
regulation, or this part. new rate (when the rate is re-nego-
tiated).
§ 200.106 Agency implementation.
The specific requirements and re- § 200.111 English language.
sponsibilities of Federal agencies, non- (a) All Federal financial assistance
Federal entities, recipients, and sub- announcements, applications, and Fed-
recipients are set forth in this part. eral award information should be in
Federal agencies making Federal the English language and must be in
awards to non-Federal entities must terms of U.S. dollars. However, Federal
implement the language in subparts C agencies, recipients, and subrecipients
through F of this part in codified regu- may issue or translate a Federal award
lations unless different provisions are or other documents into another lan-
required by Federal statute or are ap- guage. A Federal agency may translate
proved by OMB. formal or informal announcements of
the availability of Federal funding
§ 200.107 OMB responsibilities. through a financial assistance pro-
OMB will review Federal agency reg- gram, such as a notice of funding op-
ulations and implementation of this portunity, when translations may
part. OMB will provide interpretations serve to increase the pool of applicants
of policy requirements and assistance or the participation of a specific com-
to ensure effective, efficient, and con- munity (for example, programs admin-
sistent implementation. Any excep- istered in foreign countries where the
tions will be subject to approval by primary language is not English). Fed-
OMB and only with adequate justifica- eral agencies must maintain an official
tion from the Federal agency. controlling English version of the Fed-
eral financial assistance announcement
§ 200.108 Inquiries. and the Federal award, including the
Inquiries from Federal agencies con- terms and conditions.(b) Applications,
cerning this part may be directed to reports, and official correspondence
OMB. Inquiries from recipients or sub- may be submitted in languages other
recipients should be addressed to the than English if specified in the notice
Federal agency, the cognizant agency of funding opportunity or the terms
for indirect costs, the cognizant agency and conditions of the Federal award.
for audit, or the pass-through entity as (c) In the event of inconsistency be-
appropriate. tween English and another language,
the English language meaning will con-
§ 200.109 Review date. trol. When a significant portion of the
OMB will review this part periodi- recipient’s or subrecipient’s employees
cally. administering a Federal award are not
fluent in English, the Federal award
§ 200.110 Effective date. should be provided in English and the
(a) The standards set forth in this language(s) with which employees are
part affecting the administration of more familiar.
Federal awards by Federal agencies be-
come effective once implemented by § 200.112 Conflict of interest.
Federal agencies or when any future Federal agencies must establish con-
amendment to this part becomes final. flict of interest policies for Federal
rmajette on LAPJN3WLY3PROD with CFR
(b) Existing negotiated indirect cost awards. A recipient or subrecipient
rates will remain in place until they must disclose in writing any potential
expire. The effective date of changes to conflict of interest to the Federal
104
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00116 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.201
agency or pass-through entity in ac- awards in § 200.1) for which the fol-
cordance with the established Federal lowing conditions apply:
agency policies. (1) The Federal award amount is ne-
gotiated using the cost principles (or
§ 200.113 Mandatory disclosures. other pricing information) as a guide.
An applicant, recipient, or sub- See § 200.101(b)(4)(ii) for further infor-
recipient of a Federal award must mation on which provisions in subpart
promptly disclose whenever, in connec- E (cost principles) apply to fixed
tion with the Federal award (including amount awards. The Federal agency or
any activities or subawards there- pass-through entity may use fixed
under), it has credible evidence of the amount awards if the project scope has
commission of a violation of Federal measurable goals and objectives and if
criminal law involving fraud, conflict accurate cost, historical, or unit pric-
of interest, bribery, or gratuity viola- ing data is available to establish a
tions found in Title 18 of the United fixed budget based on a reasonable esti-
States Code or a violation of the civil mate of actual costs. Budgets for fixed
False Claims Act (31 U.S.C. 3729–3733). amount awards are negotiated with the
The disclosure must be made in writing recipient or subrecipient and the total
to the Federal agency, the agency’s Of- amount of Federal funding is deter-
fice of Inspector General, and pass- mined in accordance with the recipi-
through entity (if applicable). Recipi- ent’s or subrecipient’s proposal, avail-
ents and subrecipients are also re- able pricing data, and subpart E. Ac-
quired to report matters related to re-
countability must be based on perform-
cipient integrity and performance in
ance and results, which can be commu-
accordance with Appendix XII of this
nicated in performance reports or
part. Failure to make required disclo-
through routine monitoring. There is
sures can result in any of the remedies
described in § 200.339. (See also 2 CFR no expected routine monitoring of the
part 180, 31 U.S.C. 3321, and 41 U.S.C. actual costs incurred by the recipient
2313.) or subrecipient under the Federal
award. Therefore, no financial report-
ing is required. This does not absolve
Subpart C—Pre-Federal Award the recipient or subrecipient from the
Requirements and Contents of record retention requirements con-
Federal Awards tained in §§ 200.334 through 200.338; nor
does it absolve the recipient or sub-
§ 200.200 Purpose.
recipient of the responsibilities of
Sections 200.201 through 200.217 pre- making records available for review
scribe instructions and other pre-award during an audit. See § 200.101(b)(5)(i).
matters to be used by Federal agencies Payments must be based on meeting
in the program planning, announce- specific requirements of the Federal
ment, application, and award proc- award. Some of the ways in which the
esses. Federal award may be paid include, but
§ 200.201 Use of grants, cooperative are not limited to:
agreements, fixed amount awards, (i) In several partial payments. The
and contracts. amount of each payment as well as the
(a) Federal awards. The Federal agen- ‘‘milestone’’ or event triggering the
cy or pass-through entity must decide payment, should be agreed to in ad-
on the appropriate type of agreement vance and included in the Federal
for a Federal award (for example, a award;
grant, cooperative agreement, (ii) On a unit price basis. The defined
subaward, or contract) in accordance unit(s) or price(s) should be agreed to
with this guidance. See the Federal in advance and included in the Federal
Grant and Cooperative Agreement Act award; or
(31 U.S.C. 6301–6309). (iii) In one payment at the comple-
(b) Fixed amount awards. The Federal tion of the Federal award.
rmajette on LAPJN3WLY3PROD with CFR
agency or pass-through entity (see (2) A fixed amount award must not be
§ 200.333) may use fixed amount awards used in programs that require cost
(see the definition of fixed amount sharing.
105
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00117 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.202 2 CFR Ch. II (1–1–26 Edition)
(3) A fixed amount award may gen- ration, Submission, and Execution of
erate and use program income in ac- the Budget);
cordance with the terms and conditions (4) To align with the Program Man-
of the Federal award; however, the re- agement Improvement Accountability
quirements of § 200.307 do not apply. Act (Pub. L. 114–264) as well as the
(4) At the end of a fixed amount Foundations for Evidence-Based Pol-
award, the recipient or subrecipient icymaking Act (Pub. L. 115–435), as ap-
must certify in writing to the Federal plicable; and
agency or pass-through entity that the (5) To encourage applicants to en-
project was completed as agreed to in gage, when practicable, during the de-
the Federal award, or identify those ac- sign phase, members of the community
tivities that were not completed, and that will benefit from or be impacted
that all expenditures were incurred in by a program.
accordance with § 200.403. When the re- (b) Federal agencies should develop
quired activities were not carried out, programs in consultation with commu-
including fixed amount awards paid on nities benefiting from or impacted by
a unit price basis under 200.201(b)(1)(ii), the program. In addition, Federal agen-
the amount of the Federal award must cies should consider available data,
be reduced by the amount that reflects evidence, and evaluation results from
the activities that were not completed past programs and make every effort to
in accordance with the Federal award. extend eligibility requirements to all
When the required activities were com- potential applicants. Federal agencies
pleted in accordance with the terms are encouraged to coordinate with
and conditions of the Federal award, other agencies during program plan-
the recipient or subrecipient is entitled ning and design, particularly when the
to any unexpended funds. goals and objectives of a program or
(5) Periodic reports may be estab- project align with those of other agen-
lished for fixed amount awards. cies.
(6) Prior approval requirements that § 200.203 Requirement to provide pub-
apply to fixed amount awards are lic notice of Federal financial as-
§ 200.308(f) (paragraphs 1 through 3, 6 sistance programs.
through 8, and 10) and § 200.333. (a) The Federal agency must main-
tain an accurate list of Federal pro-
§ 200.202 Program planning and de-
sign. grams in the Assistance Listings main-
tained by the General Services Admin-
(a) The Federal agency must design a istration (GSA) at SAM.gov.
program and create an Assistance List- (1) The Assistance Listings is the
ing before announcing the Notice of comprehensive government-wide
Funding Opportunity. A program must source of Federal financial assistance
be designed: program information produced by the
(1) With clear goals and objectives executive branch of the Federal Gov-
that provide meaningful results and be ernment.
consistent with the Federal author- (2) The information that the Federal
izing legislation of the program; agency must submit to GSA for ap-
(2) To measure performance based on proval by OMB is listed in paragraph
the goals and objectives developed dur- (b). GSA must prescribe the format for
ing program planning and design. Per- the submission in coordination with
formance measures may differ depend- OMB.
ing on the type of program. See § 200.301 (3) The Federal agency must assign
for more information on performance the appropriate Assistance Listing be-
measurement; fore making the Federal award unless
(3) To align with the strategic goals exigent circumstances require other-
and objectives within the Federal agen- wise (for example, timing requirements
cy’s performance plan and support the imposed by a Federal statute).
Federal agency’s performance measure- (b) To the extent practicable, the
rmajette on LAPJN3WLY3PROD with CFR
ment, management, customer service Federal agency must create, update,
initiatives, and reporting as required and manage Assistance Listing entries
by Part 6 of OMB Circular A–11 (Prepa- based on the authorizing statute for
106
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00118 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.204
the program and comply with addi- eral financial assistance that will be
tional guidance provided by GSA (in openly competed. The term openly
consultation with OMB) to ensure con- competed means opportunities that are
sistent and accurate information is not directed to one or more specifically
available to prospective applicants. As- identified applicants. To the extent
sistance Listings should be commu- possible, the Federal agency should
nicated to the public in plain language. communicate opportunities to the pub-
Accordingly, Federal agencies must lic in plain language to ensure the an-
submit the following information to nouncement is accessible to diverse
GSA when creating an Assistance List- communities of eligible applicants, in-
ing: cluding underserved communities. The
(1) Program Description, Purpose, Federal agency should also make ef-
Goals, and Measurement. A brief sum- forts to limit the length and com-
mary of the statutory or regulatory re- plexity of the announcement and only
quirements of the program and its in- include the information that is nec-
tended outcome. Where appropriate, essary for the effective communication
the program description, purpose, of the program objectives. Federal
goals, and performance measurement agencies may offer pre-application
should align with the strategic goals technical assistance or provide clari-
and objectives within the Federal agen- fying information for funding opportu-
cy’s performance plan and should sup- nities. However, Federal agencies must
port the Federal agency’s performance ensure these resources are made acces-
measurement, management, customer sible and widely available to all poten-
experience initiatives, and reporting as tial applicants (for example, by posting
required by Part 6 of OMB Circular A– answers to questions and requests on
11; Grants.gov). The Federal agency should
(2) Identification. Identification of make every effort to identify in the
whether the program will issue Federal NOFO all eligible applicants (for exam-
awards on a discretionary or non-dis- ple, different types of nonprofit organi-
cretionary basis; zations such as labor unions and tribal
(3) Projected total amount of funds organizations). The following informa-
available for the program. Estimates tion must be provided in a public no-
based on previous year funding are ac- tice:
ceptable if current appropriations are (a) Summary information in notices of
not available at the time of the sub- funding opportunities. The Federal agen-
mission; cy must display the following informa-
(4) Anticipated source of available tion on Grants.gov, in a location pre-
funds. The statutory authority for ceding the full text of the announce-
funding the program and the agency, ment:
sub-agency, or specific program unit (1) Federal Agency Name;
that will issue the Federal awards (to (2) Funding Opportunity Title;
the extent possible) and associated (3) Announcement Type (whether the
funding identifier (for example, Treas- funding opportunity is the initial an-
ury Account Symbol(s)); nouncement or a modification of a pre-
(5) General eligibility requirements. The viously announced opportunity);
statutory, regulatory, or other eligi- (4) Funding Opportunity Number (re-
bility factors or considerations that de- quired, if the Federal agency has as-
termine the applicant’s qualification signed a number to the funding oppor-
for Federal awards under the program tunity announcement);
(for example, type of recipient); and (5) Assistance Listing Number(s);
(6) Applicability of Single Audit Re- (6) Funding Details. To the extent ap-
quirements. Applicability of Single propriate, the total amount of funding
Audit Requirements as required by that the Federal agency expects to
subpart F. award, the anticipated number of
awards, and the expected dollar values
§ 200.204 Notices of funding opportuni- of individual awards, which may be a
ties.
rmajette on LAPJN3WLY3PROD with CFR
range or average;
The Federal agency must announce (7) Key Dates. Key dates include due
specific funding opportunities for Fed- dates for submitting applications or
107
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00119 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.205 2 CFR Ch. II (1–1–26 Edition)
Executive Order 12372 submissions, as served communities, or intended to
well as for any letters of intent or reach inexperienced applicants.
preapplications. For any announce- (3) To reduce application burden,
ment issued before a program’s appli- Federal agencies should consider
cation materials are available, key whether programmatic or administra-
dates also include the date on which tive requirements specific to the agen-
those materials will be released; and cy, program, or funding opportunity
any other additional information, as must be met at the time of application
deemed applicable by the Federal agen- or as a requirement of receiving a Fed-
cy. If possible, the Federal agency eral award.
should provide an anticipated award
date. If the NOFO states that applica- § 200.205 Federal agency review of
tions will be evaluated on a ‘‘rolling’’ merit of proposals.
basis (that is, at different points during Unless prohibited by Federal statute,
a specified period of time), the Federal the Federal agency must design and
agency should provide an estimate of execute a merit review process of appli-
the time needed to process an applica- cations for discretionary Federal
tion and notify the applicant of the awards. The objective of a merit review
Federal agency’s decision; process is to select recipients most
(8) Executive Summary. A brief de- likely to be successful in delivering re-
scription that is written in plain lan- sults based on the program objectives
guage and summarizes the goals and as outlined in section § 200.202. A merit
objectives of the program, the target review is an objective process of evalu-
audience, and eligible applicants. The ating Federal award applications in ac-
text of the executive summary should cordance with the written standards of
not exceed 500 words; and the Federal agency. These standards
(9) Agency contact information. should identify the number of people
(b) Availability period. The Federal the agency requires to participate in
agency should make all funding oppor- the merit review process and provide
tunities available for application for at opportunities for a diverse group of
least 60 calendar days. However, the participants, including those rep-
Federal agency may modify the avail- resenting underserved communities.
ability period of an opportunity as The merit review process explained in
needed. For example, extending the pe- this section must be described or incor-
riod may be necessary to provide tech- porated by reference in the applicable
nical assistance to an applicant pool funding opportunity. See appendix I to
that was not anticipated when the an- this part. See also § 200.204. The Federal
nouncement was made or has less expe- agency must also periodically review
rience with applying for Federal finan- its merit review process.
cial assistance. The Federal agency
may also determine that an avail- § 200.206 Federal agency review of risk
ability period of less than 60 days is posed by applicants.
sufficient for a particular funding op- (a) Review of OMB-designated reposi-
portunity. However, no funding oppor- tories of government-wide data. (1) Prior
tunity should be available for less than to making a Federal award, the Fed-
30 calendar days unless the Federal eral agency is required to review eligi-
agency determines that exigent cir- bility information for applicants and
cumstances justify this. financial integrity information for ap-
(c) Full text of funding opportunities. plicants available in OMB-designated
(1) The Federal agency must include databases per the Payment Integrity
the information in Appendix I for every Information Act of 2019 (Pub. L. 116–
funding opportunity. 117), the ‘‘Do Not Pay Initiative’’ (31
(2) Federal agencies should ensure U.S.C. 3354), and 41 U.S.C. 2313.
that funding opportunities are written (2) The Federal agency is required to
using plain language. To the extent review the responsibility and qualifica-
possible Federal agencies must stream- tion records available in the non-public
rmajette on LAPJN3WLY3PROD with CFR
line opportunities to make them acces- segment of the System for Award Man-
sible, particularly for funding opportu- agement (SAM.gov) prior to making a
nities that are new, targeted to under- Federal award where the Federal share
108
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00120 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.207
is expected to exceed the simplified ac- (i) Financial stability. The applicant’s
quisition threshold, defined at 41 U.S.C. record of effectively managing finan-
134, over the period of performance. See cial risks, assets, and resources;
41 U.S.C. 2313. The Federal agency (ii) Management systems and stand-
must consider all of the information ards. Quality of management systems
available in SAM.gov with regard to the and ability to meet the management
applicant and any immediate highest- standards prescribed in this part;
level owner, predecessor (meaning, an (iii) History of performance. The appli-
organization that is replaced by a suc- cant’s record of managing previous and
cessor), or subsidiary, identified for current Federal awards, including com-
that applicant in SAM.gov. See Public pliance with reporting requirements
Law 112–239, National Defense Author-
and conformance to the terms and con-
ization Act for Fiscal Year 2013; 41
ditions of Federal awards, if applicable;
U.S.C. 2313(d). The information in the
system for a prior recipient of a Fed- (iv) Audit reports and findings. Re-
eral award must demonstrate a satis- ports and findings from audits per-
factory record of administering pro- formed under subpart F or the reports
grams or activities under Federal fi- and findings of any other available au-
nancial assistance or procurement dits, if applicable; and
awards, and integrity and business eth- (v) Ability to effectively implement re-
ics. The Federal agency may make a quirements. The applicant’s ability to
Federal award to a recipient that does effectively implement statutory, regu-
not fully meet these standards if it is latory, or other requirements imposed
determined that the information is not on recipients of Federal awards.
relevant to the Federal award under (c) Adjustments to the Risk Assessment.
consideration or there are specific con- The Federal agency may modify the
ditions that can appropriately mitigate risk assessment at any time during the
the risk associated with the recipient period of performance, which may jus-
in accordance with § 200.208. tify changes to the terms and condi-
(b) Risk Assessment. (1) The Federal tions of the Federal award. See
agency must establish and maintain § 200.208.
policies and procedures for conducting (d) Suspension and debarment compli-
a risk assessment to evaluate the risks ance. The Federal agency must comply
posed by applicants before issuing Fed- with the government-wide suspension
eral awards. This assessment helps and debarment guidance in 2 CFR part
identify risks that may affect the ad- 180 and individual Federal agency sus-
vancement toward or the achievement pension and debarment requirements in
of a project’s goals and objectives. Risk title 2 of the Code of Federal Regula-
assessments assist Federal managers in
tions. Federal agencies must also re-
determining appropriate resources and
quire recipients to comply with these
time to devote to project oversight and
requirements. These requirements re-
monitor recipient progress. This as-
strict making Federal awards, sub-
sessment may incorporate elements
awards, and contracts with certain par-
such as the quality of the application,
award amount, risk associated with the ties that are debarred, suspended, or
program, cybersecurity risks, fraud otherwise excluded from receiving Fed-
risks, and impacts on local jobs and the eral awards or participating in Federal
community. If the Federal agency de- awards.
termines that the Federal award will
§ 200.207 Standard application re-
be made, specific conditions that ad- quirements.
dress the assessed risk may be imple-
mented in the Federal award. The risk (a) Paperwork clearances. The Federal
criteria to be evaluated must be de- agency may only use application infor-
scribed in the announcement of the mation collections approved by OMB
funding opportunity described in under the Paperwork Reduction Act of
§ 200.204. 1995 and OMB’s implementing regula-
rmajette on LAPJN3WLY3PROD with CFR
(2) In evaluating risks posed by appli- tions in 5 CFR part 1320 and in align-
cants, the Federal agency should con- ment with OMB-approved, government-
sider the following items: wide data elements available from the
109
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00121 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.208 2 CFR Ch. II (1–1–26 Edition)
OMB-designated standards lead. Exam- (6) Establishing additional prior ap-
ples of application information collec- provals.
tions approved by OMB include the (d) Prior to imposing specific condi-
Standard Forms 424 (SF–424), which is tions, the Federal agency or pass-
available on Grants.gov, and the Bio- through entity must notify the recipi-
graphical Sketch Common Form (OMB ent or subrecipient as to:
Control Number 3145–0279), which Fed- (1) The nature of the specific condi-
eral agencies should use to collect bio- tion(s);
graphical sketches and other disclosure (2) The reason why the specific condi-
information from award applicants. tion(s) is being imposed;
OMB will authorize additional informa- (3) The nature of the action needed to
tion collections only on a limited basis remove the specific condition(s);
and consistent with these require- (4) The time allowed for completing
ments. the actions; and
(b) Information collection. The Federal (5) The method for requesting the
agency may inform applicants that Federal agency or pass-through entity
they do not need to provide certain in- to reconsider imposing a specific condi-
formation already being collected tion.
through other means. (e) Any specific conditions must be
§ 200.208 Specific conditions. promptly removed once the conditions
that prompted them have been satis-
(a) Federal agencies are responsible fied.
for ensuring that specific Federal
award conditions and performance ex- § 200.209 Certifications and represen-
pectations are consistent with the pro- tations.
gram design (See § 200.202 and § 200.301). Unless prohibited by the U.S. Con-
(b) The Federal agency or pass- stitution, Federal statutes, or regula-
through entity may adjust specific con- tions, a Federal agency or pass-through
ditions in the Federal award based on entity is authorized to require a recipi-
an analysis of the following factors: ent to submit annual certifications and
(1) Review of OMB-designated reposi- representations. Submission may be re-
tories of government-wide data (for ex- quired more frequently if a recipient or
ample, SAM.gov) or review of its risk subrecipient fails to meet a require-
assessment (See § 200.206); ment of a Federal award. When a re-
(2) The recipient’s or subrecipient’s cipient is provided an exception to the
history of compliance with the terms requirements of 2 CFR 25.110, the re-
and conditions of Federal awards; cipient must submit the appropriate
(3) The recipient’s or subrecipient’s assurance form (for example, SF–424B).
ability to meet expected performance
goals as described in § 200.211; or § 200.210 Pre-award costs.
(4) A determination of whether a re- For requirements on costs incurred
cipient or subrecipient has inadequate by the applicant prior to the start date
financial capability to perform the of the period of performance of the
Federal award. Federal award, see § 200.458.
(c) Specific conditions may include
the following: § 200.211 Information contained in a
(1) Requiring payments as reimburse- Federal award.
ments rather than advance payments; The Federal award must include the
(2) Withholding authority to proceed following information:
to the next phase until receipt of evi- (a) Federal award performance goals.
dence of acceptable performance; Where applicable, performance goals,
(3) Requiring additional or more de- indicators, targets, and baseline data
tailed financial reports; must be included in the Federal award.
(4) Requiring additional project mon- The Federal agency must also specify
itoring; in the terms and conditions of the Fed-
rmajette on LAPJN3WLY3PROD with CFR
(5) Requiring the recipient or sub- eral award how performance will be as-
recipient to obtain technical or man- sessed, including the timing and scope
agement assistance; or of expected performance. See §§ 200.202
110
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00122 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.211
and 200.301 for more information on specific. See § 200.300 Statutory and na-
Federal award performance goals. tional policy requirements.
(b) General Federal award information. (iii) Recipient integrity and perform-
The Federal agency must include the ance matters. When the total Federal
following information in each Federal share of the Federal award may include
award: more than $500,000 over the period of
(1) Recipient Name (which must performance, the Federal agency must
match the name associated with its include the terms and conditions avail-
unique entity identifier as defined at 2 able in Appendix XII. See also § 200.113.
CFR 25.400); (iv) Future budget periods. When it is
(2) Recipient’s Unique Entity Identi- anticipated that the period of perform-
fier; ance will include multiple budget peri-
(3) Unique Federal Award Identifica- ods, the Federal agency must indicate
tion Number (FAIN); that subsequent budget periods are
(4) Federal Award Date (see Federal subject to the availability of funds,
award date in § 200.1); program authority, satisfactory per-
(5) Period of Performance Start and formance, and compliance with the
End Date; terms and conditions of the Federal
(6) Budget Period Start and End award.
Date; (v) Termination provisions. Federal
agencies must inform recipients of the
(7) Amount of Federal Funds Obli-
termination provisions in § 200.340, in-
gated by this Action;
cluding the applicable termination pro-
(8) Total Amount of Federal Funds
visions in the Federal agency’s regula-
Obligated;
tions or terms and conditions of the
(9) Total Approved Cost Sharing, Federal award.
where applicable; (2) The Federal award must incor-
(10) Total Amount of the Federal porate, by reference, all general terms
Award including approved Cost Shar- and conditions of the Federal award,
ing; which must be maintained on the Fed-
(11) Budget Approved by the Federal eral agency’s website.
Agency; (3) The Federal agency must provide
(12) Federal Award Description (to a copy of the full text of the general
comply with statutory requirements terms and conditions if a recipient re-
(for example, FFATA)); quests it.
(13) Name of the Federal agency (in- (4) The Federal agency must main-
cluding contact information for the tain an archive of previous versions of
awarding official); the general terms and conditions, with
(14) Assistance Listings Number and effective dates, for use by a recipient,
Title; auditors, or others. The archive should
(15) Identification of whether the be located on the Federal agency’s
Award is R&D; and website in the same place where cur-
(16) Indirect Cost Rate for the Fed- rent terms and conditions are avail-
eral award (including if the de minimis able.
rate is charged per § 200.414). (d) Federal award specific terms and
(c) General terms and conditions. (1) conditions. The Federal agency must in-
Federal agencies must incorporate the clude in each Federal award any spe-
following general terms and conditions cific terms and conditions that are in
either in the Federal award or by ref- addition to the general terms and con-
erence, as applicable: ditions. See also § 200.208. For loan and
(i) Administrative requirements. Admin- loan guarantee programs, the Federal
istrative requirements implemented by agency must specify whether or not the
the Federal agency as specified in this Federal award has continuing compli-
part. ance requirements. Whenever prac-
(ii) National policy requirements. These ticable, these specific terms and condi-
include statutory, executive order, tions should also be available on the
rmajette on LAPJN3WLY3PROD with CFR
other Presidential directive, or regu- Federal agency’s website and in notices
latory requirements that apply by spe- of funding opportunities (as outlined in
cific reference and are not program- § 200.204).
111
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00123 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.212 2 CFR Ch. II (1–1–26 Edition)
(e) Federal agency requirements. Any the simplified acquisition threshold
other information required by the Fed- over the period of performance.
eral agency. (b) The Federal agency is not re-
quired to report a determination that
§ 200.212 Public access to Federal an applicant is not qualified for a Fed-
award information. eral award if they issue the Federal
(a) Except as noted in paragraph (c) award in accordance with the require-
of this section, the Federal agency ments of § 200.208.
must publish the required Federal (c) If the Federal agency reports a de-
award information on USAspending.gov termination that an applicant is not
in accordance with the guidance pro- qualified for a Federal award, the Fed-
vided by OMB and the U.S. Department eral agency also must notify the appli-
of the Treasury’s Government-wide cant that:
Spending Data Model (GSDM). (1) The determination was made and
(b) All responsibility and qualifica- reported in SAM.gov. The notification
tion records posted in SAM.gov will be from the Federal agency to the appli-
publicly available after a waiting pe- cant should also provide a brief expla-
riod of 14 calendar days, except for: nation for the determination;
(1) Past performance reviews required (2) The information will be kept in
by Federal Government contractors the system for a period of five years
(See Federal Acquisition Regulation from the date of the determination and
(FAR) 48 CFR part 42, subpart 42.15); then archived (See section 872 of Public
(2) Information that was entered Law 110–417, as amended, codified at 41
prior to April 15, 2011; or U.S.C. 2313);
(3) Information that is withdrawn (3) Each Federal agency that con-
during the 14-calendar day waiting pe- siders making a Federal award to the
riod by a Federal agency. applicant during that five-year period
(c) Nothing in this section may be will consider that information in deter-
construed as requiring the publication mining the applicant’s qualification to
of information otherwise exempt under receive a Federal award when the total
the Freedom of Information Act (5 Federal share of a Federal award is ex-
U.S.C. 552), or controlled unclassified pected to exceed the simplified acquisi-
information pursuant to Executive tion threshold over the period of per-
Order 13556. formance;
§ 200.213 Reporting a determination (4) The applicant may review the re-
that an applicant is not qualified sponsibility and qualification records
for a Federal award. accessible in SAM.gov and comment on
any information the system contains
(a) The Federal agency must report
about the applicant; and
in SAM.gov if it does not make a Fed-
eral award to an applicant because it (5) Federal agencies must consider
determines that the applicant does not the applicant’s comments in deter-
meet the minimum qualification stand- mining whether the applicant is quali-
ards as described in § 200.206(a)(2). The fied for a future Federal award.
Federal agency must report that deter- (d) If the Federal agency enters infor-
mination only if all of the following mation into SAM.gov about a deter-
apply: mination that an applicant is not
(1) The only basis for the determina- qualified for a Federal award and sub-
tion is the applicant’s prior record of sequently:
performance on administering Federal (1) Learns that any of that informa-
awards or its record of integrity and tion is erroneous, the Federal agency
business ethics, as described in must correct the information in the
§ 200.206(a)(2) (meaning, the applicant system within three business days; and
was determined to be qualified based (2) Obtains an update to that infor-
on all factors other than those two mation that could be helpful to other
rmajette on LAPJN3WLY3PROD with CFR
standards); and Federal agencies, the Federal agency
(2) The total Federal share of the should amend the information in the
Federal award was expected to exceed system within 30 days.
112
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00124 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.216
(e) Federal agencies must not post (2) Extend or renew a contract to pro-
any information that will be made pub- cure or obtain covered telecommuni-
licly available in the non-public seg- cations equipment or services; or
ment of the responsibility and quali- (3) Enter into a contract (or extend
fication records that is covered by a or renew a contract) to procure or ob-
disclosure exemption under the Free- tain covered telecommunications
dom of Information Act. If a recipient equipment or services.
asserts within seven calendar days to a (b) As described in section 889 of Pub-
Federal agency that some or all of the lic Law 115–232, ‘‘covered telecommuni-
publicly available information is cov- cations equipment or services’’ means
ered by a disclosure exemption under any of the following:
the Freedom of Information Act, the (1) Telecommunications equipment
Federal agency that posted the infor- produced by Huawei Technologies Com-
mation must remove the posting with- pany or ZTE Corporation (or any sub-
in seven calendar days of receiving the sidiary or affiliate of such entities);
assertion. Prior to reposting the releas-
(2) For the purpose of public safety,
able information, the Federal agency
security of government facilities, phys-
must resolve the issue in accordance
ical security surveillance of critical in-
with the agency’s Freedom of Informa-
frastructure, and other national secu-
tion Act procedures.
rity purposes, video surveillance and
§ 200.214 Suspension and debarment. telecommunications equipment pro-
duced by Hytera Communications Cor-
Recipients and subrecipients are sub- poration, Hangzhou Hikvision Digital
ject to the nonprocurement debarment
Technology Company, or Dahua Tech-
and suspension regulations imple-
nology Company (or any subsidiary or
menting Executive Orders 12549 and
affiliate of such entities);
12689, as well as 2 CFR part 180. The
regulations in 2 CFR part 180 restrict (3) Telecommunications or video sur-
making Federal awards, subawards, veillance services provided by such en-
and contracts with certain parties that tities or using such equipment;
are debarred, suspended, or otherwise (4) Telecommunications or video sur-
excluded from receiving or partici- veillance equipment or services pro-
pating in Federal awards. duced or provided by an entity that the
Secretary of Defense, in consultation
§ 200.215 Never contract with the with the Director of the National Intel-
enemy. ligence or the Director of the Federal
Federal agencies, recipients, and sub- Bureau of Investigation, reasonably be-
recipients are subject to the guidance lieves to be an entity owned or con-
implementing Never Contract with the trolled by, or otherwise connected to,
Enemy in 2 CFR part 183. The guidance the government of a covered foreign
in 2 CFR part 183 affects covered con- country;
tracts, grants, and cooperative agree- (c) For the purposes of this section,
ments that are expected to exceed ‘‘covered telecommunications equip-
$50,000 during the period of perform- ment or services’’ also include systems
ance, are performed outside the United that use covered telecommunications
States and its territories, and are in equipment or services as a substantial
support of a contingency operation in or essential component of any system,
which members of the Armed Forces or as critical technology as part of any
are actively engaged in hostilities. system.
(d) In implementing the prohibition
§ 200.216 Prohibition on certain tele- under section 889 of Public Law 115–232,
communications and video surveil- heads of executive agencies admin-
lance equipment or services. istering loan, grant, or subsidy pro-
(a) Recipients and subrecipients are grams must prioritize available fund-
prohibited from obligating or expend- ing and technical support to assist af-
ing loan or grant funds to: fected businesses, institutions, and or-
rmajette on LAPJN3WLY3PROD with CFR
(1) Procure or obtain covered tele- ganizations as is reasonably necessary
communications equipment or serv- for those affected entities to transition
ices; from covered telecommunications
113
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00125 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.217 2 CFR Ch. II (1–1–26 Edition)
equipment or services, to procure re- cable Federal statutes and regula-
placement equipment or services, and tions—including provisions protecting
to ensure that communications service free speech, religious liberty, public
to users and customers is sustained. welfare, and the environment, and
(e) When the recipient or sub- those prohibiting discrimination—and
recipient accepts a loan or grant, it is the requirements of this part. The Fed-
certifying that it will comply with the eral agency or pass-through entity
prohibition on covered telecommuni- must communicate to a recipient or
cations equipment and services in this subrecipient all relevant requirements,
section. The recipient or subrecipient including those contained in general
is not required to certify that funds appropriations provisions, and incor-
will not be expended on covered tele- porate them directly or by reference in
communications equipment or services the terms and conditions of the Federal
beyond the certification provided upon award.
accepting the loan or grant and those (b) In administering Federal awards
provided upon submitting payment re- that are subject to a Federal statute
quests and financial reports. prohibiting discrimination based on
(f) For additional information, see sex, the Federal agency or pass-
section 889 of Public Law 115–232 and through entity must ensure that the
§ 200.471. award is administered in a way that
does not unlawfully discriminate based
§ 200.217 Whistleblower protections. on sexual orientation or gender iden-
An employee of a recipient or sub- tity if the statute’s prohibition on sex
recipient must not be discharged, de- discrimination encompasses discrimi-
moted, or otherwise discriminated nation based on sexual orientation and
against as a reprisal for disclosing to a gender identity consistent with the Su-
person or body described in paragraph preme Court’s reasoning in Bostock v.
(a)(2) of 41 U.S.C. 4712 information that Clayton County, 140 S. Ct. 1731 (2020).
the employee reasonably believes is (c) In administering awards in ac-
evidence of gross mismanagement of a cordance with the U.S. Constitution,
Federal contract or grant, a gross the Federal agency must take account
waste of Federal funds, an abuse of au- of the heightened constitutional scru-
thority relating to a Federal contract tiny that may apply under the Con-
or grant, a substantial and specific stitution’s Equal Protection guarantee
danger to public health or safety, or a for government action that provides
violation of law, rule, or regulation re- differential treatment based on pro-
lated to a Federal contract (including tected characteristics.
the competition for or negotiation of a
contract) or grant. The recipient and § 200.301 Performance measurement.
subrecipient must inform their em- (a) The Federal agency must measure
ployees in writing of employee whistle- the recipient’s performance to show
blower rights and protections under 41 achievement of program goals and ob-
U.S.C. 4712. See statutory requirements jectives, share lessons learned, improve
for whistleblower protections at 10 program outcomes, and foster the
U.S.C. 4701, 41 U.S.C. 4712, 41 U.S.C. adoption of promising practices. The
4304, and 10 U.S.C. 4310. Federal agency should establish pro-
gram goals and objectives during pro-
Subpart D—Post Federal Award gram planning and design (see § 200.202).
Requirements The Federal agency should clearly
communicate the specific program
§ 200.300 Statutory and national policy goals and objectives in the Federal
requirements. award, including how the Federal agen-
(a) The Federal agency or pass- cy will measure the achievement of the
through entity must manage and ad- goals and objectives, the expected
minister the Federal award in a man- timeline, and information on how the
ner so as to ensure that Federal fund- recipient must report the achievement
rmajette on LAPJN3WLY3PROD with CFR
ing is expended and associated pro- of program goals and objectives. The
grams are implemented in full accord- Federal agency should also clearly
ance with the U.S. Constitution, appli- communicate in the Federal award any
114
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00126 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.303
expected outcomes (such as outputs, clude, as applicable, the Assistance
service performance, or public impacts Listings title and number, Federal
of any of these), indicators, targets, award identification number, year the
baseline data, or data collections that Federal award was issued, and name of
the recipient is responsible for meas- the Federal agency or pass-through en-
uring and reporting. The Federal agen- tity.
cy must ensure all requirements for (2) Accurate, current, and complete
measuring performance align with the disclosure of the financial results of
Federal agency’s strategic goals, stra- each Federal award or program in ac-
tegic objectives, or performance goals cordance with the reporting require-
relevant to a program (see OMB Cir- ments in §§ 200.328 and 200.329. When a
cular A–11, Preparation, Submission, Federal agency or pass-through entity
and Execution of the Budget Part 6). requires reporting on an accrual basis
(b) When establishing performance from a recipient or subrecipient that
reporting frequency and content, the maintains its records other than on an
Federal agency should consider what accrual basis, the recipient or sub-
information will be necessary to meas- recipient must not be required to es-
ure the recipient’s progress, to identify tablish an accrual accounting system.
promising practices of recipients, and This recipient or subrecipient may de-
build the evidence upon which the Fed- velop accrual data for its reports based
eral agency makes program and per- on an analysis of the documentation on
formance decisions. The Federal agen- hand.
cy should not require additional infor- (3) Maintaining records that suffi-
mation that is not necessary for meas- ciently identify the amount, source,
uring program performance and evalua- and expenditure of Federal funds for
tion. See § 200.329 for more information Federal awards. These records must
on reporting program performance. contain information necessary to iden-
(c) The Federal agency should also tify Federal awards, authorizations, fi-
specify in the Federal award any re- nancial obligations, unobligated bal-
quirements of the recipients’ participa- ances, as well as assets, expenditures,
tion in federally funded evaluations. income, and interest. All records must
be supported by source documentation.
§ 200.302 Financial management. (4) Effective control over and ac-
(a) Each State must expend and ac- countability for all funds, property,
count for the Federal award in accord- and assets. The recipient or sub-
ance with State laws and procedures recipient must safeguard all assets and
for expending and accounting for the ensure they are used solely for author-
State’s funds. All recipient and sub- ized purposes. See § 200.303.
recipient financial management sys- (5) Comparison of expenditures with
tems, including records documenting budget amounts for each Federal
compliance with Federal statutes, reg- award.
ulations, and the terms and conditions (6) Written procedures to implement
of the Federal award, must be suffi- the requirements of § 200.305.
cient to permit the preparation of re- (7) Written procedures for deter-
ports required by the terms and condi- mining the allowability of costs in ac-
tions; and tracking expenditures to es- cordance with subpart E and the terms
tablish that funds have been used in ac- and conditions of the Federal award.
cordance with Federal statutes, regula-
tions, and the terms and conditions of § 200.303 Internal controls.
the Federal award. See § 200.450. The recipient and subrecipient must:
(b) The recipient’s and subrecipient’s (a) Establish, document, and main-
financial management system must tain effective internal control over the
provide for the following (see §§ 200.334, Federal award that provides reasonable
200.335, 200.336, and 200.337): assurance that the recipient or sub-
(1) Identification of all Federal recipient is managing the Federal
awards received and expended and the award in compliance with Federal stat-
rmajette on LAPJN3WLY3PROD with CFR
Federal programs under which they utes, regulations, and the terms and
were received. Federal program and conditions of the Federal award. These
Federal award identification must in- internal controls should align with the
115
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00127 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.304 2 CFR Ch. II (1–1–26 Edition)
guidance in ‘‘Standards for Internal Cash Management Improvement Act
Control in the Federal Government’’ (CMIA) agreements and default proce-
issued by the Comptroller General of dures codified at 31 CFR part 205 and
the United States or the ‘‘Internal Con- Treasury Financial Manual (TFM) 4A–
trol-Integrated Framework’’ issued by 2000, ‘‘Overall Disbursing Rules for All
the Committee of Sponsoring Organiza- Federal Agencies.’’
tions of the Treadway Commission (b) Payments for recipients and sub-
(COSO). recipients other than States. For recipi-
(b) Comply with the U.S. Constitu- ents and subrecipients other than
tion, Federal statutes, regulations, and States, payment methods must mini-
the terms and conditions of the Federal mize the time elapsing between the
award. transfer of funds from the Federal
(c) Evaluate and monitor the recipi- agency or the pass-through entity and
ent’s or subrecipient’s compliance with the disbursement of funds by the re-
statutes, regulations, and the terms cipient or subrecipient regardless of
and conditions of Federal awards. whether the payment is made by elec-
(d) Take prompt action when in- tronic funds transfer or by other
stances of noncompliance are identi- means. See § 200.302(b)(6). Except as
fied. noted in this part, the Federal agency
(e) Take reasonable cybersecurity must require recipients to use only
and other measures to safeguard infor- OMB-approved, government-wide infor-
mation including protected personally mation collections to request payment.
identifiable information (PII) and (1) The recipient or subrecipient
other types of information. This also must be paid in advance, provided it
includes information the Federal agen- maintains or demonstrates the willing-
cy or pass-through entity designates as ness to maintain both written proce-
sensitive or other information the re- dures that minimize the time elapsing
cipient or subrecipient considers sen- between the transfer of funds and dis-
sitive and is consistent with applicable bursement by the recipient or sub-
Federal, State, local, and tribal laws recipient, and financial management
regarding privacy and responsibility systems that meet the standards for
over confidentiality. fund control and accountability as es-
tablished in this part. Advance pay-
§ 200.304 Bonds. ments to a recipient or subrecipient
(a) Where the Federal Government must be limited to the minimum
guarantees or insures the repayment of amounts needed and be timed with ac-
money borrowed by the recipient, the tual, immediate cash requirements of
Federal agency may require adequate the recipient or subrecipient in car-
bonding and insurance if the bonding rying out the purpose of the approved
and insurance requirements of the re- program or project. The timing and
cipient are not deemed adequate to amount of advance payments must be
protect the interest of the Federal Gov- as close as is administratively feasible
ernment. to the actual disbursements by the re-
(b) The Federal agency may require cipient or subrecipient for direct pro-
adequate fidelity bond coverage where gram or project costs and the propor-
the recipient lacks coverage to protect tionate share of any allowable indirect
the interest of the Federal Govern- costs. The recipient or subrecipient
ment. must make timely payments to con-
(c) Where bonds, insurance, or both tractors in accordance with the con-
are required in the situations described tract provisions.
above, the bonds and insurance must be (2) Whenever possible, advance pay-
obtained from companies holding cer- ment requests by the recipient or sub-
tificates of authority issued by the recipient must be consolidated to cover
U.S. Department of Treasury (see 31 anticipated cash needs for all Federal
CFR part 223). awards received by the recipient from
the awarding Federal agency or pass-
rmajette on LAPJN3WLY3PROD with CFR
§ 200.305 Federal payment. through entity.
(a) Payments for States. Payments for (i) Advance payment mechanisms
States are governed by Treasury-State must comply with 31 CFR part 208 and
116
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00128 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.305
include, but are not limited to, Treas- or inability of the pass-through entity
ury checks and electronic funds trans- to provide timely advance payments to
fers. the subrecipient to meet the subrecipi-
(ii) Recipients and subrecipients ent’s actual cash disbursements.
must be authorized to submit payment (5) If available, the recipient or sub-
requests as often as necessary when recipient must disburse funds available
electronic fund transfers are used or at from program income (including repay-
least monthly when electronic trans- ments to a revolving fund), rebates, re-
fers are not used. See Electronic Fund funds, contract settlements, audit re-
Transfer Act (15 U.S.C. 1693–1693r). coveries, and interest earned on Fed-
(3) Reimbursement is preferred when eral funds before requesting additional
the requirements in paragraph (b) can- cash payments.
not be met, when the Federal agency or (6) Payments for allowable costs
pass-through entity sets a specific con- must not be withheld at any time dur-
dition per § 200.208, when requested by ing the period of performance unless
the recipient or subrecipient, when a required by Federal statute, regula-
Federal award is for construction, or tions, or in one of the following in-
when a significant portion of the con- stances:
struction project is accomplished (i) The recipient or subrecipient has
through private market financing or failed to comply with the terms and
Federal loans and the Federal award conditions of the Federal award; or
constitutes a minor portion of the (ii) The recipient or subrecipient is
project. When the reimbursement delinquent in a debt to the United
method is used, the Federal agency or States as defined in OMB Circular A–
pass-through entity must make pay- 129, ‘‘Policies for Federal Credit Pro-
ment within 30 calendar days after re- grams and Non-Tax Receivables.’’
ceipt of the payment request unless the Under such conditions, the Federal
Federal agency or pass-through entity agency or pass-through entity may,
reasonably believes the request to be after providing reasonable notice, with-
improper. hold payments to the recipient or sub-
(4) If the recipient or subrecipient recipient for financial obligations in-
cannot meet the criteria for advance curred after a specified date until the
payments and the Federal agency or conditions are corrected or the debt is
pass-through entity has determined repaid to the Federal Government.
that reimbursement is not feasible be- (7) A payment withheld for failure to
cause the recipient or subrecipient comply with the terms and conditions
lacks sufficient working capital, the of the Federal award must be released
Federal agency or pass-through entity to the recipient or subrecipient upon
may provide cash on a working capital subsequent compliance. When a Fed-
advance basis. Under this procedure, eral award is suspended, payment ad-
the Federal agency or pass-through en- justments must be made in accordance
tity must advance cash payments to with § 200.343.
the recipient or subrecipient to cover (8) A payment must not be made to a
its estimated disbursement needs for recipient or subrecipient for amounts
an initial period generally aligned to that the recipient or subrecipient with-
the recipient’s or subrecipient’s dis- holds from contractors to assure satis-
bursing cycle. After that, the Federal factory completion of work. Payment
agency or pass-through entity must re- must be made when the recipient or
imburse the recipient or subrecipient subrecipient disburses the withheld
for its actual cash disbursements. Use funds to the contractors or to escrow
of the working capital advance pay- accounts established to ensure satisfac-
ment method requires that the pass- tory completion of work.
through entity provide timely advance (9) The Federal agency or pass-
payments to any subrecipients to meet through entity must not require sepa-
the subrecipient’s actual cash disburse- rate depository accounts for funds pro-
ments. The pass-through entity must vided to the recipient or subrecipient
rmajette on LAPJN3WLY3PROD with CFR
not use the working capital advance or establish any eligibility require-
method of payment if the reason for ments for depositories. However, the
using this method is the unwillingness recipient or subrecipient must be able
117
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00129 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.306 2 CFR Ch. II (1–1–26 Edition)
to account for all Federal funds re- § 200.306 Cost sharing.
ceived, obligated, and expended.
(a) Voluntary committed cost shar-
(10) Advance payments of Federal ing is not expected under Federal re-
funds must be deposited and main- search grants. The Federal agency may
tained in insured accounts whenever not use voluntary committed cost
possible. sharing as a factor during the merit re-
(11) The recipient or subrecipient view of applications or proposals for
must maintain advance payments of Federal research grants unless author-
Federal funds in interest-bearing ac- ized by Federal statutes or agency reg-
counts unless one of the following ap- ulations and specified in the notice of
plies: funding opportunity. Federal agencies
(i) The recipient or subrecipient re- are also discouraged from using vol-
ceives less than $250,000 in Federal untary committed cost sharing as a
funding per year; factor during the merit review of appli-
(ii) The best available interest-bear- cations for other Federal financial as-
ing account would not reasonably be sistance programs. If voluntary com-
expected to earn interest in excess of mitted cost sharing is used for this
$500 per year on Federal cash balances; purpose for other programs, the notice
(iii) The depository would require an of funding opportunity must specify
average or minimum balance so high how an applicant’s proposed cost shar-
that it would not be feasible with the ing will be considered. See §§ 200.414,
expected Federal and non-Federal cash 200.204, and Appendix I.
resources; (b) For all Federal awards, the Fed-
(iv) A foreign government or banking eral agency or pass-through entity
system prohibits or precludes interest- must accept any cost sharing funds (in-
bearing accounts; or cluding cash and third-party in-kind
(v) An interest-bearing account is not contributions, and also including funds
readily accessible (for example, due to committed by the recipient, sub-
public or political unrest in a foreign recipient, or third parties) as part of
country). the recipient’s or subrecipient’s con-
(12) The recipient or subrecipient tributions to a program when the
may retain up to $500 per year of inter- funds:
est earned on Federal funds to use for (1) Are verifiable in the recipient’s or
administrative expenses of the recipi- subrecipient’s records;
ent or subrecipient. Any additional in- (2) Are not included as contributions
terest earned on Federal funds must be for any other Federal award;
returned annually to the Department (3) Are necessary and reasonable for
of Health and Human Services Pay- achieving the objectives of the Federal
ment Management System (PMS) award;
through either the Automated Clearing (4) Are allowable under subpart E;
House (ACH) network or a Fedwire (5) Are not paid by the Federal Gov-
Funds Service payment. All interest in ernment under another Federal award,
excess of $500 per year must be re- except where the program’s Federal au-
turned to PMS regardless of whether thorizing statute specifically provides
the recipient or subrecipient was paid that Federal funds made available for
through PMS. Instructions for return- the program can be applied to cost
ing interest can be found at https:// sharing requirements of other Federal
pms.psc.gov/grant-recipients/returning- programs;
funds-interest.html. (6) Are provided for in the approved
(13) All other Federal funds must be budget when required by the Federal
returned to the payment system of the agency; and
Federal agency. Returns should follow (7) Conform to other applicable provi-
the instructions provided by the Fed- sions of this part.
eral agency. All returns to PMS should (c) Unrecovered indirect costs, in-
rmajette on LAPJN3WLY3PROD with CFR
follow the instructions provided at cluding indirect costs on cost sharing,
https://pms.psc.gov/grant-recipients/re- may be included as part of cost sharing
turning-funds-interest.html. with the prior approval of the Federal
118
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00130 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.306
agency or pass-through entity. Unre- cost rate or, a rate in accordance with
covered indirect cost means the dif- § 200.414(d) provided these services em-
ference between the amount charged to ploy the same skill(s) for which the
the Federal award and the amount employee is normally paid. Where do-
which could have been charged to the nated services are treated as indirect
Federal award under the recipient’s or costs, indirect cost rates will separate
subrecipient’s approved indirect cost the value of the donated services so
rate. that reimbursement for the donated
(d) Values for recipient or sub- services will not be made.
recipient contributions of services and (g) Donated property from third par-
property must be established in accord- ties may include items such as equip-
ance with the cost principles in subpart ment, office supplies, laboratory sup-
E. When a Federal agency or pass- plies, or workshop and classroom sup-
through entity authorizes the recipient plies. The assessed value of donated
or subrecipient to donate buildings or property included as cost sharing must
land for construction/facilities acquisi- not exceed the property’s fair market
tion projects or long-term use, the value at the time of the donation.
value of the donated property for cost (h) The method used for determining
sharing must be the lesser of paragraph the value of donated equipment, build-
(d)(1) or (2) below. ings, and land for which title passes to
(1) The value of the remaining life of the recipient or subrecipient may differ
the property recorded in the recipient’s according to the following:
or subrecipient’s accounting records at
(1) If the purpose of the Federal
the time of donation.
award is to assist the recipient or sub-
(2) The current fair market value.
recipient in acquiring equipment,
However, when there is sufficient jus-
buildings, or land, the aggregate value
tification, the Federal agency or pass-
of the donated property may be
through may approve using the current
claimed as cost sharing.
fair market value of the donated prop-
erty, even if it exceeds the value de- (2) If the purpose of the Federal
scribed in paragraph (d)(1) at the time award is to support activities that re-
of donation. quire the use of equipment, buildings,
(e) Volunteer services furnished by or land, only depreciation charges for
third-party professional and technical equipment and buildings may be made.
personnel, consultants, and other labor However, the fair market value of
may be counted as cost sharing if the equipment or other capital assets and
service is necessary for the program. fair rental charges for land may be al-
Rates for third-party volunteer serv- lowed if provided in the terms and con-
ices must be consistent with those paid ditions of the Federal award. See
for similar work by the recipient or § 200.420.
subrecipient. When the required skills (i) The value of donated property
are not found in the recipient’s or sub- must be determined in accordance with
recipient’s workforce, rates must be the accounting policies of the recipient
consistent with those paid for similar or subrecipient with the following
work in the labor market where the re- qualifications:
cipient or subrecipient competes for (1) The value of donated land and
the services involved. In either case, buildings must not exceed its fair mar-
fringe benefits that are allowable, allo- ket value at the time of donation to
cable, and reasonable may be included the recipient or subrecipient as estab-
in the valuation. lished by an independent appraiser (for
(f) When a third-party organization example, certified real property ap-
furnishes the services of an employee, praiser or General Services Adminis-
these services must be valued at the tration representative) and certified by
employee’s regular rate of pay plus an a responsible official of the recipient or
amount of fringe benefits that is rea- subrecipient as required by the Uni-
sonable, necessary, allocable, and oth- form Relocation Assistance and Real
rmajette on LAPJN3WLY3PROD with CFR
erwise allowable, and indirect costs at Property Acquisition Policies Act of
either the third-party organization’s 1970, as amended, (42 U.S.C. 4601–4655)
approved federally-negotiated indirect except as provided in the implementing
119
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00131 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.307 2 CFR Ch. II (1–1–26 Edition)
regulations at 49 CFR part 24, ‘‘Uni- come: deduction; addition; and cost-
form Relocation Assistance And Real sharing. The Federal agency should
Property Acquisition For Federal And specify what program income meth-
Federally-Assisted Programs.’’ od(s) will be used in the terms and con-
(2) The value of donated equipment ditions of the Federal award. The de-
must not exceed the fair market value duction method will be used if the Fed-
at the time of donation. eral agency does not specify a method
(3) The value of donated space must for applying program income. When no
not exceed the fair rental value of com- program income method is specified in
parable space as established by an inde- the Federal award, prior approval is re-
pendent appraisal of comparable space quired to use the addition or cost shar-
and facilities in a privately-owned ing methods. However, the addition
building in the same locality. method will be used when no method is
(4) The value of loaned equipment
specified for awards made to institu-
must not exceed its fair rental value.
tions of higher education (IHE) and
(j) The fair market value of third-
party in-kind contributions must be nonprofit research institutions. In
documented and, to the extent feasible, specifying alternatives to the deduc-
supported by the same methods used tion and addition methods, the Federal
internally by the recipient or sub- agency may distinguish between in-
recipient. come earned by the recipient and in-
(k) For institutions of higher edu- come earned by subrecipients as well as
cation (IHE), voluntary uncommitted between the sources, kinds, or amounts
cost sharing should be treated dif- of income.
ferently from mandatory or voluntary (1) Deduction. Program income is de-
committed cost sharing. Voluntary un- ducted from the total allowable costs,
committed cost sharing should not be reducing the overall total amount of
included in the organized research base the Federal award.
for computing the indirect cost rate or (2) Addition. Program income is added
reflected in any allocation of indirect to the total allowable costs, increasing
costs. Voluntary uncommitted cost the overall total amount of the Federal
sharing includes faculty-donated addi- award.
tional time above that agreed to as (3) Cost sharing. Program income is
part of the award. See OMB memo- used to meet the Federal award’s cost
randum M–01–06, dated January 5, 2001, sharing requirement.
Clarification of OMB A–21 Treatment (c) Income after the period of perform-
of Voluntary Uncommitted Cost Shar-
ance. There are no requirements gov-
ing and Tuition Remission Costs.
erning the disposition of program in-
§ 200.307 Program income. come earned after the end of the period
of performance of the Federal award
(a) General. The recipient or sub-
unless stipulated in the Federal agency
recipient is encouraged to earn income
regulations or the terms and condi-
to defray program costs when appro-
tions of the Federal award. The Federal
priate. Program income must be used
agency may negotiate agreements with
for the original purpose of the Federal
award. Program income earned during recipients regarding appropriate uses
the period of performance may only be of income earned after the end of the
used for costs incurred during the pe- period of performance as part of the
riod of performance or allowable close- closeout process. See § 200.344.
out costs. See § 200.472(b). Program in- (d) Cost of generating program income.
come must be expended prior to re- If authorized by Federal regulations or
questing additional Federal funds. Pro- the Federal award, costs incidental to
gram income exceeding amounts speci- generating program income may be de-
fied in the Federal award may be added ducted from gross income to determine
to or deducted from the total allowable program income, provided these costs
costs in accordance with the terms and have not been charged to the Federal
rmajette on LAPJN3WLY3PROD with CFR
conditions of the Federal award. award.
(b) Use of program income. There are (e) Not considered program income. The
three methods of applying program in- following are not considered program
120
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00132 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.308
income unless specified in Federal stat- and should notify the recipient or sub-
utes, regulations, or the terms and con- recipient whether the revisions have
ditions of the Federal award: been approved within 30 days of receipt
(1) Governmental revenues. Taxes, spe- of the request. The Federal agency or
cial assessments, levies, fines, and pass-through entity must inform the
similar revenues the recipient or sub- recipient or subrecipient in writing
recipient raised. when a decision can be expected if
(2) Property. Proceeds from the sale of more than 30 days is required for a re-
real property, equipment, or supplies. view.
The proceeds must be handled in ac- (e) Limitation on other prior approval
cordance with the requirements of the requirements. Unless specified in this
Property Standards of §§ 200.311, 200.313, guidance, the Federal agency must not
200.314, or as explicitly identified in impose additional prior approval re-
Federal statutes, regulations, or the quirements without OMB approval. See
terms and conditions of the Federal also §§ 200.102 and 200.407.
award. (f) Revisions Requiring Prior Approval.
(3) License fees and royalties. License A recipient or subrecipient must re-
fees and royalties for copyrighted ma- quest prior written approval from the
terial, patents, patent applications, Federal agency or pass-through entity
trademarks, and inventions made for the following program and budget-
under the Federal award subject to 37 related reasons:
CFR part 401.
(1) Change in the scope or the objec-
§ 200.308 Revision of budget and pro- tive of the project or program (even if
gram plans. there is no associated budget revision
requiring prior written approval).
(a) Approved budget in general. The ap-
proved budget for the Federal award (2) Change in key personnel (includ-
summarizes the financial aspects of the ing employees and contractors) that
project or program as approved during are identified by name or position in
the Federal award process. It may in- the Federal award.
clude the Federal share and non-Fed- (3) The disengagement from a project
eral share or only the Federal share, as for more than three months, or a 25
determined by the Federal agency or percent reduction in time and effort
pass-through entity. devoted to the Federal award over the
(b) Deviations from approved budget. course of the period of performance, by
The recipient or subrecipient must re- the approved project director or prin-
port deviations from the approved cipal investigator.
budget, project or program scope, or (4) The inclusion, unless waived by
objective(s) in accordance with the Federal agency, of costs that re-
§ 200.329. The recipient or subrecipient quire prior approval in accordance with
must request prior approvals from the subpart E as applicable.
Federal agency or pass-through entity (5) The transfer of funds budgeted for
for budget and program plan revisions participant support costs to other
in accordance with this section. budget categories.
(c) Requesting approval for budget revi- (6) Subaward activities not proposed
sions. When requesting approval for in the application and approved in the
budget revisions, the recipient or sub- Federal award. A change of sub-
recipient must use the same format for recipient only requires prior approval
budget information that was used in if the Federal agency or pass-through
their application, except if the Federal entity includes the requirement in the
agency has approved an alternative for- terms and conditions of the Federal
mat. Alternative formats may include award. In general, a Federal agency or
the use of electronic systems, email, or pass-through entity should not require
other agency-approved mechanisms prior approval of a change of sub-
that document the request. recipient unless the inclusion was a de-
(d) Federal agency or pass-through en- termining factor in the merit review or
rmajette on LAPJN3WLY3PROD with CFR
tity review. The Federal agency or pass- eligibility process. This requirement
through entity must review the request does not apply to procurement trans-
for budget or program plan revision actions for goods and services.
121
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00133 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.308 2 CFR Ch. II (1–1–26 Edition)
(7) Changes in the total approved not required if a recipient is authorized
cost-sharing amount. in the terms and conditions of the Fed-
(8) The need arises for additional eral award to initiate a one-time ex-
Federal funds to complete the project. tension. However, the recipient must
Before providing approval, the Federal notify the Federal agency in writing
agency must ensure that adequate with the supporting justification and a
funds are available to avoid a violation revised period of performance at least
of the Antideficiency Act. 10 calendar days before the conclusion
(9) Transferring funds between the of the period of performance. A one-
construction and non-construction time extension may not be exercised
work under a Federal award. for the sole purpose of using unobli-
(10) A no-cost extension (meaning, an gated balances. This paragraph does
extension of time that does not require not preclude the Federal agency from
the obligation of additional Federal approving further no-cost extensions to
funds) of the period of performance, the Federal award. One-time exten-
other than any one-time extension au- sions require prior approval from the
thorized by the Federal agency in ac- Federal agency when:
cordance with paragraph (g)(2). All re- (i) The terms and conditions of the
quests for no-cost extensions should be Federal award prohibit the extension;
submitted at least 10 calendar days be- (ii) The extension requires additional
fore the conclusion of the period of per- Federal funds; or
formance. The Federal agency may ap-
(iii) The extension involves any
prove multiple no-cost extensions
change in the approved scope of the
under a Federal award if not prohibited
project.
by Federal statute or regulation.
(g) Waiver of certain prior approvals. (3) Unobligated Balances. Carry for-
Except for the requirements listed in ward unobligated balances to subse-
paragraphs (f)(1) through (10), the Fed- quent budget periods.
eral agency is authorized to waive (h) Prior approvals for research awards.
other cost-related and administrative The prior approval requirements for
prior written approval requirements the actions described in paragraph (g)
contained in subparts D and E. Such of this section are automatically
waivers may include authorizing re- waived for Federal awards that support
cipients to do one or more of the fol- research unless stipulated in the Fed-
lowing: eral agency’s regulations or terms and
(1) Pre-award costs. Incur project conditions of the Federal award. How-
costs 90 calendar days before the Fed- ever, one-time extensions require the
eral award date. Expenses incurred Federal agency’s prior approval when
more than 90 calendar days before the one of the conditions in paragraph
Federal award date require prior ap- (g)(2) of this section applies.
proval of the Federal agency. All costs (i) Transfer of funds. The Federal
incurred before the Federal award date agency must not permit a transfer of
are at the recipient’s own risk (for ex- funds that would cause any Federal ap-
ample, the Federal agency is not re- propriation to be used for purposes
quired to reimburse such costs if the other than those consistent with the
recipient does not receive the Federal appropriation. The Federal agency may
award or if the Federal award is less also, at its option, restrict the transfer
than anticipated and inadequate to of funds among direct cost categories
cover such costs). Pre-award costs (for example, personnel, travel, and
must be charged to the initial budget supplies) or programs, functions, and
period of the Federal award unless oth- activities when:
erwise specified by the Federal agency. (1) The Federal share of the Federal
See also § 200.458. award exceeds the simplified acquisi-
(2) One-time extensions. Initiate a one- tion threshold; and
time extension of the period of per- (2) The cumulative amount of a
formance by up to 12 months unless transfer exceeds or is expected to ex-
rmajette on LAPJN3WLY3PROD with CFR
one or more of the conditions outlined ceed 10 percent of the total budget, in-
in paragraphs (g)(2)(i) through (iii) of cluding cost share, as last approved by
this section apply. Prior approval is the Federal agency.
122
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00134 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.311
§ 200.309 Modifications to Period of the Uniform Relocation Assistance and
Performance. Real Property Acquisition Policies Act
When the Federal agency or pass- of 1970, as amended, (42 U.S.C. 4601–4655)
through entity approves an extension except as provided in the implementing
to a Federal award, or if a recipient ex- regulations at 49 CFR part 24, ‘‘Uni-
tends under § 200.308(g)(2), the period of form Relocation Assistance And Real
performance will be amended to end at Property Acquisition For Federal And
the completion of the extension. If ter- Federally-Assisted Programs.’’
mination occurs, the period of perform- (d) Disposition. When real property is
ance will be amended to end upon the no longer needed for the originally au-
effective date of termination. The start thorized purpose, the recipient or sub-
date of a renewal award begins a new recipient must obtain disposition in-
and distinct period of performance. structions from the Federal agency or
pass-through entity. The instructions
PROPERTY STANDARDS must specify one of the following dis-
position methods:
§ 200.310 Insurance coverage. (1) Retain title after compensating the
The recipient or subrecipient must, Federal agency. When the recipient or
at a minimum, provide the equivalent subrecipient retains title to the prop-
insurance coverage for real property erty, it must pay the Federal agency
and equipment acquired or improved an amount calculated by multiplying
with Federal funds as provided to prop- the percentage of the Federal agency’s
erty and equipment owned by the re- contribution towards the original pur-
cipient or subrecipient. Insurance is chase (and costs of any improvements)
not required for Federally owned prop- by the current fair market value of the
erty unless required by the terms and property. However, in situations where
conditions of the Federal award. the recipient or subrecipient is dis-
posing of real property acquired or im-
§ 200.311 Real property. proved with the Federal award and ac-
(a) Title. Subject to the requirements quiring replacement real property
and conditions set forth in this section, under the same Federal award, the net
title to real property acquired or im- proceeds from the disposition may be
proved under the Federal award will used as an offset to the cost of the re-
vest upon acquisition in the recipient placement property.
or subrecipient. (2) Sell the property and compensate the
(b) Use. Except as otherwise provided Federal agency. When a recipient or
by Federal statutes or the Federal subrecipient sells the property, it must
agency, real property must be used for pay the Federal agency an amount cal-
the originally authorized purpose as culated by multiplying the percentage
long as it is needed for that purpose. of the Federal agency’s contribution
While the property is being used for the towards the original purchase (and cost
originally authorized purpose, the re- of any improvements) by the proceeds
cipient or subrecipient must not dis- of the sale after deducting any actual
pose of or encumber its title or other and reasonable expenses paid to sell or
interests except as provided by the fix up the property for sale. When the
Federal agency. Easements for utility, Federal award has not been closed out,
cable, and similar services that benefit the net proceeds from the sale may be
the real property and are consistent offset against the original cost of the
with the authorized use are not consid- property. When directed to sell the
ered an encumbrance. property, the recipient or subrecipient
(c) Appraisals. When an appraisal of must sell the property utilizing proce-
real property is required and obtained dures that provide for competition to
by the recipient or subrecipient, it the extent practicable and that result
must be conducted by an independent in the highest possible return.
appraiser (for example, certified real (3) Transfer title to the Federal agency
property appraiser or General Services or a third party designated/approved by
rmajette on LAPJN3WLY3PROD with CFR
Administration representative) and the Federal agency. When a recipient or
certified by a responsible official of the subrecipient transfers title to the prop-
recipient or subrecipient as required by erty to a Federal agency or third party
123
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00135 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.312 2 CFR Ch. II (1–1–26 Edition)
designated or approved by the Federal acquisition in the recipient or sub-
agency, the recipient or subrecipient is recipient subject to the conditions of
entitled to be paid an amount cal- this section. This title must be a condi-
culated by multiplying the percentage tional title unless a Federal statute
of the recipient’s or subrecipient’s con- specifically authorizes the Federal
tribution towards the original purchase agency to vest title in the recipient or
of the real property (and cost of any subrecipient without further responsi-
improvements) by the current fair mar- bility to the Federal Government (and
ket value of the property. the Federal agency elects to do so). A
conditional title means a clear title is
§ 200.312 Federally owned and exempt withheld by the Federal agency until
property. conditions and requirements specified
(a) Title to Federally owned property in the terms and conditions of a Fed-
remains vested in the Federal Govern- eral award have been fulfilled. Title for
ment. The recipient or subrecipient equipment vested in a recipient or sub-
must submit an inventory listing of recipient is subject to the following
Federally owned property in its cus- conditions:
tody to the Federal agency or pass- (1) Use the equipment for the author-
through entity on an annual basis. The ized purposes of the project during the
recipient or subrecipient must request period of performance or until the
disposition instructions from the Fed- property is no longer needed for the
eral agency or pass-through entity purposes of the project.
upon completion of the Federal award (2) While the equipment is being used
or when the property is no longer need- for the originally-authorized purpose,
ed. the recipient or subrecipient must not
(b) If the Federal agency has no fur- dispose of or encumber its title or
ther need for the property, it must de- other interests without the approval of
clare the property excess and report it the Federal agency or pass-through en-
for disposal to the appropriate Federal tity.
disposal authority unless the Federal (3) Use and dispose of the property in
agency has statutory authority to dis- accordance with paragraphs (b), (c),
pose of the property by alternative and (e) of this section.
methods (for example, the authority (b) General. A State must use, man-
provided by the Federal Technology age and dispose of equipment acquired
Transfer Act (15 U.S.C. 3710(i)). The under a Federal award in accordance
Federal agency or pass-through entity with State laws and procedures. Indian
must issue appropriate instructions to Tribes must use, manage, and dispose
the recipient or subrecipient. of equipment acquired under a Federal
(c) Exempt property means property award in accordance with tribal laws
acquired under the Federal award and procedures. If such laws and proce-
where the Federal agency has chosen dures do not exist, Indian Tribes must
to vest title to the property to the re- follow the guidance in this section.
cipient or subrecipient without further Other recipients and subrecipients, in-
responsibility to the Federal Govern- cluding subrecipients of a State or In-
ment. The Federal agency may only ex- dian Tribe, must follow paragraphs (c)
ercise this option when permitted by through (e) of this section.
Federal statute and set forth in the (c) Use. (1) The recipient or sub-
terms and conditions of the Federal recipient must use equipment for the
award. Absent statutory authority and project or program for which it was ac-
specific terms and conditions of the quired and for as long as needed,
Federal award, the title to exempt whether or not the project or program
property acquired under the Federal continues to be supported by the Fed-
award remains with the Federal Gov- eral award. The recipient or sub-
ernment. recipient must not encumber the equip-
ment without prior approval of the
§ 200.313 Equipment. Federal agency or pass-through entity.
rmajette on LAPJN3WLY3PROD with CFR
See also § 200.439. The Federal agency may require the
(a) Title. Title to equipment acquired submission of the applicable common
under the Federal award will vest upon forms for reporting on equipment.
124
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00136 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.313
When no longer needed for the original lizing procedures that meet the fol-
project or program, the equipment may lowing requirements:
be used in other activities in the fol- (1) Property records must include a
lowing order of priority: description of the property, a serial
(i) Activities under other Federal number or another identification num-
awards from the Federal agency that ber, the source of funding for the prop-
funded the original program or project; erty (including the FAIN), the title
then holder, the acquisition date, the cost of
(ii) Activities under Federal awards the property, the percentage of the
from other Federal agencies. These ac- Federal agency contribution towards
tivities include consolidated equipment the original purchase, the location, use
for information technology systems. and condition of the property, and any
(2) During the time that equipment is
disposition data including the date of
used on the project or program for
disposal and sale price of the property.
which it was acquired, the recipient or
The recipient and subrecipient are re-
subrecipient must also make the equip-
sponsible for maintaining and updating
ment available for use on other pro-
grams or projects supported by the property records when there is a
Federal Government, provided that change in the status of the property.
such use will not interfere with the (2) A physical inventory of the prop-
purpose for which it was originally ac- erty must be conducted, and the re-
quired. First preference for other use of sults must be reconciled with the prop-
the equipment must be given to other erty records at least once every two
programs or projects supported by the years.
Federal agency that financed the (3) A control system must be in place
equipment. Second preference must be to ensure safeguards for preventing
given to programs or projects under property loss, damage, or theft. Any
Federal awards from other Federal loss, damage, or theft of equipment
agencies. Use for non-federally-funded must be investigated. The recipient or
projects is also permissible, provided subrecipient must notify the Federal
such use will not interfere with the agency or pass-through entity of any
purpose for which it was originally ac- loss, damage, or theft of equipment
quired. The recipient or subrecipient that will have an impact on the pro-
should consider charging user fees as gram.
appropriate. (4) Regular maintenance procedures
(3) Notwithstanding the encourage- must be in place to ensure the property
ment in § 200.307 to earn program in- is in proper working condition.
come, the recipient or subrecipient (5) If the recipient or subrecipient is
must not use equipment acquired with
authorized or required to sell the prop-
the Federal award to provide services
erty, proper sales procedures must be
for a fee that is less than a private
in place to ensure the highest possible
company would charge for similar serv-
return.
ices unless specifically authorized by
Federal statute. This restriction is ef- (e) Disposition. When equipment ac-
fective as long as the Federal Govern- quired under a Federal award is no
ment retains an interest in the equip- longer needed for the original project,
ment. program, or for other activities cur-
(4) When acquiring replacement rently or previously supported by a
equipment, the recipient or sub- Federal agency, the recipient or sub-
recipient may either trade-in or sell recipient must request disposition in-
the equipment and use the proceeds to structions from the Federal agency or
offset the cost of the replacement pass-through entity if required by the
equipment. terms and conditions of the Federal
(d) Management requirements. Regard- award. Disposition of the equipment
less of whether equipment is acquired will be made as follows, in accordance
in part or its entirety under the Fed- with Federal agency or pass-through
rmajette on LAPJN3WLY3PROD with CFR
eral award, the recipient or sub- entity disposition instructions:
recipient must manage equipment (in- (1) Equipment with a current fair
cluding replacement equipment) uti- market value of $10,000 or less (per
125
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00137 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.314 2 CFR Ch. II (1–1–26 Edition)
unit) may be retained, sold, or other- not needed for any other Federal
wise disposed of with no further re- award, the recipient or subrecipient
sponsibility to the Federal agency or may retain or sell the unused supplies.
pass-through entity. Unused supplies means supplies that
(2) Except as provided in § 200.312(b), are in new condition, not having been
or if the Federal agency or pass- used or opened before. The aggregate
through entity fails to provide re- value of unused supplies consists of all
quested disposition instructions within supply types, not just like-item sup-
120 days, items of equipment with a plies. The Federal agency or pass-
current fair market value in excess of through entity is entitled to compensa-
$10,000 (per-unit) may be retained or tion in an amount calculated by multi-
sold by the recipient or subrecipient. plying the percentage of the Federal
However, the Federal agency is enti- agency’s or pass-through entity’s con-
tled to an amount calculated by multi- tribution towards the cost of the origi-
plying the percentage of the Federal nal purchase(s) by the current market
agency’s contribution towards the value or proceeds from the sale. If the
original purchase by the current mar- supplies are sold, the Federal agency or
ket value or proceeds from the sale. If pass-through entity may permit the re-
the equipment is sold, the Federal cipient or subrecipient to retain, from
agency or pass-through entity may per- the Federal share, $1,000 of the pro-
mit the recipient or subrecipient to re- ceeds to cover expenses associated with
tain, from the Federal share, $1,000 of the selling and handling of the sup-
the proceeds to cover expenses associ- plies.
ated with the selling and handling of (b) Unless expressly authorized by
the equipment. Federal statute, the recipient or sub-
(3) The recipient or subrecipient may recipient must not use supplies ac-
transfer title to the property to the quired with the Federal award to pro-
Federal Government or to an eligible vide services for a fee that is less than
third party provided that the recipient a private company would charge for
or subrecipient must be entitled to similar services. This restriction is ef-
compensation for its attributable per- fective as long as the Federal Govern-
centage of the current fair market ment retains an interest in the supplies
value of the property. or as authorized by Federal statute.
(4) In cases where a recipient or sub-
recipient fails to take appropriate dis- § 200.315 Intangible property.
position actions, the Federal agency or (a) Title to intangible property ac-
pass-through entity may direct the re- quired under a Federal award vests
cipient or subrecipient to take disposi- upon acquisition in the recipient or
tion actions. subrecipient. The recipient or sub-
(f) Equipment retention. When included recipient must use that intangible
in the terms and conditions of the Fed- property for the originally authorized
eral award, the Federal agency may purpose and must not encumber the
permit the recipient to retain equip- property without the approval of the
ment, or authorize a pass-through enti- Federal agency or pass-through entity.
ty to permit the subrecipient to retain When no longer needed for the origi-
equipment, with no further obligation nally authorized purpose, disposition of
to the Federal Government unless pro- the intangible property must occur in
hibited by Federal statute or regula- accordance with the provisions in
tion. § 200.313(e).
(b) To the extent permitted by law,
§ 200.314 Supplies. the recipient or subrecipient may copy-
See also § 200.453. right any work that is subject to copy-
(a) Title to supplies acquired under right and was developed, or for which
the Federal award will vest upon acqui- ownership was acquired, under a Fed-
sition in the recipient or subrecipient. eral award. The Federal agency re-
When there is a residual inventory of serves a royalty-free, nonexclusive, and
rmajette on LAPJN3WLY3PROD with CFR
unused supplies exceeding $10,000 in ag- irrevocable right to reproduce, publish,
gregate value at the end of the period or otherwise use the work for Federal
of performance, and the supplies are purposes and to authorize others to do
126
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00138 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.317
so. This includes the right to require confidential by a researcher until they
recipients and subrecipients to make are published, or similar information
such works available through agency- which is protected under law; and
designated public access repositories. (iii) Personnel, medical, and other
(c) The recipient or subrecipient is personally identifiable information
subject to applicable regulations gov- that, if disclosed, would constitute an
erning patents and inventions, includ- invasion of personal privacy. Informa-
ing government-wide regulations in 37 tion that could identify a particular
CFR part 401. person in a research study is not con-
(d) The Federal Government has the sidered research data.
right to: (f) Federal agencies should work with
(1) Obtain, reproduce, publish, or oth- recipients to maximize public access to
erwise use the data produced under a Federally funded research results and
Federal award; and data in a manner that protects data
(2) Authorize others to receive, repro- providers’ confidentiality, privacy, and
duce, publish, or otherwise use the data security. Agencies should provide guid-
for Federal purposes. ance to recipients to make restricted-
(e)(1) The recipient or subrecipient access data available through a variety
must provide research data relating to of mechanisms. FOIA may not be the
published research findings produced most appropriate mechanism for pro-
under the Federal award and that were viding access to intangible property,
used by the Federal Government in de- including Federally funded research re-
veloping an agency action that has the sults and data.
force and effect of law if requested by
the Federal agency in response to a § 200.316 Property trust relationship.
Freedom of Information Act (FOIA) re-
quest. When the Federal agency ob- Real property, equipment, and intan-
tains the research data solely in re- gible property acquired or improved
sponse to a FOIA request, the Federal with the Federal award must be held in
agency may charge the requester a fee trust by the recipient or subrecipient
for the cost of obtaining the research as trustee for the beneficiaries of the
data. This fee should reflect the costs project or program under which the
incurred by the Federal agency and the property was acquired or improved.
recipient or subrecipient. This fee is in The Federal agency or pass-through en-
addition to any fees the Federal agency tity may require the recipient or sub-
may assess under the FOIA (5 U.S.C. recipient to record liens or other ap-
552(a)(4)(A)). propriate notices of record to indicate
(2) Published research findings mean: that personal or real property has been
(i) Research findings published in a acquired or improved with a Federal
peer-reviewed scientific or technical award and that use and disposition
journal; or conditions apply to the property.
(ii) Research findings publicly cited
by a Federal agency in developing an PROCUREMENT STANDARDS
agency action that has the force and
effect of law. § 200.317 Procurements by States and
Indian Tribes.
(3) Research data means the recorded
factual material commonly accepted in When conducting procurement trans-
the scientific community as necessary actions under a Federal award, a State
to validate research findings. Research or Indian Tribe must follow the same
data does not include any of the fol- policies and procedures it uses for pro-
lowing: curements with non-Federal funds. If
(i) Preliminary analyses, drafts of such policies and procedures do not
scientific papers, plans for future re- exist, States and Indian Tribes must
search, peer reviews, or communica- follow the procurement standards in
tions with colleagues. This ‘‘recorded’’ §§ 200.318 through 200.327. In addition to
material excludes physical objects (for its own policies and procedures, a State
rmajette on LAPJN3WLY3PROD with CFR
example, laboratory samples). or Indian Tribe must also comply with
(ii) Trade secrets, commercial infor- the following procurement standards:
mation, materials necessary to be held §§ 200.321, 200.322, 200.323, and 200.327. All
127
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00139 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.318 2 CFR Ch. II (1–1–26 Edition)
other recipients and subrecipients, in- applied for violations by its employees,
cluding subrecipients of a State or In- officers, agents, or board members.
dian Tribe, must follow the procure- (2) If the recipient or subrecipient
ment standards in §§ 200.318 through has a parent, affiliate, or subsidiary or-
200.327. ganization that is not a State, local
government, or Indian Tribe, the re-
§ 200.318 General procurement stand- cipient or subrecipient must also main-
ards. tain written standards of conduct cov-
(a) Documented procurement proce- ering organizational conflicts of inter-
dures. The recipient or subrecipient est. Organizational conflicts of interest
must maintain and use documented mean that because of relationships
procedures for procurement trans- with a parent company, affiliate, or
actions under a Federal award or subsidiary organization, the recipient
subaward, including for acquisition of or subrecipient is unable or appears to
property or services. These documented be unable to be impartial in conducting
procurement procedures must be con- a procurement action involving a re-
sistent with State, local, and tribal lated organization.
laws and regulations and the standards (d) Avoidance of unnecessary or dupli-
identified in §§ 200.317 through 200.327. cative items. The recipient’s or sub-
recipient’s procedures must avoid the
(b) Oversight of contractors. Recipients
acquisition of unnecessary or duplica-
and subrecipients must maintain over-
tive items. Consideration should be
sight to ensure that contractors per-
given to consolidating or breaking out
form in accordance with the terms,
procurements to obtain a more eco-
conditions, and specifications of their
nomical purchase. When appropriate,
contracts or purchase orders. See also
an analysis should be made between
§ 200.501(h). leasing and purchasing property or
(c) Conflicts of interest. (1) The recipi- equipment to determine the most eco-
ent or subrecipient must maintain nomical approach.
written standards of conduct covering (e) Procurement arrangements using
conflicts of interest and governing the strategic sourcing. When appropriate for
actions of its employees engaged in the the procurement or use of common or
selection, award, and administration of shared goods and services, recipients
contracts. No employee, officer, agent, and subrecipients are encouraged to
or board member with a real or appar- enter into State and local intergovern-
ent conflict of interest may participate mental agreements or inter-entity
in the selection, award, or administra- agreements for procurement trans-
tion of a contract supported by the actions. These or similar procurement
Federal award. A conflict of interest arrangements using strategic sourcing
includes when the employee, officer, may foster greater economy and effi-
agent, or board member, any member ciency. Documented procurement ac-
of their immediate family, their part- tions of this type (using strategic
ner, or an organization that employs or sourcing, shared services, and other
is about to employ any of the parties similar procurement arrangements)
indicated herein, has a financial or will meet the competition require-
other interest in or a tangible personal ments of this part.
benefit from an entity considered for a (f) Use of excess and surplus Federal
contract. An employee, officer, agent, property. The recipient or subrecipient
and board member of the recipient or is encouraged to use excess and surplus
subrecipient may neither solicit nor Federal property instead of purchasing
accept gratuities, favors, or anything new equipment and property when it is
of monetary value from contractors. feasible and reduces project costs.
However, the recipient or subrecipient (g) Use of value engineering clauses.
may set standards for situations where When practical, the recipient or sub-
the financial interest is not substantial recipient is encouraged to use value en-
or a gift is an unsolicited item of nomi- gineering clauses in contracts for con-
rmajette on LAPJN3WLY3PROD with CFR
nal value. The recipient’s or subrecipi- struction projects of sufficient size to
ent’s standards of conduct must also offer reasonable opportunities for cost
provide for disciplinary actions to be reductions. Value engineering means
128
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00140 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.318
analyzing each contract item or task trative issues arising out of its pro-
to ensure its essential function is pro- curement transactions. These issues in-
vided at the overall lowest cost. clude, but are not limited to, source
(h) Responsible contractors. The recipi- evaluation, protests, disputes, and
ent or subrecipient must award con- claims. These standards do not relieve
tracts only to responsible contractors the recipient or subrecipient of any
that possess the ability to perform suc- contractual responsibilities under its
cessfully under the terms and condi- contracts. The Federal agency will not
tions of a proposed contract. The re- substitute its judgment for that of the
cipient or subrecipient must consider recipient or subrecipient unless the
contractor integrity, public policy matter is primarily a Federal concern.
compliance, proper classification of The recipient or subrecipient must re-
employees (see the Fair Labor Stand- port violations of law to the Federal,
ards Act, 29 U.S.C. 201, chapter 8), past State, or local authority with proper
performance record, and financial and jurisdiction.
technical resources when conducting a (l) Examples of labor and employment
procurement transaction. See also practices. (1) The procurement stand-
§ 200.214. ards in this subpart do not prohibit re-
(i) Procurement records. The recipient cipients or subrecipients from:
or subrecipient must maintain records (i) Using Project Labor Agreements
sufficient to detail the history of each (PLAs) or similar forms of pre-hire col-
procurement transaction. These lective bargaining agreements;
records must include the rationale for (ii) Requiring construction contrac-
the procurement method, contract type tors to use hiring preferences or goals
selection, contractor selection or rejec- for people residing in high-poverty
tion, and the basis for the contract areas, disadvantaged communities as
price. defined by the Justice40 Initiative (see
(j) Time-and-materials type contracts. OMB Memorandum M–21–28), or high-
(1) The recipient or subrecipient may unemployment census tracts within a
use a time-and-materials type contract region no smaller than the county
only after a determination that no where a federally funded construction
other contract is suitable and if the project is located. The hiring pref-
contract includes a ceiling price that erences or goals should be consistent
the contractor exceeds at its own risk. with the policies and procedures of the
Time-and-materials type contract recipient or subrecipient, and must not
means a contract whose cost to a re- prohibit interstate hiring;
cipient or subrecipient is the sum of: (iii) Requiring a contractor to use
(i) The actual cost of materials; and hiring preferences or goals for individ-
(ii) Direct labor hours charged at uals with barriers to employment (as
fixed hourly rates that reflect wages, defined in section 3 of the Workforce
general and administrative expenses, Innovation and Opportunity Act (29
and profit. U.S.C. 3102(24)), including women and
(2) Because this formula generates an people from underserved communities
open-ended contract price, a time-and- as defined by Executive Order 14091;
materials contract provides no positive (iv) Using agreements intended to en-
profit incentive to the contractor for sure uninterrupted delivery of services;
cost control or labor efficiency. There- using agreements intended to ensure
fore, each contract must set a ceiling community benefits; or
price that the contractor exceeds at its (v) Offering employees of a prede-
own risk. Further, the recipient or sub- cessor contractor rights of first refusal
recipient awarding such a contract under a new contract.
must assert a high degree of oversight (2) Recipients and subrecipients may
to obtain reasonable assurance that use the practices listed in paragraph (1)
the contractor is using efficient meth- if consistent with the U.S. Constitu-
ods and effective cost controls. tion, applicable Federal statutes and
(k) Settlement of contractual and ad- regulations, the objectives and pur-
rmajette on LAPJN3WLY3PROD with CFR
ministrative issues. The recipient or sub- poses of the applicable Federal finan-
recipient is responsible for the settle- cial assistance program, and other re-
ment of all contractual and adminis- quirements of this part.
129
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00141 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.319 2 CFR Ch. II (1–1–26 Edition)
§ 200.319 Competition. alent’’ description of features may be
(a) All procurement transactions used to provide procurement require-
under the Federal award must be con- ments. The specific features of the
ducted in a manner that provides full named brand must be clearly stated;
and open competition and is consistent and
with the standards of this section and (3) Identify any additional require-
§ 200.320. ments which the offerors must fulfill
(b) To ensure objective contractor and all other factors that will be used
performance and eliminate unfair com- in evaluating bids or proposals.
petitive advantage, contractors that (e) The recipient or subrecipient
develop or draft specifications, require- must ensure that all prequalified lists
ments, statements of work, or invita- of persons, firms, or products used in
tions for bids must be excluded from procurement transactions are current
competing on those procurements. and include enough qualified sources to
(c) Examples of situations that may ensure maximum open competition.
restrict competition include, but are When establishing or amending
not limited to: prequalified lists, the recipient or sub-
(1) Placing unreasonable require- recipient must consider objective fac-
ments on firms for them to qualify to tors that evaluate price and cost to
do business; maximize competition. The recipient
(2) Requiring unnecessary experience or subrecipient must not preclude po-
and excessive bonding; tential bidders from qualifying during
(3) Noncompetitive pricing practices the solicitation period.
between firms or between affiliated (f) To the extent consistent with es-
companies; tablished practices and legal require-
(4) Noncompetitive contracts to con- ments applicable to the recipient or
sultants that are on retainer contracts; subrecipient, this subpart does not pro-
(5) Organizational conflicts of inter- hibit recipients or subrecipients from
est; developing written procedures for pro-
(6) Specifying only a ‘‘brand name’’ curement transactions that incor-
product instead of allowing ‘‘an equal’’ porate a scoring mechanism that re-
product to be offered and describing wards bidders that commit to specific
the performance or other relevant re- numbers and types of U.S. jobs, min-
quirements of the procurement; and imum compensation, benefits, on-the-
(7) Any arbitrary action in the pro- job-training for employees making
curement process. work products or providing services on
(d) The recipient or subrecipient a contract, and other worker protec-
must have written procedures for pro- tions. This subpart also does not pro-
curement transactions. These proce- hibit recipients and subrecipients from
dures must ensure that all solicita- making inquiries of bidders about these
tions: subjects and assessing the responses.
(1) Are made in accordance with Any scoring mechanism must be con-
§ 200.319(b); sistent with the U.S. Constitution, ap-
(2) Incorporate a clear and accurate plicable Federal statutes and regula-
description of the technical require- tions, and the terms and conditions of
ments for the property, equipment, or the Federal award.
service being procured. The description (g) Noncompetitive procurements can
may include a statement of the quali- only be awarded in accordance with
tative nature of the property, equip- § 200.320(c).
ment, or service to be procured. When
necessary, the description must pro- § 200.320 Procurement methods.
vide minimum essential characteristics There are three types of procurement
and standards to which the property, methods described in this section: in-
equipment, or service must conform. formal procurement methods (for
Detailed product specifications should micro-purchases and simplified acquisi-
be avoided if at all possible. When it is tions); formal procurement methods
rmajette on LAPJN3WLY3PROD with CFR
impractical or uneconomical to clearly (through sealed bids or proposals); and
and accurately describe the technical noncompetitive procurement methods.
requirements, a ‘‘brand name or equiv- For any of these methods, the recipient
130
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00142 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.320
or subrecipient must maintain and use fied in the FAR in accordance with the
documented procurement procedures, requirements of this section. The re-
consistent with the standards of this cipient or subrecipient may self-certify
section and §§ 200.317, 200.318, and a threshold up to $50,000 on an annual
200.319. basis and must maintain documenta-
(a) Informal procurement methods for tion to be made available to the Fed-
small purchases. These procurement eral agency or pass-through entity and
methods expedite the completion of auditors in accordance with § 200.334.
transactions, minimize administrative The self-certification must include a
burdens, and reduce costs. Informal justification, clear identification of the
procurement methods may be used threshold, and supporting documenta-
when the value of the procurement tion of any of the following:
transaction under the Federal award
(A) A qualification as a low-risk
does not exceed the simplified acquisi-
auditee, in accordance with the criteria
tion threshold as defined in § 200.1. Re-
in § 200.520 for the most recent audit;
cipients and subrecipients may also es-
tablish a lower threshold. Informal pro- (B) An annual internal institutional
curement methods include: risk assessment to identify, mitigate,
(1) Micro-purchases—(i) Distribution. and manage financial risks; or,
The aggregate amount of the procure- (C) For public institutions, a higher
ment transaction does not exceed the threshold is consistent with State law.
micro-purchase threshold defined in (v) Recipient or subrecipient increase to
§ 200.1. To the extent practicable, the the micro-purchase threshold over $50,000.
recipient or subrecipient should dis- Micro-purchase thresholds higher than
tribute micro-purchases equitably $50,000 must be approved by the cog-
among qualified suppliers. nizant agency for indirect costs. The
(ii) Micro-purchase awards. Micro-pur- recipient or subrecipient must submit
chases may be awarded without solic- a request that includes the require-
iting competitive price or rate ments in paragraph (a)(1)(iv) of this
quotations if the recipient or sub- section. The increased threshold is
recipient considers the price reason- valid until any factor that was relied
able based on research, experience, pur- on in the establishment and rationale
chase history, or other information; of the threshold changes.
and maintains documents to support (2) Simplified acquisitions—(i) Sim-
its conclusion. Purchase cards may be plified acquisition procedures. The aggre-
used as a method of payment for micro- gate dollar amount of the procurement
purchases. transaction is higher than the micro-
(iii) Micro-purchase thresholds. The re- purchase threshold but does not exceed
cipient or subrecipient is responsible
the simplified acquisition threshold. If
for determining and documenting an
simplified acquisition procedures are
appropriate micro-purchase threshold
used, price or rate quotations must be
based on internal controls, an evalua-
obtained from an adequate number of
tion of risk, and its documented pro-
qualified sources. Unless specified by
curement procedures. The micro-pur-
the Federal agency, the recipient or
chase threshold used by the recipient
or subrecipient must be authorized or subrecipient may exercise judgment in
not prohibited under State, local, or determining what number is adequate.
tribal laws or regulations. The recipi- (ii) Simplified acquisition thresholds.
ent or subrecipient may establish a The recipient or subrecipient is respon-
threshold higher than the Federal sible for determining an appropriate
threshold established in the Federal simplified acquisition threshold based
Acquisition Regulations (FAR) in ac- on internal controls, an evaluation of
cordance with paragraphs (a)(1)(iv) and risk, and its documented procurement
(v) of this section. procedures, which may be lower than,
(iv) Recipient or subrecipient increase but must not exceed, the threshold es-
to the micro-purchase threshold up to tablished in the FAR.
rmajette on LAPJN3WLY3PROD with CFR
$50,000. The recipient or subrecipient (b) Formal procurement methods. For-
may establish a threshold higher than mal procurement methods are required
the micro-purchase threshold identi- when the value of the procurement
131
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00143 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.320 2 CFR Ch. II (1–1–26 Edition)
transaction under a Federal award ex- When specified in the invitation for
ceeds the simplified acquisition thresh- bids, factors such as discounts, trans-
old of the recipient or subrecipient. portation cost, and life-cycle costs
Formal procurement methods are com- must be considered in determining
petitive and require public notice. The which bid is the lowest. Payment dis-
following formal methods of procure- counts must only be used to determine
ment are used for procurement trans- the low bid when the recipient or sub-
actions above the simplified acquisi- recipient determines they are a valid
tion threshold determined by the re- factor based on prior experience.
cipient or subrecipient in accordance (E) The recipient or subrecipient
with paragraph (a)(2)(ii) of this section: must document and provide a justifica-
(1) Sealed bids. This is a procurement tion for all bids it rejects.
method in which bids are publicly so- (2) Proposals. This is a procurement
licited through an invitation and a method used when conditions are not
firm fixed-price contract (lump sum or appropriate for using sealed bids. This
unit price) is awarded to the respon- procurement method may result in ei-
sible bidder whose bid conforms with ther a fixed-price or cost-reimburse-
all the material terms and conditions ment contract. They are awarded in ac-
of the invitation and is the lowest in cordance with the following require-
price. The sealed bids procurement ments:
method is preferred for procuring con- (i) Requests for proposals require
struction services. public notice, and all evaluation fac-
(i) For sealed bidding to be feasible, tors and their relative importance
the following conditions should be must be identified. Proposals must be
present: solicited from multiple qualified enti-
(A) A complete, adequate, and real- ties. To the maximum extent prac-
istic specification or purchase descrip- ticable, any proposals submitted in re-
tion is available; (B) Two or more re- sponse to the public notice must be
sponsible bidders have been identified considered.
as willing and able to compete effec- (ii) The recipient or subrecipient
tively for the business; and must have written procedures for con-
(C) The procurement lends itself to a ducting technical evaluations and
firm-fixed-price contract, and the se- making selections.
lection of the successful bidder can be (iii) Contracts must be awarded to
made principally based on price. the responsible offeror whose proposal
(ii) If sealed bids are used, the fol- is most advantageous to the recipient
lowing requirements apply: or subrecipient considering price and
(A) Bids must be solicited from an other factors; and
adequate number of qualified sources, (iv) The recipient or subrecipient
providing them with sufficient re- may use competitive proposal proce-
sponse time prior to the date set for dures for qualifications-based procure-
opening the bids. Unless specified by ment of architectural/engineering (A/E)
the Federal agency, the recipient or professional services whereby the
subrecipient may exercise judgment in offeror’s qualifications are evaluated,
determining what number is adequate. and the most qualified offeror is se-
For local governments, the invitation lected, subject to negotiation of fair
for bids must be publicly advertised. and reasonable compensation. The
(B) The invitation for bids must de- method, where the price is not used as
fine the items or services with specific a selection factor, can only be used to
information, including any required procure architectural/engineering (A/E)
specifications, for the bidder to prop- professional services. The method may
erly respond; not be used to purchase other services
(C) All bids will be opened at the provided by A/E firms that are a poten-
time and place prescribed in the invita- tial source to perform the proposed ef-
tion for bids. For local governments, fort.
the bids must be opened publicly. (c) Noncompetitive procurement. There
rmajette on LAPJN3WLY3PROD with CFR
(D) A firm-fixed-price contract is are specific circumstances in which the
awarded in writing to the lowest re- recipient or subrecipient may use a
sponsive bid and responsible bidder. noncompetitive procurement method.
132
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00144 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.323
The noncompetitive procurement § 200.322 Domestic preferences for pro-
method may only be used if one of the curements.
following circumstances applies: (a) The recipient or subrecipient
(1) The aggregate amount of the pro- should, to the greatest extent prac-
curement transaction does not exceed ticable and consistent with law, pro-
the micro-purchase threshold (see vide a preference for the purchase, ac-
paragraph (a)(1) of this section); quisition, or use of goods, products, or
(2) The procurement transaction can materials produced in the United
only be fulfilled by a single source; States (including but not limited to
(3) The public exigency or emergency iron, aluminum, steel, cement, and
for the requirement will not permit a other manufactured products). The re-
delay resulting from providing public quirements of this section must be in-
notice of a competitive solicitation; cluded in all subawards, contracts, and
(4) The recipient or subrecipient re- purchase orders under Federal awards.
quests in writing to use a noncompeti- (b) For purposes of this section:
tive procurement method, and the Fed- (1) ‘‘Produced in the United States’’
eral agency or pass-through entity pro- means, for iron and steel products, that
vides written approval; or all manufacturing processes, from the
(5) After soliciting several sources, initial melting stage through the appli-
competition is determined inadequate. cation of coatings, occurred in the
United States.
§ 200.321 Contracting with small busi- (2) ‘‘Manufactured products’’ means
nesses, minority businesses, wom- items and construction materials com-
en’s business enterprises, veteran-
owned businesses, and labor sur- posed in whole or in part of non-ferrous
plus area firms. metals such as aluminum; plastics and
polymer-based products such as poly-
(a) When possible, the recipient or vinyl chloride pipe; aggregates such as
subrecipient should ensure that small concrete; glass, including optical fiber;
businesses, minority businesses, wom- and lumber.
en’s business enterprises, veteran- (c) Federal agencies providing Fed-
owned businesses, and labor surplus eral financial assistance for infrastruc-
area firms (See U.S. Department of La- ture projects must implement the Buy
bor’s list) are considered as set forth America preferences set forth in 2 CFR
below. part 184.
(b) Such consideration means:
(1) These business types are included § 200.323 Procurement of recovered
on solicitation lists; materials.
(2) These business types are solicited (a) A recipient or subrecipient that is
whenever they are deemed eligible as a State agency or agency of a political
potential sources; subdivision of a State and its contrac-
(3) Dividing procurement trans- tors must comply with section 6002 of
actions into separate procurements to the Solid Waste Disposal Act, as
permit maximum participation by amended by the Resource Conservation
these business types; and Recovery Act of 1976 as amended,
(4) Establishing delivery schedules 42 U.S.C. 6962. The requirements of Sec-
(for example, the percentage of an tion 6002 include procuring only items
order to be delivered by a given date of designated in the guidelines of the En-
each month) that encourage participa- vironmental Protection Agency (EPA)
tion by these business types; at 40 CFR part 247 that contain the
(5) Utilizing organizations such as highest percentage of recovered mate-
the Small Business Administration and rials practicable, consistent with main-
the Minority Business Development taining a satisfactory level of competi-
Agency of the Department of Com- tion, where the purchase price of the
merce; and item exceeds $10,000 or the value of the
rmajette on LAPJN3WLY3PROD with CFR
(6) Requiring a contractor under a quantity acquired during the preceding
Federal award to apply this section to fiscal year exceeded $10,000; procuring
subcontracts. solid waste management services in a
133
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00145 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.324 2 CFR Ch. II (1–1–26 Edition)
manner that maximizes energy and re- curements under the Federal award if
source recovery; and establishing an af- the Federal agency or pass-through en-
firmative procurement program for tity believes the review is needed to
procurement of recovered materials ensure that the item or service speci-
identified in the EPA guidelines. fied is the one being proposed for ac-
(b) The recipient or subrecipient quisition. The recipient or subrecipient
should, to the greatest extent prac- must submit the technical specifica-
ticable and consistent with law, pur- tions of proposed procurements when
chase, acquire, or use products and requested by the Federal agency or
services that can be reused, refur- pass-through entity. This review
bished, or recycled; contain recycled should take place prior to the time the
content, are biobased, or are energy specifications are incorporated into a
and water efficient; and are sustain- solicitation document. When the re-
able. This may include purchasing cipient or subrecipient desires to ac-
compostable items and other products complish the review after a solicitation
and services that reduce the use of sin- has been developed, the Federal agency
gle-use plastic products. See Executive or pass-through entity may still review
Order 14057, section 101, Policy. the specifications. In those cases, the
review should be limited to the tech-
§ 200.324 Contract cost and price.
nical aspects of the proposed purchase.
(a) The recipient or subrecipient (b) When requested, the recipient or
must perform a cost or price analysis subrecipient must provide procurement
for every procurement transaction, in- documents (such as requests for pro-
cluding contract modifications, in ex- posals, invitations for bids, or inde-
cess of the simplified acquisition pendent cost estimates) to the Federal
threshold. The method and degree of agency or pass-through entity for pre-
analysis conducted depend on the facts procurement review. The Federal agen-
surrounding the particular procure- cy or pass-through entity may conduct
ment transaction. For example, the re- a pre-procurement review when:
cipient or subrecipient should consider (1) The recipient’s or subrecipient’s
potential workforce impacts in their procurement procedures or operation
analysis if the procurement trans-
fails to comply with the procurement
action will displace public sector em-
standards in this part;
ployees. However, as a starting point,
(2) The procurement is expected to
the recipient or subrecipient must
make independent estimates before re- exceed the simplified acquisition
ceiving bids or proposals. threshold and is to be awarded without
(b) Costs or prices based on estimated competition, or only one bid is ex-
costs for contracts under the Federal pected to be received in response to a
award are allowable only to the extent solicitation;
that the costs incurred or cost esti- (3) The procurement is expected to
mates included in negotiated prices exceed the simplified acquisition
would be allowable for the recipient or threshold and specifies a ‘‘brand name’’
subrecipient under subpart E of this product;
part. The recipient or subrecipient may (4) The procurement is expected to
reference its own cost principles as exceed the simplified acquisition
long as they comply with subpart E of threshold, and a sealed bid procure-
this part. ment is to be awarded to an entity
(c) The recipient or subrecipient other than the apparent low bidder; or
must not use the ‘‘cost plus a percent- (5) A proposed contract modification
age of cost’’ and ‘‘percentage of con- changes the scope of a contract or in-
struction costs’’ methods of con- creases the contract amount by more
tracting. than the simplified acquisition thresh-
old.
§ 200.325 Federal agency or pass- (c) The recipient or subrecipient is
through entity review. exempt from the pre-procurement re-
rmajette on LAPJN3WLY3PROD with CFR
(a) The Federal agency or pass- view in paragraph (b) of this section if
through entity may review the tech- the Federal agency or pass-through en-
nical specifications of proposed pro- tity determines that its procurement
134
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00146 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.328
systems comply with the standards of (c) A payment bond on the contrac-
this part. tor’s part for 100 percent of the con-
(1) The recipient or subrecipient may tract price. A payment bond is a bond
request that the Federal agency or executed in connection with a contract
pass-through entity review its procure- to assure payment as required by the
ment system to determine whether it law of all persons supplying labor and
meets these standards for its system to material in the execution of the work
be certified. Generally, these reviews provided for under a contract.
must occur where there is continuous
high-dollar funding and third-party § 200.327 Contract provisions.
contracts are awarded regularly. The recipient’s or subrecipient’s con-
(2) The recipient or subrecipient may tracts must contain the applicable pro-
self-certify its procurement system. visions described in Appendix II of this
However, self-certification does not part.
limit the Federal agency’s or pass-
through entity’s right to review the PERFORMANCE AND FINANCIAL
MONITORING AND REPORTING
system. Under a self-certification pro-
cedure, the Federal agency or pass- § 200.328 Financial reporting.
through entity may rely on written as-
surances from the recipient or sub- (a) The Federal agency must require
recipient that it is complying with the only OMB-approved government-wide
standards of this part. The recipient or data elements on recipient financial re-
subrecipient must cite specific policies, ports. At the time of publication, this
procedures, regulations, or standards consists of the Federal Financial Re-
as complying with these requirements port (SF–425); however, this also ap-
and have its system available for re- plies to any future OMB-approved gov-
view. ernment-wide data elements available
from the OMB-designated standards
§ 200.326 Bonding requirements. lead.
(b) The Federal agency or pass-
The Federal agency or pass-through through entity must collect financial
entity may accept the recipient’s or reports no less than annually. The Fed-
subrecipient’s bonding policy and re- eral agency or pass-through entity may
quirements for construction or facility not collect financial reports more fre-
improvement contracts or subcontracts quently than quarterly unless a spe-
exceeding the simplified acquisition cific condition has been implemented
threshold. Before doing so, the Federal in accordance with § 200.208. To the ex-
agency or pass-through entity must de- tent practicable, the Federal agency or
termine that the Federal interest is pass-through entity should collect fi-
adequately protected. If such a deter- nancial reports in coordination with
mination has not been made, the min- performance reports.
imum requirements must be as follows: (c) The recipient or subrecipient
(a) A bid guarantee from each bidder must submit financial reports as re-
equivalent to five percent of the bid quired by the Federal award. Reports
price. The bid guarantee must consist submitted annually by the recipient or
of a firm commitment such as a bid subrecipient must be due no later than
bond, certified check, or other nego- 90 calendar days after the reporting pe-
tiable instrument accompanying a bid riod. Reports submitted quarterly or
as assurance that the bidder will, upon semiannually must be due no later
acceptance of the bid, execute any re- than 30 calendar days after the report-
quired contractual documents within ing period.
the specified timeframe. (d) The final financial report sub-
(b) A performance bond on the con- mitted by the recipient must be due no
tractor’s part for 100 percent of the later than 120 calendar days after the
contract price. A performance bond is a conclusion of the period of perform-
bond executed in connection with a ance. A subrecipient must submit a
rmajette on LAPJN3WLY3PROD with CFR
contract to secure the fulfillment of all final financial report to a pass-through
the contractor’s requirements under a entity no later than 90 calendar days
contract. after the conclusion of the period of
135
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00147 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.329 2 CFR Ch. II (1–1–26 Edition)
performance. See also § 200.344. The toring framework documents such as
Federal agency or pass-through entity the agency’s Evaluation Plan to make
may extend the due date for any finan- that determination. As noted in OMB
cial report with justification from the Circular A–11, Part 6, Section 280,
recipient or subrecipient. measures of customer experience are of
co-equal importance as traditional
§ 200.329 Monitoring and reporting measures of financial and operational
program performance.
performance.
(a) Monitoring by the recipient and sub- (c) Submitting performance reports. (1)
recipient. The recipient and sub- The recipient or subrecipient must sub-
recipient are responsible for the over- mit performance reports as required by
sight of the Federal award. The recipi- the Federal award. Intervals must be
ent and subrecipient must monitor
no less frequent than annually nor
their activities under Federal awards
more frequent than quarterly except if
to ensure they are compliant with all
specific conditions are applied (See
requirements and meeting performance
§ 200.208). Reports submitted annually
expectations. Monitoring by the recipi-
ent and subrecipient must cover each by the recipient or subrecipient must
program, function, or activity. See also be due no later than 90 calendar days
§ 200.332. after the reporting period. Reports sub-
(b) Reporting program performance. mitted quarterly or semiannually must
The Federal agency must use OMB-ap- be due no later than 30 calendar days
proved common information collec- after the reporting period. Alter-
tions (for example, Research Perform- natively, the Federal agency or pass-
ance Progress Reports) when request- through entity may require annual re-
ing performance reporting information. ports before the anniversary dates of
The Federal agency or pass-through en- multiple-year Federal awards. The
tity may not collect performance re- final performance report submitted by
ports more frequently than quarterly the recipient must be due no later than
unless a specific condition has been im- 120 calendar days after the period of
plemented in accordance with § 200.208. performance. A subrecipient must sub-
To the extent practicable, the Federal mit a final performance report to a
agency or pass-through entity should pass-through entity no later than 90
align the due dates of performance re- calendar days after the conclusion of
ports and financial reports. When re- the period of performance. See also
porting program performance, the re- § 200.344. The Federal agency or pass-
cipient or subrecipient must relate fi- through entity may extend the due
nancial data and project or program date for any performance report with
accomplishments to the performance justification from the recipient or sub-
goals and objectives of the Federal recipient.
award. Also, the recipient or sub- (2) As applicable, performance re-
recipient must provide cost informa-
ports should contain information on
tion to demonstrate cost-effective
the following:
practices (for example, through unit
cost data) when required by the terms (i) A comparison of accomplishments
and conditions of the Federal award. In to the objectives of the Federal award
some instances (for example, discre- established for the reporting period (for
tionary research awards), this may be example, comparing costs to units of
limited to the requirement to submit accomplishment). Where performance
technical performance reports. Report- trend data and analysis would be in-
ing requirements must clearly indicate formative to the Federal agency pro-
a standard against which the recipi- gram, the Federal agency should in-
ent’s or subrecipient’s performance can clude this as a performance reporting
be measured. Reporting requirements requirement.
should not solicit information from the (ii) Explanations on why established
recipient or subrecipient that is not goals or objectives were not met; and
rmajette on LAPJN3WLY3PROD with CFR
necessary for the effective monitoring (iii) Additional information, anal-
or evaluation of the Federal award. ysis, and explanation of cost overruns
Federal agencies should consult moni- or higher-than-expected unit costs.
136
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00148 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.331
(d) Construction performance reports. mitted at multi-year frequencies may
Federal agencies or pass-through enti- not exceed a five-year reporting period.
ties rely on on-site technical inspec- The Federal agency must only require
tions and certified percentage of com- OMB-approved government-wide data
pletion data to monitor progress under elements on recipient real property re-
Federal awards for construction. ports.
Therefore, the Federal agency or pass-
through entity may require additional SUBRECIPIENT MONITORING AND
performance reports when necessary to MANAGEMENT
ensure the goals and objectives of Fed-
eral awards are met. § 200.331 Subrecipient and contractor
determinations.
(e) Significant developments. When a
significant development that could im- An entity may concurrently receive
pact the Federal award occurs between Federal awards as a recipient, a sub-
performance reporting due dates, the recipient, and a contractor. The pass-
recipient or subrecipient must notify through entity is responsible for mak-
the Federal agency or pass-through en- ing case-by-case determinations to de-
tity. Significant developments include termine whether the entity receiving
events that enable meeting milestones Federal funds is a subrecipient or a
and objectives sooner or at less cost contractor. The Federal agency may
than anticipated or that produce dif- require the pass-through entity to
ferent beneficial results than origi- comply with additional guidance to
nally planned. Significant develop- make these determinations, provided
ments also include problems, delays, or such guidance does not conflict with
adverse conditions which will impact this section. The Federal agency does
the recipient’s or subrecipient’s ability not have a direct legal relationship
to meet milestones or the objectives of with subrecipients or contractors of
the Federal award. When significant any tier; however, the Federal agency
developments occur that negatively is responsible for monitoring the pass-
impact the Federal Award, the recipi- through entity’s oversight of first-tier
ent or subrecipient must include infor- subrecipients. All of the characteris-
mation on their plan for corrective ac- tics listed below may not be present in
tion and any assistance needed to re- all cases, and some characteristics
solve the situation. from both categories may be present at
(f) Site visits. The Federal agency or the same time. No single factor or any
pass-through entity may conduct in- combination of factors is necessarily
person or virtual site visits as war- determinative. The pass-through entity
ranted. must use judgment in classifying each
(g) Performance report requirement agreement as a subaward or a procure-
waiver. The Federal agency may waive ment contract. In making this deter-
any performance report that is not nec- mination, the substance of the rela-
essary to ensure the goals and objec- tionship is more important than the
tives of the Federal award are being form of the agreement.
achieved. (a) Subrecipients. A subaward is for
the purpose of carrying out a portion of
§ 200.330 Reporting on real property. the Federal award and creates a Fed-
The Federal agency or pass-through eral financial assistance relationship
entity must require the recipient or with a subrecipient. See the definition
subrecipient to submit reports on the of Subaward in § 200.1. Characteristics
status of real property in which the that support the classification of the
Federal Government retains an inter- entity as a subrecipient include, but
est. Such reports must be submitted at are not limited to, when the entity:
least annually. In instances where the (1) Determines who is eligible to re-
Federal Government’s interest in the ceive what Federal assistance;
real property extends for 15 years or (2) Has its performance measured in
more, the Federal agency or pass- relation to whether the objectives of a
rmajette on LAPJN3WLY3PROD with CFR
through entity may require the recipi- Federal program were met;
ent or subrecipient to report at various (3) Has responsibility for pro-
multi-year frequencies. Reports sub- grammatic decision-making;
137
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00149 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.332 2 CFR Ch. II (1–1–26 Edition)
(4) Is responsible for adherence to ap- (ii) Subrecipient’s unique entity
plicable Federal program requirements identifier;
specified in the Federal award; and (iii) Federal Award Identification
(5) Implements a program for a public Number (FAIN);
purpose specified in authorizing stat- (iv) Federal Award Date;
ute, as opposed to providing goods or (v) Subaward Period of Performance
services for the benefit of the pass- Start and End Date;
through entity. (vi) Subaward Budget Period Start
(b) Contractors. A contract is for the and End Date;
purpose of obtaining goods and services (vii) Amount of Federal Funds Obli-
for the recipient’s or subrecipient’s use gated in the subaward;
and creates a procurement relationship
(viii) Total Amount of Federal Funds
with a contractor. See the definition of
Obligated to the subrecipient by the
contract in § 200.1. Characteristics that
pass-through entity, including the cur-
support a procurement relationship be-
rent financial obligation;
tween the recipient or subrecipient and
a contractor include, but are not lim- (ix) Total Amount of the Federal
ited to, when the contractor: Award committed to the subrecipient
(1) Provides the goods and services by the pass-through entity;
within normal business operations; (x) Federal award project description,
(2) Provides similar goods or services as required by the Federal Funding Ac-
to many different purchasers; countability and Transparency Act
(3) Normally operates in a competi- (FFATA);
tive environment; (xi) Name of the Federal agency,
(4) Provides goods or services that pass-through entity, and contact infor-
are ancillary to the implementation of mation for awarding official of the
a Federal program; and pass-through entity;
(5) Is not subject to compliance re- (xii) Assistance Listings title and
quirements of a Federal program as a number; the pass-through entity must
result of the agreement. However, simi- identify the dollar amount made avail-
lar requirements may apply for other able under each Federal award and the
reasons. Assistance Listings Number at the
time of disbursement;
§ 200.332 Requirements for pass- (xiii) Identification of whether the
through entities. Federal award is for research and de-
A pass-through entity must: velopment; and
(a) Verify that the subrecipient is not (xiv) Indirect cost rate for the Fed-
excluded or disqualified in accordance eral award (including if the de minimis
with § 180.300. Verification methods are rate is used in accordance with
provided in § 180.300, which include con- § 200.414).
firming in SAM.gov that a potential (2) All requirements of the subaward,
subrecipient is not suspended, including requirements imposed by
debarred, or otherwise excluded from Federal statutes, regulations, and the
receiving Federal funds. terms and conditions of the Federal
(b) Ensure that every subaward is award;
clearly identified to the subrecipient as (3) Any additional requirements that
a subaward and includes the informa- the pass-through entity imposes on the
tion provided below. A pass-through subrecipient for the pass-through enti-
entity must provide the best available ty to meet its responsibilities under
information when some of the informa- the Federal award. This includes infor-
tion below is unavailable. A pass- mation and certifications (see § 200.415)
through entity must provide the un- required for submitting financial and
available information when it is ob- performance reports that the pass-
tained. Required information includes: through entity must provide to the
(1) Federal award identification. Federal agency;
rmajette on LAPJN3WLY3PROD with CFR
(i) Subrecipient’s name (must match (4) Indirect cost rate:
the name associated with its unique (i) An approved indirect cost rate ne-
entity identifier); gotiated between the subrecipient and
138
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00150 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.332
the Federal Government. If no ap- (d) If appropriate, consider imple-
proved rate exists, a pass-through enti- menting specific conditions in a
ty must determine the appropriate rate subaward as described in § 200.208 and
in collaboration with the subrecipient. notify the Federal agency of the spe-
The indirect cost rate may be either: cific conditions.
(A) An indirect cost rate negotiated (e) Monitor the activities of a sub-
between the pass-through entity and recipient as necessary to ensure that
the subrecipient. These rates may be the subrecipient complies with Federal
based on a prior negotiated rate be- statutes, regulations, and the terms
tween a different pass-through entity and conditions of the subaward. The
and the subrecipient, in which case the pass-through entity is responsible for
pass-through entity is not required to monitoring the overall performance of
collect information justifying the rate a subrecipient to ensure that the goals
but may elect to do so; or and objectives of the subaward are
(B) The de minimis indirect cost achieved. In monitoring a subrecipient,
rate. a pass-through entity must:
(ii) The pass-through entity must not (1) Review financial and performance
require the use of the de minimis indi- reports.
rect cost rate if the subrecipient has an (2) Ensure that the subrecipient
approved indirect cost rate negotiated takes corrective action on all signifi-
with the Federal Government. Sub- cant developments that negatively af-
recipients may elect to use the cost al- fect the subaward. Significant develop-
location method to account for indirect ments include Single Audit findings re-
costs in accordance with § 200.405(d). lated to the subaward, other audit find-
(5) A requirement that the sub- ings, site visits, and written notifica-
recipient permit the pass-through enti- tions from a subrecipient of adverse
ty and auditors to access the subrecipi- conditions which will impact their
ent’s records and financial statements ability to meet the milestones or the
for the pass-through entity to fulfill its objectives of a subaward. When signifi-
monitoring requirements; and cant developments negatively impact
(6) Appropriate terms and conditions the subaward, a subrecipient must pro-
concerning the closeout of the vide the pass-through entity with in-
subaward. formation on their plan for corrective
(c) Evaluate each subrecipient’s action and any assistance needed to re-
fraud risk and risk of noncompliance solve the situation.
with a subaward to determine the ap- (3) Issue a management decision for
propriate subrecipient monitoring de- audit findings pertaining only to the
scribed in paragraph (f) of this section. Federal award provided to the sub-
When evaluating a subrecipient’s risk, recipient from the pass-through entity
a pass-through entity should consider as required by § 200.521.
the following: (4) Resolve audit findings specifically
(1) The subrecipient’s prior experi- related to the subaward. However, the
ence with the same or similar sub- pass-through entity is not responsible
awards; for resolving cross-cutting audit find-
(2) The results of previous audits. ings that apply to the subaward and
This includes considering whether or other Federal awards or subawards. If a
not the subrecipient receives a Single subrecipient has a current Single Audit
Audit in accordance with subpart F report and has not been excluded from
and the extent to which the same or receiving Federal funding (meaning,
similar subawards have been audited as has not been debarred or suspended),
a major program; the pass-through entity may rely on
(3) Whether the subrecipient has new the subrecipient’s cognizant agency for
personnel or new or substantially audit or oversight agency for audit to
changed systems; and perform audit follow-up and make
(4) The extent and results of any Fed- management decisions related to cross-
eral agency monitoring (for example, if cutting audit findings in accordance
rmajette on LAPJN3WLY3PROD with CFR
the subrecipient also receives Federal with section § 200.513(a)(4)(viii). Such
awards directly from the Federal agen- reliance does not eliminate the respon-
cy). sibility of the pass-through entity to
139
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00151 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.333 2 CFR Ch. II (1–1–26 Edition)
issue subawards that conform to agen- tained include but are not limited to,
cy and award-specific requirements, to financial records, supporting docu-
manage risk through ongoing subaward mentation, and statistical records.
monitoring, and to monitor the status Federal agencies or pass-through enti-
of the findings that are specifically re- ties may not impose any other record
lated to the subaward. retention requirements except for the
(f) Depending upon the pass-through following:
entity’s assessment of the risk posed (a) The records must be retained
by the subrecipient (as described in until all litigation, claims, or audit
paragraph (c) of this section), the fol- findings involving the records have
lowing monitoring tools may be useful been resolved and final action taken if
for the pass-through entity to ensure any litigation, claim, or audit is start-
proper accountability and compliance ed before the expiration of the three-
with program requirements and year period.
achievement of performance goals: (b) When the recipient or sub-
(1) Providing subrecipients with recipient is notified in writing by the
training and technical assistance on Federal agency or pass-through entity,
program-related matters; cognizant agency for audit, oversight
(2) Performing site visits to review agency for audit, or cognizant agency
the subrecipient’s program operations; for indirect costs to extend the reten-
and tion period.
(3) Arranging for agreed-upon-proce- (c) The records for property and
dures engagements as described in equipment acquired with the support of
§ 200.425.
Federal funds must be retained for
(g) Verify that a subrecipient is au-
three years after final disposition.
dited as required by subpart F of this
(d) The three-year retention require-
part.
ment does not apply to the recipient or
(h) Consider whether the results of a
subrecipient when records are trans-
subrecipient’s audit, site visits, or
other monitoring necessitate adjust- ferred to or maintained by the Federal
ments to the pass-through entity’s agency.
records. (e) The records for program income
(i) Consider taking enforcement ac- earned after the period of performance
tion against noncompliant subrecipi- must be retained for three years from
ents as described in § 200.339 and in pro- the end of the recipient’s or subrecipi-
gram regulations. ent’s fiscal year in which the program
income is earned. This only applies if
§ 200.333 Fixed amount subawards. the Federal agency or pass-through en-
With prior written approval from the tity requires the recipient or sub-
Federal agency, the recipient may pro- recipient to report on program income
vide subawards based on fixed amounts earned after the period of performance
up to $500,000. Fixed amount subawards in the terms and conditions of the Fed-
must meet the requirements of eral award.
§ 200.201. (f) The records for indirect cost rate
computations or proposals, cost alloca-
RECORD RETENTION AND ACCESS tion plans, and any similar accounting
computations of the rate at which a
§ 200.334 Record retention require- particular group of costs is chargeable
ments. (such as computer usage chargeback
The recipient and subrecipient must rates or composite fringe benefit rates)
retain all Federal award records for must be retained according to the ap-
three years from the date of submis- plicable option below:
sion of their final financial report. For (1) If submitted for negotiation. When a
awards that are renewed quarterly or proposal, plan, or other computation
annually, the recipient and sub- must be submitted to the Federal Gov-
recipient must retain records for three ernment to form the basis for negotia-
rmajette on LAPJN3WLY3PROD with CFR
years from the date of submission of tion of an indirect cost rate (or other
their quarterly or annual financial re- standard rates), then the three-year re-
port, respectively. Records to be re- tention period for its supporting
140
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00152 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.338
records starts from the date of submis- trol reviews must ensure that elec-
sion. tronic conversion procedures provide
(2) If not submitted for negotiation. safeguards against the alteration of
When a proposal, plan, or other com- records and assurance that records re-
putation is not required to be sub- main in a format that is readable by a
mitted to the Federal Government to computer system.
form the basis for negotiation of an in-
direct cost rate (or other standard § 200.337 Access to records.
rates), then the three-year retention (a) Records of recipients and subrecipi-
period for its supporting records starts ents. The Federal agency or pass-
from the end of the fiscal year (or through entity, Inspectors General, the
other accounting period) covered by Comptroller General of the United
the proposal, plan, or other computa- States, or any of their authorized rep-
tion. resentatives must have the right of ac-
cess to any records of the recipient or
§ 200.335 Requests for transfer of subrecipient pertinent to the Federal
records. award to perform audits, execute site
The Federal agency must request the visits, or for any other official use.
transfer of records to its custody from This right also includes timely and rea-
the recipient or subrecipient when it sonable access to the recipient’s or sub-
determines that the records possess recipient’s personnel for the purpose of
long-term retention value. However, interview and discussion related to
the Federal agency may arrange for such documents or the Federal award
the recipient or subrecipient to retain in general.
the records that have long-term reten- (b) Extraordinary and rare cir-
tion value so long as they are continu- cumstances. The recipient or sub-
ously available to the Federal Govern- recipient and Federal agency or pass-
ment. through entity must take measures to
protect the name of victims of a crime
§ 200.336 Methods for collection, trans- when access to the victim’s name is
mission, and storage of information. necessary. Only under extraordinary
When practicable, the Federal agency and rare circumstances would such ac-
or pass-through entity and the recipi- cess include a review of the true name
ent or subrecipient must collect, trans- of victims of a crime. Routine moni-
mit, and store Federal award informa- toring cannot be considered extraor-
tion in open and machine-readable for- dinary and rare circumstances that
mats. A machine-readable format is a would necessitate access to this infor-
format in a standard computer lan- mation. Any such access, other than
guage (not English text) that can be under a court order or subpoena pursu-
read automatically by a computer sys- ant to a bona fide confidential inves-
tem. Upon request, the Federal agency tigation, must be approved by the head
or pass-through entity must always or delegate of the Federal agency.
provide or accept paper versions of (c) Expiration of right of access. The
Federal award information to and from Federal agency’s or pass-through enti-
the recipient or subrecipient. The Fed- ty’s rights of access are not limited to
eral agency or pass-through entity the required retention period of this
must not require additional copies of part but last as long as the records are
Federal award information submitted retained. Federal agencies or pass-
in paper versions. The recipient or sub- through entities must not impose any
recipient does not need to create and other access requirements upon recipi-
retain paper copies when original ents and subrecipients.
records are electronic and cannot be al-
tered. In addition, the recipient or sub- § 200.338 Restrictions on public access
recipient may substitute electronic to records.
versions of original paper records Federal agencies may not place re-
through duplication or other forms of strictions on the recipient or sub-
rmajette on LAPJN3WLY3PROD with CFR
electronic conversion, provided that recipient that limit public access to
the procedures are subject to periodic the records of the recipient or sub-
quality control reviews. Quality con- recipient pertinent to a Federal award,
141
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00153 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.339 2 CFR Ch. II (1–1–26 Edition)
except for protected personally identi- (e) Withhold further Federal funds
fiable information (PII) or other sen- (new awards or continuation funding)
sitive information when the Federal for the project or program.
agency can demonstrate that such (f) Pursue other legally available
records will be kept confidential and remedies.
would have been exempted from disclo-
sure pursuant to the Freedom of Infor- § 200.340 Termination.
mation Act (5 U.S.C. 552) or controlled (a) The Federal award may be termi-
unclassified information pursuant to nated in part or its entirety as follows:
Executive Order 13556 if the records had (1) By the Federal agency or pass-
belonged to the Federal agency. The through entity if the recipient or sub-
Freedom of Information Act (5 U.S.C. recipient fails to comply with the
552) (FOIA) does not apply to records terms and conditions of the Federal
that remain under the recipient’s or award;
subrecipient’s control except as re- (2) By the Federal agency or pass-
quired by § 200.315. Unless required by through entity with the consent of the
Federal, State, local, or tribal law, re- recipient or subrecipient, in which case
cipients and subrecipients are not re- the two parties must agree upon the
quired to permit public access to their termination conditions. These condi-
records. The recipient’s or subrecipi- tions include the effective date and, in
ent’s records provided to a Federal the case of partial termination, the
agency generally will be subject to portion to be terminated;
FOIA and applicable exemptions. (3) By the recipient or subrecipient
upon sending the Federal agency or
REMEDIES FOR NONCOMPLIANCE pass-through entity a written notifica-
tion of the reasons for such termi-
§ 200.339 Remedies for noncompliance. nation, the effective date, and, in the
The Federal agency or pass-through case of partial termination, the portion
entity may implement specific condi- to be terminated. However, if the Fed-
tions if the recipient or subrecipient eral agency or pass-through entity de-
fails to comply with the U.S. Constitu- termines that the remaining portion of
tion, Federal statutes, regulations, or the Federal award will not accomplish
terms and conditions of the Federal the purposes for which the Federal
award. See § 200.208 for additional infor- award was made, the Federal agency or
mation on specific conditions. When pass-through entity may terminate the
the Federal agency or pass-through en- Federal award in its entirety; or
tity determines that noncompliance (4) By the Federal agency or pass-
cannot be remedied by imposing spe- through entity pursuant to the terms
cific conditions, the Federal agency or and conditions of the Federal award,
including, to the extent authorized by
pass-through entity may take one or
law, if an award no longer effectuates
more of the following actions:
the program goals or agency priorities.
(a) Temporarily withhold payments
(b) The Federal agency or pass-
until the recipient or subrecipient
through entity must clearly and unam-
takes corrective action. biguously specify all termination pro-
(b) Disallow costs for all or part of visions in the terms and conditions of
the activity associated with the non- the Federal award.
compliance of the recipient or sub- (c) When the Federal agency termi-
recipient. nates the Federal award prior to the
(c) Suspend or terminate the Federal end of the period of performance due to
award in part or in its entirety. the recipient’s material failure to com-
(d) Initiate suspension or debarment ply with the terms and conditions of
proceedings as authorized in 2 CFR the Federal award, the Federal agency
part 180 and the Federal agency’s regu- must report the termination in
lations, or for pass-through entities, SAM.gov. A Federal agency must use
rmajette on LAPJN3WLY3PROD with CFR
recommend suspension or debarment the Contractor Performance Assess-
proceedings be initiated by the Federal ment Reporting System (CPARS) to
agency. enter information in SAM.gov.
142
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00154 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.342
(1) The information required under the portion of the Federal award to be
paragraph (c) of this section is not to terminated, if applicable.
be reported in SAM.gov until the recipi- (b) If the Federal award is terminated
ent has either: for the recipient’s material failure to
(i) Exhausted its opportunities to ob- comply with a Federal award, the noti-
ject or challenge the decision (see fication must state the following:
§ 200.342); or (1) The termination decision will be
(ii) Has not, within 30 calendar days reported in SAM.gov;
after being notified of the termination, (2) The information will be available
informed the Federal agency that it in- in SAM.gov for five years from the date
tends to appeal the decision to termi- of the termination and then archived;
nate. (3) Federal agencies that consider
(2) If a Federal agency, after entering making a Federal award to the recipi-
information about a termination in
ent during the five year period must
SAM.gov, subsequently:
consider this information in judging
(i) Learns that any of that informa-
whether the recipient is qualified to re-
tion is erroneous, the Federal agency
ceive the Federal award when the Fed-
must correct the information in the
eral share of the Federal award is ex-
system within three business days;
pected to exceed the simplified acquisi-
(ii) Obtains an update to that infor-
tion threshold over the period of per-
mation that could be helpful to other
formance;
Federal agencies, the Federal agency is
strongly encouraged to amend the in- (4) The recipient may comment on
formation in the system to incorporate any information in SAM.gov about the
the update in a timely way. recipient for future consideration by
(3) The Federal agency must not post Federal agencies. The recipient may
any information that will be made pub- submit comments in SAM.gov.
licly available in the non-public seg- (5) Federal agencies should consider
ment of SAM.gov that is covered by a the recipient’s comments when deter-
disclosure exemption under the Free- mining whether the recipient is quali-
dom of Information Act (FOIA). When fied for a Federal award.
the recipient asserts within seven cal- (c) Upon termination of the Federal
endar days to the Federal agency award, the Federal agency must pro-
which posted the information that a vide the information required by the
disclosure exemption under FOIA cov- Federal Funding Accountability and
ers some of the information made pub- Transparency Act (FFATA) to
licly available, the Federal agency that USAspending.gov. In addition, the Fed-
posted the information must remove eral agency must update or notify any
the posting within seven calendar days other relevant government-wide sys-
of receiving the assertion. Before re- tems or entities of any indications of
posting the releasable information, the poor performance as required by 41
Federal agency must resolve the issue U.S.C. 2313 and 31 U.S.C. 3321.
in accordance with the agency’s FOIA
procedures. § 200.342 Opportunities to object, hear-
(d) When the Federal award is termi- ings, and appeals.
nated in part or its entirety, the Fed- The Federal agency must maintain
eral agency or pass-through entity and written procedures for processing ob-
recipient or subrecipient remain re- jections, hearings, and appeals. Upon
sponsible for compliance with the re- initiating a remedy for noncompliance
quirements in §§ 200.344 and 200.345. (for example, disallowed costs, a cor-
rective action plan, or termination),
§ 200.341 Notification of termination the Federal agency must provide the
requirement. recipient with an opportunity to object
(a) The Federal agency or pass- and provide information challenging
through entity must provide written the action. The Federal agency or pass-
notice of termination to the recipient through entity must comply with any
rmajette on LAPJN3WLY3PROD with CFR
or subrecipient. The written notice of requirements for hearings, appeals, or
termination should include the reasons other administrative proceedings to
for termination, the effective date, and which the recipient or subrecipient is
143
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00155 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.343 2 CFR Ch. II (1–1–26 Edition)
entitled under any statute or regula- and subrecipient). When justified, the
tion applicable to the action involved. Federal agency or pass-through entity
may approve extensions for the recipi-
§ 200.343 Effects of suspension and ter- ent or subrecipient. When the recipient
mination. does not have a final indirect cost rate
Costs to the recipient or subrecipient covering the period of performance, a
resulting from financial obligations in- final financial report must still be sub-
curred by the recipient or subrecipient mitted to fulfill the requirements of
during a suspension or after the termi- this section. The recipient must submit
nation of a Federal award are not al- a revised final financial report when all
lowable unless the Federal agency or applicable indirect cost rates have been
pass-through entity expressly author- finalized.
izes them in the notice of suspension or (c) The recipient must liquidate all
termination or subsequently. However, financial obligations incurred under
costs during suspension or after termi- the Federal award no later than 120
nation are allowable if: calendar days after the conclusion of
(a) The costs result from financial the period of performance. A sub-
obligations which were properly in- recipient must liquidate all financial
curred by the recipient or subrecipient obligations incurred under a subaward
before the effective date of suspension no later than 90 calendar days after the
or termination, and not in anticipation conclusion of the period of performance
of it; and of the subaward (or an earlier date as
(b) The costs would be allowable if agreed upon by the pass-through entity
the Federal award was not suspended and subrecipient). When justified, the
or expired normally at the end of the Federal agency or pass-through entity
period of performance in which the ter- may approve extensions for the recipi-
mination takes effect. ent or subrecipient.
(d) The Federal agency or pass-
CLOSEOUT through entity must not delay pay-
ments to the recipient or subrecipient
§ 200.344 Closeout. for costs meeting the requirements of
(a) The Federal agency or pass- subpart E of this part.
through entity must close out the Fed- (e) The recipient or subrecipient
eral award when it determines that all must promptly refund any unobligated
administrative actions and required funds that the Federal agency or pass-
work of the Federal award have been through entity paid and that are not
completed. When the recipient or sub- authorized to be retained. See OMB
recipient fails to complete the nec- Circular A–129 and § 200.346.
essary administrative actions or the (f) The Federal agency or pass-
required work for an award, the Fed- through entity must make all nec-
eral agency or pass-through entity essary adjustments to the Federal
must proceed with closeout based on share of costs after closeout reports are
the information available. This section received (for example, to reflect the
specifies the administrative actions re- disallowance of any costs or the
quired at the end of the period of per- deobligation of an unliquidated bal-
formance. ance).
(b) A recipient must submit all re- (g) The recipient or subrecipient
ports (financial, performance, and must account for any property ac-
other reports required by the Federal quired with Federal funds or received
award) no later than 120 calendar days from the Federal Government in ac-
after the conclusion of the period of cordance with §§ 200.310 through 200.316
performance. A subrecipient must sub- and 200.330.
mit all reports (financial, performance, (h) The Federal agency must make
and other reports required by a every effort to complete all closeout
subaward) to the pass-through entity actions no later than one year after the
no later than 90 calendar days after the end of the period of performance. If the
rmajette on LAPJN3WLY3PROD with CFR
conclusion of the period of performance indirect cost rate has not been final-
of the subaward (or an earlier date as ized and would delay closeout, the Fed-
agreed upon by the pass-through entity eral agency is authorized to mutually
144
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00156 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.400
agree with the recipient to close an Federal award may be modified or
award using the current or most re- ended in whole or in part. This may
cently negotiated rate. However, the only be done with the consent of the
recipient is not required to agree to a awarding Federal agency or pass-
final rate for a Federal award for the through entity and the recipient or
purpose of prompt closeout. subrecipient, provided the responsibil-
(i) If the recipient does not comply ities of the recipient or subrecipient re-
with the requirements of this section, ferred to in paragraph (a) of this sec-
including submitting all final reports, tion, including those for property man-
the Federal agency must report the re- agement as applicable, are considered
cipient’s material failure to comply and provisions are made for continuing
with the terms and conditions of the responsibilities of the recipient or sub-
Federal award in SAM.gov. A Federal recipient, as appropriate.
agency must use the Contractor Per-
formance Assessment Reporting Sys- COLLECTION OF AMOUNTS DUE
tem (CPARS) to enter or amend infor-
§ 200.346 Collection of amounts due.
mation in SAM.gov. Federal agencies
may also pursue other enforcement ac- Any Federal funds paid to the recipi-
tions as appropriate. See § 200.339. ent or subrecipient in excess of the
amount that the recipient or sub-
POST-CLOSEOUT ADJUSTMENTS AND recipient is determined to be entitled
CONTINUING RESPONSIBILITIES to under the Federal award constitute
a debt to the Federal Government. The
§ 200.345 Post-closeout adjustments Federal agency must collect all debts
and continuing responsibilities. arising out of its Federal awards in ac-
(a) The closeout of the Federal award cordance with the Standards for the
does not affect any of the following: Administrative Collection of Claims (31
(1) The right of the Federal agency or CFR part 901).
pass-through entity to disallow costs
and recover funds on the basis of a Subpart E—Cost Principles
later audit or review. However, the
Federal agency or pass-through entity GENERAL PROVISIONS
must make determinations to disallow
costs and notify the recipient or sub- § 200.400 Policy guide.
recipient within the record retention The application of these cost prin-
period. ciples is based on the fundamental
(2) The recipient’s or subrecipient’s premises that:
requirement to return funds or right to (a) The recipient and subrecipient are
receive any remaining and available responsible for the efficient and effec-
funds as a result of refunds, correc- tive administration of the Federal
tions, final indirect cost rate adjust- award through sound management
ments (unless the Federal award in practices.
closed in accordance with § 200.344(h)), (b) The recipient and subrecipient are
or other transactions. responsible for administering Federal
(3) The ability of the Federal agency funds in a manner consistent with Fed-
or pass-through entity to make finan- eral statutes, regulations, and the
cial adjustments to a previously closed terms and conditions of the Federal
Federal award, such as resolving indi- award.
rect cost payments and making final (c) The recipient and subrecipient, in
payments. recognition of their unique combina-
(4) Audit requirements in subpart F tion of staff, facilities, and experience,
of this part. are responsible for employing organiza-
(5) Property management and dis- tion and management techniques nec-
position requirements in §§ 200.310 essary to ensure the proper and effi-
through 200.316. cient administration of the Federal
(6) Records retention as required in award.
rmajette on LAPJN3WLY3PROD with CFR
§§ 200.334 through 200.337. (d) The accounting practices of the
(b) After the closeout of the Federal recipient and subrecipient must be con-
award, a relationship created under the sistent with these cost principles and
145
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00157 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.401 2 CFR Ch. II (1–1–26 Edition)
support the accumulation of costs as (4) Federal awards to hospitals (see
required by these cost principles, in- Appendix IX of this part).
cluding maintaining adequate docu- (5) Food commodities provided
mentation to support costs charged to through grants and cooperative agree-
the Federal award. ments.
(e) When reviewing, negotiating, and (6) Other awards under which the re-
approving cost allocation plans or indi- cipient or subrecipient is not required
rect cost proposals, the cognizant agen- to account for actual costs incurred.
cy for indirect costs should ensure that (b) Federal contract. A Federal con-
the recipient consistently applies these tract awarded to a recipient is subject
cost principles. Where wide variations to the Cost Accounting Standards
exist in the treatment of a given cost (CAS). It must incorporate the applica-
item by the recipient, the reasonable- ble CAS requirements per 48 CFR Chap-
ness and equity of such treatments ter 99 and 48 CFR part 30 (FAR Part 30).
should be fully considered. See the def- With respect to the allocation of costs,
inition of indirect costs in § 200.1. the Cost Accounting Standards at 48
(f) For recipients and subrecipients CFR parts 9904 or 9905 take precedence
that educate and engage students in re- over the cost principles in subpart E.
search, the dual role of students as When a contract with a recipient is
both trainees and employees (including subject to full CAS coverage, the al-
pre- and post-doctoral staff) contrib- lowability of certain costs under the
uting to the completion of Federal cost principles will be affected by the
awards for research must be recognized allocation provisions of the Cost Ac-
in the application of these principles. counting Standards (for example, CAS
(g) The recipient or subrecipient 414—48 CFR 9904.414—Cost of Money as
must not earn or keep any profit re- an Element of the Cost of Facilities
sulting from Federal financial assist- Capital, and CAS 417—48 CFR 9904.417—
ance unless explicitly authorized by Cost of Money as an Element of the
the terms and conditions of the Federal Cost of Capital Assets Under Construc-
award. See also § 200.307. When the re- tion, apply instead of the allowability
quired activities of a fixed amount provisions of § 200.449). For example,
award were completed in accordance the allowability of costs in CAS-cov-
with the terms and conditions of the ered contracts is determined first by
award, the unexpended funds retained the allocation provisions of the Cost
by the recipient or subrecipient are not Accounting Standards rather than the
considered profit. allowability provisions in § 200.449 (un-
less the CAS does not address the spe-
§ 200.401 Application. cific costs). In complying with those
(a) General. The recipient and sub- requirements, the recipient’s applica-
recipient must apply these principles tion of cost accounting practices for es-
in determining allowable costs under timating, accumulating, and reporting
Federal awards. The recipient and sub- costs for Federal awards and CAS-cov-
recipient must also use these principles ered contracts must be consistent with
as a guide in pricing fixed-price con- 48 CFR. The recipient only needs to
tracts and subcontracts when costs are maintain one set of accounting records
used in determining the appropriate supporting the allocation of costs if the
price. These cost principles do not recipient administers both Federal
apply to: awards and CAS-covered contracts.
(1) Arrangements under which Fed- (c) Exemptions. Some nonprofit orga-
eral financing is in the form of loans, nizations, because of their size and na-
scholarships, fellowships, traineeships, ture of operations, can be considered to
or other fixed amounts based on items be similar to for-profit organizations in
such as education allowance or pub- terms of the applicability of cost prin-
lished tuition rates and fees. ciples. These nonprofit organizations
(2) Capitation awards based on case must operate under Federal cost prin-
counts or the number of beneficiaries. ciples that apply to for-profit organiza-
rmajette on LAPJN3WLY3PROD with CFR
(3) Fixed amount awards, except as tions located at 48 CFR 31.2. Appendix
provided in § 200.101(b). See also VIII contains a list of these nonprofit
§ 200.201. organizations. Other organizations
146
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00158 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.405
may be added to this list if approved by budget period. At its discretion, the
the cognizant agency for indirect costs. Federal agency is authorized to waive
prior written approvals to carry for-
BASIC CONSIDERATIONS ward unobligated balances to subse-
quent budget periods. See § 200.308(g)(3).
§ 200.402 Composition of costs.
The total cost of a Federal award is § 200.404 Reasonable costs.
the sum of the allowable direct and al- A cost is reasonable if it does not ex-
locable indirect costs minus any appli- ceed an amount that a prudent person
cable credits would incur under the circumstances
prevailing when the decision was made
§ 200.403 Factors affecting allowability to incur the cost. In determining the
of costs.
reasonableness of a given cost, consid-
Except where otherwise authorized eration must be given to the following:
by statute, costs must meet the fol- (a) Whether the cost is generally rec-
lowing criteria to be allowable under ognized as ordinary and necessary for
Federal awards: the recipient’s or subrecipient’s oper-
(a) Be necessary and reasonable for ation or the proper and efficient per-
the performance of the Federal award formance of the Federal award;
and be allocable thereto under these (b) The restraints or requirements
principles. imposed by such factors as sound busi-
(b) Conform to any limitations or ex- ness practices; arm’s-length bar-
clusions set forth in these principles or gaining; Federal, State, local, tribal,
in the Federal award as to types or and other laws and regulations; and
amount of cost items. terms and conditions of the Federal
(c) Be consistent with policies and award;
procedures that apply uniformly to (c) Market prices for comparable
both federally financed and other ac- costs for the geographic area;
tivities of the recipient or sub- (d) Whether the individuals con-
recipient. cerned acted with prudence in the cir-
(d) Be accorded consistent treatment. cumstances considering their respon-
For example, a cost must not be as- sibilities to the recipient or sub-
signed to a Federal award as a direct recipient, its employees, its students or
cost if any other cost incurred for the membership (if applicable), the public
same purpose in like circumstances has at large, and the Federal Government;
been allocated to the Federal award as and
an indirect cost. (e) Whether the cost represents a de-
(e) Be determined in accordance with viation from the recipient’s or sub-
generally accepted accounting prin- recipient’s established written policies
ciples (GAAP), except, for State and and procedures for incurring costs.
local governments and Indian Tribes
only, as otherwise provided for in this § 200.405 Allocable costs.
part. (a) Allocable costs in general. A cost is
(f) Not be included as a cost or used allocable to a Federal award or other
to meet cost sharing requirements of cost objective if the cost is assignable
any other federally-financed program to that Federal award or other cost ob-
in either the current or a prior period. jective in accordance with the relative
See § 200.306(b). benefits received. This standard is met
(g) Be adequately documented. See if the cost satisfies any of the following
§§ 200.300 through 200.309. criteria:
(h) Administrative closeout costs (1) Is incurred specifically for the
may be incurred until the due date of Federal award;
the final report(s). If incurred, these (2) Benefits both the Federal award
costs must be liquidated prior to the and other work of the recipient or sub-
due date of the final report(s) and recipient and can be distributed in pro-
charged to the final budget period of portions that may be approximated
rmajette on LAPJN3WLY3PROD with CFR
the award unless otherwise specified by using reasonable methods; or
the Federal agency. All other costs (3) Is necessary to the overall oper-
must be incurred during the approved ation of the recipient or subrecipient
147
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00159 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.406 2 CFR Ch. II (1–1–26 Edition)
and is assignable in part to the Federal § 200.406 Applicable credits.
award in accordance with these cost (a) Applicable credits refer to trans-
principles. actions that offset or reduce direct or
(b) Allocation of indirect costs. All ac- indirect costs allocable to a Federal
tivities which benefit from the recipi- award. Examples of such transactions
ent’s or subrecipient’s indirect cost, in- are purchase discounts, rebates or al-
cluding unallowable activities and do- lowances, recoveries or indemnities on
nated services by the recipient or sub- losses, insurance refunds or rebates,
recipient or third parties, will receive and adjustments of overpayments or
an appropriate allocation of indirect erroneous charges. To the extent that
costs. such credits accruing to or received by
(c) Limitation on charging certain allo- the recipient or subrecipient relate to
cable costs to other Federal awards. A allowable costs, they must be credited
cost allocable to a particular Federal to the Federal award either as a cost
award may not be charged to other reduction or cash refund, as appro-
priate.
Federal awards (for example, to over-
(b) In some instances, the amounts
come fund deficiencies or to avoid re- received from the Federal Government
strictions imposed by Federal statutes, to finance activities or service oper-
regulations, or the terms and condi- ations of the recipient or subrecipient
tions of the Federal awards). However, should be treated as applicable credits.
this prohibition would not preclude the Specifically, the concept of netting
recipient or subrecipient from shifting such credit items (including any
costs that are allowable under two or amounts used to meet cost sharing re-
more Federal awards in accordance quirements) must be recognized in de-
with existing Federal statutes, regula- termining the rates or amounts to be
tions, or the terms and conditions of charged to the Federal award. See
the Federal awards. §§ 200.436 and 200.468 for potential appli-
(d) Direct cost allocation principles. If a cation areas.
cost benefits two or more projects or
§ 200.407 Prior written approval (prior
activities in proportions that can be approval).
determined without undue effort or
cost, the cost must be allocated to the The reasonableness and allocability
projects based on the proportional ben- of certain costs under Federal awards
may be difficult to determine. To avoid
efit However, when those proportions
subsequent disallowance or dispute
cannot be determined because of the
based on unreasonableness or
interrelationship of the work involved, nonallocability, the recipient may seek
then, notwithstanding paragraph (c), the prior written approval of the Fed-
the costs may be allocated or trans- eral agency (or, for indirect costs, the
ferred to benefitted projects on any cognizant agency for indirect costs) be-
reasonable documented basis. Where fore incurring the cost. The absence of
the purchase of equipment or other prior written approval on any element
capital asset is specifically authorized of cost will not, in itself, affect the rea-
under a Federal award, the costs are sonableness or allocability of that cost
assignable to the Federal award regard- unless prior approval is specifically re-
less of the use that may be made of the quired for allowability as described
equipment or other capital asset in- under certain circumstances in the fol-
volved, when no longer needed for the lowing sections:
purpose for which it was originally re- (a) Section 200.306 Cost sharing;
quired. See also §§ 200.310 through (b) Section 200.307 Program income;
200.316 and 200.439. (c) Section 200.308 Revision of budget
(e) Costs of contracts subject to CAS. If and program plans;
a contract is subject to CAS, costs (d) Section 200.333 Fixed amount sub-
awards;
must be allocated to that contract ac-
(e) Section 200.430 Compensation—
cording to the Cost Accounting Stand-
rmajette on LAPJN3WLY3PROD with CFR
personal services, paragraph (h);
ards, which take precedence over the (f) Section 200.431 Compensation—
allocation provisions in this part. fringe benefits;
148
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00160 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.411
(g) Section 200.439 Equipment and through entity that made the allow-
other capital expenditures; ability determination. See §§ 200.300
(h) Section 200.440 Exchange rates; through 200.309, and § 200.346.
(i) Section 200.441 Fines, penalties,
damages and other settlements; § 200.411 Adjustment of previously ne-
(j) Section 200.442 Fund raising and gotiated indirect cost rates con-
investment management costs; taining unallowable costs.
(k) Section 200.445 Goods or services (a) Negotiated indirect cost rates
for personal use; based on a proposal later found to have
(l) Section 200.447 Insurance and in- included costs that:
demnification; (1) Are unallowable as specified by
(m) Section 200.455 Organization Federal statutes, regulations or the
costs; terms and conditions of a Federal
(n) Section 200.458 Pre-award costs; award; or
(o) Section 200.462 Rearrangement (2) Are unallowable because they are
and reconversion costs; not allocable to the Federal award(s),
(p) Section 200.475 Travel costs. must be adjusted, or a refund must be
made in accordance with the require-
§ 200.408 Limitation on allowance of ments of this section. These adjust-
costs. ments or refunds are intended to cor-
Statutory requirements may limit rect the proposals used to establish the
the allowability of costs. Any costs rates and do not constitute a reopening
that exceed the maximum amount al- of the rate negotiation. The adjust-
lowed by statute may not be charged to ments or refunds must be made regard-
the Federal award. Only the amount al- less of the type of rate negotiated (pre-
lowable by statute may be charged to determined, final, fixed, or provi-
the Federal award. sional).
(b) For rates covering a future fiscal
§ 200.409 Special considerations. year of the recipient or subrecipient,
Other sections in this part describe the unallowable costs must be removed
special considerations and require- from the indirect cost pools and the
ments applicable to states, local gov- rates must be adjusted.
ernments, Indian Tribes, and IHEs. In (c) For rates covering a past period,
addition, certain provisions among the the Federal share of the unallowable
items of cost in this subpart are only costs must be computed for each year
applicable to certain types of recipi- involved, and a cash refund (including
ents and subrecipients, as specified in interest) must be made to the Federal
the following sections: Government in accordance with the di-
(a) Direct and Indirect Costs rections provided by the cognizant
(§§ 200.412–200.415); agency for indirect costs. When cash
(b) Special Considerations for States, refunds are made for past periods cov-
Local Governments and Indian Tribes ered by provisional or fixed rates, ap-
(§§ 200.416 and 200.417); and propriate adjustments must be made
(c) Special Considerations for Insti- when the rates are finalized to avoid
tutions of Higher Education (§§ 200.418 duplicate recovery of the unallowable
and 200.419). costs.
(d) For rates covering the current pe-
§ 200.410 Collection of unallowable riod, either a rate adjustment or a re-
costs. fund, as described in paragraphs (b) and
Payments made for costs determined (c) of this section, must be required by
to be unallowable by either the award- the cognizant agency for indirect costs.
ing Federal agency, cognizant agency The choice of method must be at the
for indirect costs, or pass-through enti- discretion of the cognizant agency for
ty must be refunded with interest to indirect costs, based on its judgment as
the Federal Government. Unless di- to which method would be most prac-
rected by Federal statute or regula- tical.
rmajette on LAPJN3WLY3PROD with CFR
tion, repayments must be made in ac- (e) The amount or proportion of unal-
cordance with the instructions pro- lowable costs included in each year’s
vided by the Federal agency or pass- rate will be assumed to be the same as
149
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00161 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.412 2 CFR Ch. II (1–1–26 Edition)
the amount or proportion of unallow- (c) Administrative and clerical staff sal-
able costs included in the base year aries. Administrative and clerical staff
proposal used to establish the rate. salaries should normally be treated as
indirect costs. Direct charging of these
DIRECT AND INDIRECT COSTS costs may be appropriate only if they
meet all of the following conditions:
§ 200.412 Classification of costs. (1) The administrative or clerical
There is no universal rule for services are integral to a Federal
classifying certain costs as direct or in- award;
direct costs. A cost may be direct for (2) Individuals involved can be spe-
some specific service or function but cifically identified with a Federal
indirect for the Federal award or other award; and
final cost objective. Therefore, each (3) The costs are not also recovered
cost incurred for the same purpose in as indirect costs.
like circumstances must be treated (d) Minor items. A direct cost of a
consistently either as a direct or an in- minor amount may be treated as an in-
direct cost to avoid possible double- direct cost, for reasons of practicality,
charging of Federal awards. Guidelines provided that it is treated consistently
for determining direct and indirect for all Federal and non-Federal pur-
costs charged to Federal awards are poses.
provided in this subpart. (e) Treatment of unallowable costs in
determining indirect cost rates. The costs
§ 200.413 Direct costs. of certain activities are not allowable
(a) General. Direct costs are those as charges to Federal awards. Even
costs that can be identified specifically though these costs are unallowable,
with a particular final cost objective, they must be treated as direct costs for
such as a Federal award, or other inter- purposes of determining indirect cost
nally or externally funded activity, or rates and be allocated their equitable
that can be directly assigned to such share of the recipient’s or subrecipi-
activities relatively easily with a high ent’s indirect costs if they represent
degree of accuracy. Costs incurred for activities which:
the same purpose in like circumstances (1) Include the salaries of personnel;
must be treated consistently as direct (2) Occupy space; and
or indirect costs. See § 200.405. (3) Benefit from the recipient’s or
(b) Application to Federal awards. The subrecipient’s indirect costs.
association of costs with a Federal (f) Treatment of certain costs for non-
award determines whether costs are di- profit organizations. For nonprofit orga-
rect or indirect. Costs charged directly nizations, the costs of activities per-
to a Federal award are typically in- formed by the nonprofit organization
curred specifically for that Federal primarily as a service to members, cli-
award (including, for example, supplies ents, or the general public when sig-
needed to achieve the award’s objec- nificant and necessary to the organiza-
tives and the proportion of employee tion’s mission must be treated as di-
compensation and fringe benefits ex- rect costs whether or not allowable,
pended in relation to that specific and be allocated an equitable share of
award). Costs that otherwise would be indirect costs. Some examples of these
treated as indirect costs may also be types of activities include:
considered direct costs if they are di- (1) Maintenance of membership rolls,
rectly related to a specific award (in- subscriptions, publications, and related
cluding, for example, extraordinary functions. See § 200.454.
utility consumption, the cost of mate- (2) Providing services and informa-
rials supplied from stock or services tion to members, the government, or
rendered by specialized facilities, cy- the public. See §§ 200.454 and 200.450.
bersecurity, integrated data systems, (3) Promotion, lobbying, and other
asset management systems, perform- forms of public relations. See §§ 200.421
rmajette on LAPJN3WLY3PROD with CFR
ance management costs, program eval- and 200.450.
uation costs, or other institutional (4) Conferences (except those held to
service operations). conduct the general administration of
150
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00162 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.414
the recipient or subrecipient). See also officers, personnel administration, and
§ 200.432. accounting.
(5) Maintenance, protection, and in- (c) Federal Agency Acceptance of Nego-
vestment of special funds not used in tiated Indirect Cost Rates. (See § 200.306.)
the recipient’s or subrecipient’s oper- (1) Negotiated indirect cost rates
ation. See also § 200.442. must be accepted by all Federal agen-
(6) Administration of group benefits cies. A Federal agency may use a rate
on behalf of members or clients, in- different from the negotiated rate for
cluding life and hospital insurance, an- either a class of Federal awards or a
nuity or retirement plans, and finan- single Federal award only when re-
cial aid. See also § 200.431. quired by Federal statute or regula-
tion, or when approved by the awarding
§ 200.414 Indirect costs. Federal agency in accordance with
(a) Facilities and administration classi- paragraph (c)(3) of this section.
fication. For major Institutions of (2) The Federal agency must notify
Higher Education (IHE) and major non- OMB of any approved deviations. The
profit organizations, indirect costs recipient or subrecipient may notify
must be classified within two broad OMB of any disputes with Federal
categories: ‘‘Facilities’’ and ‘‘Adminis- agencies regarding the application of a
tration.’’ ‘‘Facilities’’ is defined as de- federally negotiated indirect cost rate.
preciation on buildings, equipment and (3) The Federal agency must imple-
capital improvements, interest on debt ment, and make publicly available, the
associated with certain buildings, policies, procedures and general deci-
equipment and capital improvements, sion-making criteria that their pro-
and operations and maintenance ex- grams will follow to seek and justify
penses. ‘‘Administration’’ is defined as deviations from negotiated rates.
general administration and general ex- (4) The Federal agency must include,
penses such as the director’s office, ac- in the notice of funding opportunity,
counting, personnel, and all other the policies relating to indirect cost
types of expenditures not listed specifi- rate reimbursement or cost share as
cally under one of the subcategories of approved under paragraph (e). As ap-
‘‘Facilities’’ (including cross alloca- propriate, the Federal agency should
tions from other pools, where applica- incorporate discussion of these policies
ble). For nonprofit organizations, li- into its outreach activities with appli-
brary expenses are included in the cants before posting a notice of funding
‘‘Administration’’ category; for IHEs, opportunity. See § 200.204.
they are included in the ‘‘Facilities’’ (d) Pass-through entities. Pass-through
category. Major IHEs are defined as entities are subject to the require-
those required to use the Standard For- ments in § 200.332(b)(4) and must accept
mat for Submission as noted in Appen- all federally negotiated indirect costs
dix III. Major nonprofit organizations rates for subrecipients.
are those which receive more than $10 (e) Appendices. Requirements for de-
million in direct Federal funding. velopment and submission of indirect
(b) Diversity of nonprofit organizations. cost rate proposals and cost allocation
It is not always possible to specify the plans are contained in the following
types of costs that may be classified as Appendices:
indirect costs for nonprofit organiza- (1) Appendix III to Part 200—Indirect
tions due to the diversity of their ac- (F&A) Costs Identification and Assign-
counting practices. The association of ment, and Rate Determination for In-
a cost with a Federal award is the de- stitutions of Higher Education (IHEs);
termining factor in distinguishing di- (2) Appendix IV to Part 200—Indirect
rect from indirect costs. However, typ- (F&A) Costs Identification and Assign-
ical examples of indirect cost for many ment, and Rate Determination for Non-
nonprofit organizations may include profit Organizations;
depreciation on buildings and equip- (3) Appendix V to Part 200—State/
ment, the costs of operating and main- Local Government-wide Central Serv-
rmajette on LAPJN3WLY3PROD with CFR
taining facilities, and general adminis- ice Cost Allocation Plans;
tration and general expenses, such as (4) Appendix VI to Part 200—Public
the salaries and expenses of executive Assistance Cost Allocation Plans;
151
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00163 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.415 2 CFR Ch. II (1–1–26 Edition)
(5) Appendix VII to Part 200—States § 200.415 Required certifications.
and Local Government and Indian
(a) Financial reports must include a
Tribe Indirect Cost Proposals; and
certification, signed by an official who
(6) Appendix IX to Part 200—Hospital is authorized to legally bind the recipi-
Cost Principles. ent, which reads as follows: ‘‘By sign-
(f) De minimis rate. Recipients and ing this report, I certify to the best of
subrecipients that do not have a cur- my knowledge and belief that the re-
rent Federal negotiated indirect cost port is true, complete, and accurate,
rate (including provisional rate) may and the expenditures, disbursements
elect to charge a de minimis rate of up and cash receipts are for the purposes
to 15 percent of modified total direct and objectives set forth in the terms
costs (MTDC). The recipient or sub- and conditions of the Federal award. I
recipient is authorized to determine am aware that any false, fictitious, or
the appropriate rate up to this limit. fraudulent information, or the omis-
Federal agencies and pass-through en- sion of any material fact, may subject
tities may not require recipients and me to criminal, civil or administrative
subrecipients to use a de minimis rate penalties for fraud, false statements,
lower than the negotiated indirect cost false claims or otherwise. (U.S. Code
rate or the rate elected pursuant to Title 18, Section 1001 and Title 31, Sec-
this subsection unless required by Fed- tions 3729–3730 and 3801–3812).’’
eral statute or regulation. The de mini- (b) Subrecipients under the Federal
mis rate must not be applied to cost re- award must certify to the pass-through
imbursement contracts issued directly entity whenever applying for funds, re-
by the Federal Government in accord- questing payment, and submitting fi-
ance with the FAR. Recipients and sub- nancial reports: ‘‘I certify to the best
recipients are not required to use the of my knowledge and belief that the in-
de minimis rate. When applying the de formation provided herein is true, com-
minimis rate, costs must be consist- plete, and accurate. I am aware that
ently charged as either direct or indi- the provision of false, fictitious, or
rect costs and may not be double fraudulent information, or the omis-
charged or inconsistently charged as sion of any material fact, may subject
both. The de minimis rate does not re- me to criminal, civil, or administrative
quire documentation to justify its use consequences including, but not lim-
and may be used indefinitely. Once ited to violations of U.S. Code Title 18,
elected, the recipient or subrecipient Sections 2, 1001, 1343 and Title 31, Sec-
tions 3729–3730 and 3801–3812.’’ Each
must use the de minimis rate for all
such certification must be maintained
Federal awards until the recipient or
pursuant to the requirements of
subrecipient chooses to receive a nego-
§ 200.334. This paragraph applies to all
tiated rate.
tiers of subrecipients.
(g) One-time extension of indirect rates.
(c) Certification of cost allocation
A recipient or subrecipient with a cur- plan or indirect cost rate proposal.
rent Federal negotiated indirect cost Each cost allocation plan or indirect
rate may apply for a one-time exten- cost rate proposal must comply with
sion of that agreement for up to four the following:
years. This extension will be subject to (1) A proposal to establish a cost allo-
review and approval by the cognizant cation plan or an indirect cost rate,
agency for indirect costs. If this exten- whether submitted to a Federal cog-
sion is granted, the recipient or sub- nizant agency for indirect costs or
recipient may not request a rate review maintained on file by the recipient,
until the extension period ends. The re- must be certified by the recipient using
cipient or subrecipient must re-apply the Certificate of Cost Allocation Plan or
to negotiate a new rate when the ex- Certificate of Indirect Costs as set forth
tension ends. After a new rate has been in appendices III through VII, and IX of
negotiated, the recipient or sub- this part. The certificate must be
rmajette on LAPJN3WLY3PROD with CFR
recipient may again apply for a one- signed on behalf of the recipient by an
time extension of the new rate in ac- individual at a level no lower than the
cordance with this paragraph. vice president or chief financial officer
152
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00164 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.418
of the recipient that submits the pro- each operating department is usually
posal. necessary to claim indirect costs under
(2) The Federal Government may ei- Federal awards. Indirect costs include:
ther disallow all indirect costs or uni- (1) The indirect costs originating in
laterally establish an indirect cost rate each operating department of the
when the recipient fails to submit a State, local government, or Indian
certified proposal for establishing a Tribe carrying out Federal awards; and
rate. This rate should be based upon (2) The costs of central governmental
audited historical data or other data services distributed through the cen-
furnished to the cognizant agency for
tral service cost allocation plan and
indirect costs and for which it can be
not otherwise treated as direct costs.
demonstrated that all unallowable
costs have been excluded. The rate es- (c) The requirements for developing
tablished must ensure that potentially and submitting cost allocation plans
unallowable costs are not reimbursed. (for central service costs and public as-
Alternatively, the recipient may use sistance programs) and indirect cost
the de minimis indirect cost rate. See rate proposals are contained in appen-
§ 200.414(f). dices V, VI, and VII of this part.
(d) Nonprofit organizations must cer-
tify that they did not meet the defini- § 200.417 Interagency service.
tion of a major nonprofit organization An operating department may pro-
as defined in § 200.414(a), if applicable. vide services to another operating de-
(e) The recipient must certify that partment of the same State, local gov-
the requirements and standards for lob- ernment, or Indian Tribe. In these in-
bying (see § 200.450) have been met when stances, the cost of services provided
submitting its indirect cost rate pro- may include allowable direct costs of
posal. the service plus a pro-rated share of in-
direct costs. A standard indirect cost
SPECIAL CONSIDERATIONS FOR STATES,
LOCAL GOVERNMENTS AND INDIAN rate equal to 15 percent of the direct
TRIBES salaries and wages for providing the
service (excluding overtime, shift pre-
§ 200.416 Cost allocation plans and in- miums, and fringe benefits) may be
direct cost proposals. used instead of determining the actual
(a) Awards to states, local govern- indirect costs of the service. These
ments, and Indian Tribes are often im- services do not include centralized
plemented at the level of department services that are included in central
within the State, local government, or service cost allocation plans described
Indian Tribe. A central service cost al- in Appendix V of this part.
location plan is established to allow
such department to claim a portion of SPECIAL CONSIDERATIONS FOR
centralized service costs that are in- INSTITUTIONS OF HIGHER EDUCATION
curred in proportion to the award’s ac-
tivities. Examples of centralized serv- § 200.418 Costs incurred by states and
ice costs may include motor pools, local governments.
computer centers, purchasing, and ac- Costs incurred or paid by a State or
counting. Since Federal awards are local government on behalf of and in
performed within the individual oper- direct benefit to its IHEs are allowable.
ating agencies, there needs to be a These costs include but are not limited
process whereby these central service to fringe benefit programs such as pen-
costs can be identified and assigned to sion costs and Federal Insurance Con-
benefitted activities on a reasonable tributions Act (FICA) costs. These
and consistent basis. The central serv- costs are allowable regardless of
ice cost allocation plan establishes this whether they are recorded in the ac-
process.
counting records of the institutions,
(b) Individual departments typically
subject to the following conditions:
rmajette on LAPJN3WLY3PROD with CFR
charge Federal awards for indirect
(a) The costs meet the requirements
costs through an indirect cost rate. A
separate indirect cost rate proposal for of § 200.402–200.411;
153
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00165 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.419 2 CFR Ch. II (1–1–26 Edition)
(b) The costs are properly supported § 200.421 Advertising and public rela-
by approved cost allocation plans in ac- tions.
cordance with the applicable cost ac- (a) The term advertising costs means
counting principles of this part; and the costs of advertising media and cor-
(c) The costs are not otherwise borne ollary administrative costs. Adver-
directly or indirectly by the Federal tising media includes, but is not lim-
Government. ited to, magazines, newspapers, radio
and television, direct mail, exhibits,
§ 200.419 Cost accounting standards. and electronic or computer transmit-
An IHE that receive an aggregate tals.
total $50 million or more in Federal (b) The only allowable advertising
costs are those which are solely for:
awards and instruments subject to this
(1) The recruitment of personnel re-
subpart (as specified in § 200.101) in its
quired by the recipient or subrecipient
most recently completed fiscal year for the performance of a Federal award
must comply with the Cost Accounting (See also § 200.463);
Standards Board’s cost accounting (2) The procurement of goods and
standards located at 48 CFR 9905.501, services for the performance of a Fed-
9905.502, 9905.505, and 9905.506. CAS-cov- eral award;
ered contracts and subcontracts award- (3) The disposal of scrap or surplus
ed to the IHEs are subject to the broad- materials acquired in the performance
er range of CAS requirements at 48 of a Federal award except when the re-
CFR 9900 through 9999 and 48 CFR part cipient or subrecipient is reimbursed
30 (FAR Part 30). for disposal costs at a predetermined
amount; or
GENERAL PROVISIONS FOR SELECTED (4) Program outreach (for example,
ITEMS OF COST recruiting project participants) and
other specific purposes necessary to
§ 200.420 Considerations for selected meet the Federal award requirements.
items of cost. (c) The term ‘‘public relations’’ in-
(a) This section provides principles to cludes community relations and means
be applied in establishing the allow- those activities dedicated to maintain-
ability of certain items involved in de- ing the recipient’s or subrecipient’s
termining cost, in addition to other re- image or maintaining or promoting un-
quirements of this subpart. These prin- derstanding and favorable relations
ciples apply whether or not a par- with the community or public at large
or any segment of the public.
ticular cost item is properly treated as
(d) The only allowable public rela-
a direct or indirect cost.
tions costs are:
(b) The following sections are not in- (1) Costs specifically required by the
tended to be a comprehensive list of po- Federal award;
tential items of cost encountered under (2) Costs of communicating with the
Federal awards. Failure to mention a public and press about specific activi-
particular item of cost, including as an ties or accomplishments which result
example in certain sections, is not in- from the performance of the Federal
tended to imply that it is either allow- award (these costs are considered nec-
able or unallowable. When determining essary as part of the outreach effort for
the allowability for an item of cost, the Federal award); or
each case should be based on the treat- (3) Costs of conducting general liai-
ment provided for similar or related son with news media and government
items of cost and based on the prin- public relations officers, to the extent
ciples described in §§ 200.402 through that such activities are limited to com-
200.411. In case of a discrepancy be- munication and liaison necessary to
tween the provisions of a specific Fed- keep the public informed on matters of
eral award and the provisions below, public concern, such as notices of fund-
the Federal award governs. Criteria ing opportunities or financial matters.
rmajette on LAPJN3WLY3PROD with CFR
(e) Unallowable advertising and pub-
outlined in § 200.403 must be applied in
lic relations costs include the fol-
determining allowability.
lowing:
154
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00166 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.427
(1) All advertising and public rela- (2) Except as provided for in para-
tions costs other than as specified in graph (c) of this section, any costs of
paragraphs (b) and (d) of this section; auditing a non-Federal entity that is
(2) Costs of meetings, conventions, exempted from having an audit con-
conferences, or other events related to ducted under the Single Audit Act and
other activities of the entity (see also subpart F of this part because its ex-
§ 200.432), including: penditures under Federal awards are
(i) Costs of displays, demonstrations, less than $1,000,000 during its fiscal
and exhibits; year.’’
(ii) Costs of meeting rooms, hospi- (b) The costs of a financial statement
tality suites, and other special facili- audit of a recipient or subrecipient
ties used in conjunction with shows that does not currently have a Federal
and other special events; and award may be included in the indirect
(iii) Salaries and wages of employees cost pool for a cost allocation plan or
engaged in setting up and displaying indirect cost proposal.
exhibits, making demonstrations, and (c) Pass-through entities may charge
providing briefings; Federal awards for the cost of agreed-
(3) Costs of promotional items and upon procedures engagements to mon-
memorabilia; itor subrecipients (in accordance with
(4) Costs of advertising and public re- §§ 200.331–333) exempt from having an
lations designed solely to promote the audit conducted under the Single Audit
recipient or subrecipient. Act and the requirements of this part.
§ 200.422 Advisory councils. This cost is allowable only if the
agreed-upon procedures engagements
An advisory council or committee is are:
a body that provides advice to the
(1) Conducted in accordance with
management of such entities as cor-
GAGAS or applicable international at-
porations, organizations, or founda-
testation standards, as appropriate;
tions. Costs incurred by both internal
(2) Paid for and arranged by the pass-
and external advisory councils or com-
through entity; and
mittees are allowable if authorized by
statute, the Federal agency, or as an (3) Limited in scope to one or more of
indirect cost where allocable to Fed- the following types of compliance re-
eral awards. See § 200.444, which applies quirements: activities allowed or
to States, local governments, and In- unallowed; allowable costs/cost prin-
dian Tribes. ciples; eligibility; and reporting.
§ 200.423 Alcoholic beverages. § 200.426 Bad debts.
The cost of alcoholic beverages is un- Bad debts (debts determined to be un-
allowable. collectable), including losses (whether
actual or estimated) arising from un-
§ 200.424 Alumni activities. collectable accounts and other claims,
Costs incurred by IHEs for, or in sup- are unallowable. Related collection
port of, alumni activities are unallow- costs, and related legal costs, arising
able. from such debts are also unallowable.
See § 200.428.
§ 200.425 Audit services.
(a) A reasonably proportionate share § 200.427 Bonding costs.
of the costs of audits required by and (a) Bonding costs arise when the Fed-
performed in accordance with the Sin- eral agency requires assurance against
gle Audit Act Amendments of 1996 (31 financial loss to itself or others be-
U.S.C. 7501–7507), and the requirements cause of an act or default of the recipi-
of this part are allowable. However, the ent or subrecipient. They also arise
following audit costs are unallowable: when the recipient or subrecipient re-
(1) Any costs when audits required by quires similar assurance, including
the Single Audit Act and subpart F of bonds as bid, performance, payment,
rmajette on LAPJN3WLY3PROD with CFR
this part have not been conducted, or advance payment, infringement, and fi-
have been conducted but not in accord- delity bonds for employees and offi-
ance with the requirements; and cials.
155
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00167 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.428 2 CFR Ch. II (1–1–26 Edition)
(b) Costs of bonding required under (3) Is determined and supported as
the Federal award’s terms and condi- provided in paragraph (g) of this sec-
tions are allowable. tion, when applicable.
(c) Costs of bonding required by the (b) Reasonableness. Compensation for
recipient or subrecipient in the general employees engaged in work on Federal
conduct of its operations are allowable awards will be reasonable to the extent
as an indirect cost to the extent that that it is consistent with that paid for
such bonding is in accordance with similar work in other activities of the
sound business practice and the rates recipient or subrecipient. In cases
and premiums are reasonable under the where the kinds of employees required
circumstances. for Federal awards are not found in the
other activities of the recipient or sub-
§ 200.428 Collections of improper pay- recipient, compensation will be consid-
ments. ered reasonable to the extent that it is
The costs incurred by a recipient or comparable to that paid for similar
subrecipient to recover improper pay- work in the labor market in which the
ments, including improper overpay- recipient or subrecipient competes for
ments, are allowable as either direct or the kind of employees involved.
indirect costs, as appropriate. The re- (c) Professional activities outside the re-
cipient or subrecipient may use the cipient or subrecipient. Unless the Fed-
amounts collected in accordance with eral agency expressly authorizes an ar-
rangement, a recipient or subrecipient
cash management standards described
must follow its written policies and
in § 200.305.
procedures concerning the permissible
§ 200.429 Commencement and convoca- extent of professional services that can
tion costs. be provided outside the recipient or
subrecipient for non-organizational
For IHEs, costs incurred for com- compensation. Where the recipient or
mencements and convocations are un- subrecipient does not have written
allowable, except as activity costs pro- policies or procedures, or they do not
vided for in Appendix III, (B)(9) Stu- adequately define the permissible ex-
dent Administration and Services. tent of consulting or other non-organi-
zational activities undertaken for
§ 200.430 Compensation—personal
services. extra outside pay, the Federal Govern-
ment may require the recipient or sub-
(a) General. Compensation for per- recipient to allocate the effort of pro-
sonal services includes all remunera- fessional staff working on Federal
tion, paid currently or accrued, for awards between:
services of employees rendered during (1) Recipient or subrecipient activi-
the period of performance under the ties, and
Federal award, including but not nec- (2) Non-organizational professional
essarily limited to wages and salaries. activities. Appropriate arrangements
Compensation for personal services governing compensation must be nego-
may also include fringe benefits ad- tiated on a case-by-case basis if the
dressed in § 200.431. Costs of compensa- Federal agency considers the extent of
tion are allowable to the extent that non-organizational professional effort
they satisfy the specific requirements excessive or inconsistent with the con-
of this part and that the total com- flicts-of-interest terms and conditions
pensation for individual employees: of the Federal award.
(1) Is reasonable for the services ren- (d) Unallowable costs. (1) Costs unal-
dered and conforms to the established lowable under other sections of these
written policy of the recipient or sub- principles must not be allowable under
recipient consistently applied to both this section solely because they con-
Federal and non-Federal activities; stitute personnel compensation.
(2) Follows an appointment made in (2) The allowable compensation for
accordance with the recipient’s or sub- certain employees is subject to a ceil-
rmajette on LAPJN3WLY3PROD with CFR
recipient’s laws, rules, or written poli- ing in accordance with Federal statute.
cies and meets the requirements of See 10 U.S.C. 3744(a)(16), 41 U.S.C. 1127,
Federal statute, where applicable; and and 41 U.S.C. 4304(a)(16) for the ceiling
156
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00168 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.430
amount, covered compensation subject (v) Comply with the established ac-
to the ceiling, covered employees, and counting policies and procedures of the
other relevant provisions for cost-reim- recipient or subrecipient (See para-
bursement contracts. For other types graph (i)(1)(ii) of this section for treat-
of Federal awards, other statutory ceil- ment of incidental work for IHEs.); and
ings may apply. (vi) Support the distribution of the
(e) Special considerations. Special con- employee’s salary or wages among spe-
siderations in determining the allow- cific activities or cost objectives if the
ability of compensation will be given employee works on more than one Fed-
to any change in a recipient’s or sub- eral award; a Federal award and non-
recipient’s compensation policy result- Federal award; an indirect cost activ-
ing in a substantial increase in its em- ity and a direct cost activity; two or
ployees’ level of compensation (par- more indirect activities allocated using
ticularly when the change was concur- different allocation bases; or an unal-
rent with an increase in the ratio of lowable activity and a direct or indi-
Federal awards to other activities) or rect cost activity.
any change in the treatment of allow- (vii) Budget estimates (meaning, es-
ability of specific types of compensa- timates determined before the services
tion due to changes in Federal policy. are performed) alone do not qualify as
(f) Incentive compensation. Incentive support for charges to Federal awards,
compensation to employees based on but may be used for interim accounting
cost reduction, efficient performance, purposes, provided that:
suggestion awards, or safety awards is (A) The system for establishing the
allowable to the extent that the overall estimates produces reasonable approxi-
compensation is determined to be rea- mations of the activity performed;
sonable and such costs are paid or ac- (B) Significant changes in the related
crued according to an agreement en- work activity (as defined by the recipi-
tered into in good faith between the re- ent’s or subrecipient’s written policies)
cipient or subrecipient and the employ- are promptly identified and entered
ees before the services were rendered, into the records. Short-term (such as
or according to an established plan fol- one or two months) fluctuations be-
lowed by the recipient or subrecipient tween workload categories do not need
so consistently as to imply, in effect, to be considered as long as the dis-
an agreement to make such payment. tribution of salaries and wages is rea-
(g) Standards for Documentation of sonable over the longer term; and
Personnel Expenses. (1) Charges to Fed- (C) The recipient’s or subrecipient’s
eral awards for salaries and wages system of internal controls includes
must be based on records that accu- processes to perform periodic after-the-
rately reflect the work performed. fact reviews of interim charges made
These records must: to a Federal award based on budget es-
(i) Be supported by a system of inter- timates. All necessary adjustments
nal control that provides reasonable must be made so that the final amount
assurance that the charges are accu- charged to the Federal award is accu-
rate, allowable, and properly allocated; rate, allowable, and properly allocated.
(ii) Be incorporated into the official (viii) Because practices vary as to the
records of the recipient or subrecipient; activity constituting a full workload
(iii) Reasonably reflect the total ac- (for example, the Institutional Base
tivity for which the employee is com- Salary (IBS) for IHEs), records may re-
pensated by the recipient or sub- flect categories of activities expressed
recipient, not exceeding 100 percent of as a percentage distribution of total
compensated activities (for IHEs, this activities.
is the IBS); (ix) It is recognized that teaching, re-
(iv) Encompass federally-assisted and search, service, and administration are
all other activities compensated by the often inextricably intermingled in an
recipient or subrecipient on an inte- academic setting. Therefore, a precise
grated basis but may include the use of assessment of factors contributing to
rmajette on LAPJN3WLY3PROD with CFR
subsidiary records as defined in the re- costs is not required when IHEs record
cipient’s or subrecipient’s written pol- salaries and wages charged to Federal
icy; awards.
157
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00169 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.430 2 CFR Ch. II (1–1–26 Edition)
(2) For records that meet the stand- (iii) Less than full compliance with
ards required in paragraph (g)(1) of this the statistical sampling standards
section, the recipient or subrecipient is noted in paragraph (5)(i) may be ac-
not required to provide additional sup- cepted by the cognizant agency for in-
port or documentation for the work direct costs if it concludes that the
performed other than that referenced amounts allocated to Federal awards
in paragraph (g)(3) of this section. will be minimal or if it concludes that
(3) In accordance with Department of the system proposed by the recipient or
Labor regulations implementing the subrecipient will result in lower costs
Fair Labor Standards Act (FLSA) (29 to Federal awards than a system which
CFR part 516), charges for the salaries complies with the standards.
and wages of nonexempt employees, in (6) Cognizant agencies for indirect
addition to the supporting documenta- costs are encouraged to approve alter-
tion described in this section, must native proposals based on outcomes
also be supported by records indicating and milestones for program perform-
the total number of hours worked each ance when these are clearly docu-
day. mented. These plans are acceptable as
(4) Salaries and wages of employees an alternative to requirements in para-
used in meeting cost sharing require- graph (g)(1) of this section when ap-
ments on Federal awards must be sup- proved by the cognizant agency for in-
ported in the same manner as salaries direct costs.
and wages claimed for reimbursement (7) For Federal awards of similar pur-
from Federal awards.
pose activity or instances of approved
(5) States, local governments, and In-
blended funding, a recipient or sub-
dian Tribes may use substitute proc-
recipient may submit performance
esses or systems for allocating salaries
plans that incorporate funds from mul-
and wages to Federal awards either in
tiple Federal awards and account for
place of or in addition to the records
their combined use based on perform-
described in paragraph (g)(1) of this
ance-oriented metrics, provided the
section if approved by the cognizant
plans are approved in advance by all in-
agency for indirect cost. Such systems
volved Federal agencies. In these in-
may include, but are not limited to,
stances, the recipient or subrecipient
random moment sampling, ‘‘rolling’’
time studies, case counts, or other must submit a request for waiver of the
quantifiable measures of work per- requirements based on documentation
formed. that describes the method of charging
(i) Substitute systems that use sam- costs, relates the charging of costs to
pling methods (primarily for Tem- the specific activity that is applicable
porary Assistance for Needy Families to all fund sources, and is based on
(TANF), the Supplemental Nutrition quantifiable measures of the activity
Assistance Program (SNAP), Medicaid, in relation to time charged.
and other public assistance programs) (8) For a recipient or subrecipient
must meet acceptable statistical sam- whose records do not meet the stand-
pling standards, including: ards described in this section, the Fed-
(A) The sampling universe must in- eral Government may require per-
clude all of the employees whose sala- sonnel activity reports, including pre-
ries and wages are to be allocated scribed certifications, or equivalent
based on sample results except as pro- documentation supporting the records
vided in paragraph (g)(5)(iii); as required in this section.
(B) The sample must cover the entire (h) Nonprofit organizations. This para-
period involved; and graph (h) provides guidance specific to
(C) The results must be statistically only nonprofit organizations. For com-
valid and applied to the period being pensation to members of nonprofit or-
sampled. ganizations, trustees, directors, associ-
(ii) Allocating charges for the sam- ates, officers, or the immediate fami-
pled employees’ supervisors and cler- lies thereof, a determination must be
rmajette on LAPJN3WLY3PROD with CFR
ical and support staff, based on the re- made that the compensation is reason-
sults of the sampled employees, will be able for the actual personal services
acceptable. rendered rather than a distribution of
158
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00170 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.430
earnings above actual costs. Compensa- istration, or other activities. IBS ex-
tion may include director’s and execu- cludes any income an individual earns
tive committee member’s fees, incen- outside of duties performed for the
tive awards, off-site or incentive pay, IHE. Unless there is prior approval by
location allowances, hardship pay, and the Federal agency, charges of a fac-
cost-of-living differentials. ulty member’s salary to a Federal
(i) Institutions of Higher Education award may not exceed the propor-
(IHEs). This paragraph provides guid- tionate share of the IBS for the period
ance specific to only IHEs. during which the faculty member
(1) Determining allowable personnel worked on the Federal award.
costs. Certain conditions require special (3) Intra-Institution of Higher Edu-
consideration and possible limitations cation (IHE) consulting. Intra-IHE con-
in determining allowable personnel sulting by faculty should be under-
compensation costs under Federal taken as an IHE responsibility requir-
awards. Among such conditions are the ing no compensation in addition to
following: IBS. However, in unusual cases where
(i) Allowable activities. Charges to consultation is across departmental
Federal awards may include reasonable lines or involves a separate or remote
amounts for activities contributing operation, and the work performed by
and directly related to work under an the faculty members is in addition to
agreement, such as delivering special their regular responsibilities, any
lectures about specific aspects of the charges for such work representing ad-
ongoing activity, writing reports and ditional compensation above IBS are
articles, developing and maintaining allowable provided that such con-
protocols (human, animals, etcetera), sulting arrangements are expressly au-
managing substances/chemicals, man- thorized in the Federal award or ap-
aging and securing project-specific proved in writing by the Federal agen-
data, coordinating research subjects, cy.
participating in appropriate seminars,
(4) Extra service pay. Extra service
consulting with colleagues and grad-
pay typically represents overload com-
uate students, and attending meetings
pensation, subject to institutional
and conferences.
compensation policies for services
(ii) Incidental activities. Incidental
above and beyond IBS. Where extra
activities for which supplemental com-
service pay results from Intra-IHE con-
pensation is allowable under the writ-
sulting, it is subject to the same re-
ten institutional policy (at a rate not
quirements of paragraph (b) of this sec-
to exceed institutional base salary) do
tion. It is allowable if all of the fol-
not need to be included in the records
described in paragraph (g). To charge lowing conditions are met:
payments of incidental activities di- (i) The IHE establishes consistent
rectly, such activities must either be written policies which apply uniformly
expressly authorized in the Federal to all faculty members, not just those
award budget or receive prior written working on Federal awards.
approval by the Federal agency. (ii) The IHE establishes a consistent
(2) Salary basis. Charges for work per- written definition of work covered by
formed on Federal awards by faculty IBS, which is specific enough to deter-
members during the academic year are mine conclusively when work beyond
allowable at the institutional base sal- that level has occurred. This definition
ary (IBS) rate. Except as noted in para- may be described in appointment let-
graph (i)(1)(ii), in no event will charges ters or other documentation.
to Federal awards, irrespective of the (iii) The supplementation amount
basis of computation, exceed the pro- paid is commensurate with the IBS pay
portionate share of the IBS for that pe- rate and additional work performed.
riod. This principle applies to all mem- See paragraph (i)(2) of this section.
bers of the faculty at an institution. (iv) The salaries, as supplemented,
IBS is the annual compensation paid fall within the salary structure and
rmajette on LAPJN3WLY3PROD with CFR
by an IHE for an individual’s appoint- pay ranges established by and docu-
ment, whether that individual’s time is mented in writing or otherwise applica-
spent on research, instruction, admin- ble to the IHE.
159
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00171 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.431 2 CFR Ch. II (1–1–26 Edition)
(v) The total salaries charged to Fed- addition to regular salaries and wages.
eral awards, including extra service Fringe benefits include, but are not
payments, are subject to the standards limited to, the costs of leave, employee
of documentation as described in para- insurance, pensions, and unemploy-
graph (g). ment benefits. Except as provided else-
(5) Periods outside the academic year. where in these principles, the costs of
(i) Except as specified for teaching ac- fringe benefits are allowable provided
tivity in paragraph (i)(5)(ii) of this sec- that the benefits are reasonable and
tion, charges for work performed by are required by law, an organization-
faculty members on Federal awards employee agreement, or an established
during periods not included in the base policy of the recipient or subrecipient.
salary period must be at a rate not (b) Leave. The cost of fringe benefits
more than the IBS.
in the form of regular compensation
(ii) Charges for teaching activities
paid to employees during periods of au-
performed by faculty members on Fed-
thorized absences from the job, such as
eral awards during periods not included
for annual leave, family-related leave,
in IBS period must be based on the
written policy of the IHE governing sick leave, holidays, court leave, mili-
compensation to faculty members for tary leave, administrative leave, and
teaching assignments during such peri- other similar benefits, are allowable if
ods. all of the following criteria are met:
(6) Part-time faculty. Charges for work (1) They are provided under estab-
performed on Federal awards by fac- lished written leave policies;
ulty members having only part-time (2) The costs are equitably allocated
appointments must be determined at a to all related activities, including Fed-
rate not more than that regularly paid eral awards; and,
for part-time assignments. (3) The accounting basis (cash or ac-
(7) Sabbatical leave costs. Rules for crual) selected for costing each type of
sabbatical leave are as follows: leave is consistently followed by the
(i) Costs of leaves of absence by em- recipient or subrecipient or a specified
ployees for performance of graduate grouping of employees.
work or sabbatical study, travel, or re- (i) When a recipient or subrecipient
search are allowable, provided the IHE uses the cash basis of accounting, the
has a uniform written policy on sab- cost of leave is recognized in the period
batical leave for persons engaged in in- that the leave is taken and paid for.
struction and persons engaged in re- Payments for unused leave when an
search. These costs must be allocated employee retires or terminates em-
equitably among all related activities ployment are allowable in the year of
of the IHE.
payment and should be allocated as a
(ii) Where sabbatical leave is in-
general administrative expense to all
cluded in fringe benefits for which a
activities or included in the fringe ben-
cost is determined for assessment as a
efit rate.
direct charge, the aggregate amount of
such assessments applicable to all (ii) The accrual basis may be only
work of the institution during the base used for those types of leave for which
period must be reasonable in relation a liability as defined by GAAP exists
to the IHE’s actual experience under when the leave is earned. When a re-
its sabbatical leave policy. cipient or subrecipient uses the accrual
(8) Salary rates for non-faculty mem- basis of accounting, allowable leave
bers. Non-faculty full-time professional costs are the lesser of the amount ac-
personnel may also earn ‘‘extra service crued or funded.
pay’’ in accordance with the IHE’s (c) Fringe benefits. The cost of fringe
written policy and paragraph (i)(1)(i). benefits in the form of employer con-
tributions or expenses for social secu-
§ 200.431 Compensation—fringe bene- rity; employee life, health, unemploy-
fits. ment, and worker’s compensation in-
rmajette on LAPJN3WLY3PROD with CFR
(a) General. Fringe benefits are allow- surance (except as indicated in
ances and services employers provide § 200.447); pension plan costs; and other
to their employees as compensation in similar benefits are allowable, provided
160
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00172 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.431
such benefits are permitted under es- post-retirement health benefits) are al-
tablished written policies. The recipi- lowable in the year of payment pro-
ent or subrecipient must allocate vided that the recipient or subrecipient
fringe benefits to Federal awards and follows a consistent costing policy.
all other activities in a manner con- (f) Automobiles. That portion of auto-
sistent with the pattern of benefits at- mobile costs furnished by the recipient
tributable to the individuals or or subrecipient that relates to personal
group(s) of employees whose salaries use by employees (including transpor-
and wages are chargeable to such Fed- tation to and from work) is unallow-
eral awards and other activities, and able as a fringe benefit or indirect
charged as direct or indirect costs fol- costs regardless of whether the cost is
lowing the recipient’s or subrecipient’s reported as taxable income to the em-
accounting practices. ployees.
(d) Cost objectives. The recipient or (g) Pension plan costs. Pension plan
subrecipient may assign fringe benefits costs incurred in accordance with the
to cost objectives by identifying spe- established written policies of the re-
cific benefits to specific individual em- cipient or subrecipient are allowable,
ployees or by allocating them based on provided that:
entity-wide salaries and wages of the (1) Such policies meet the test of rea-
employees receiving the benefits. When sonableness.
the allocation method is used, separate
(2) The methods of cost allocation are
allocations must be made to selective
not discriminatory.
groupings of employees unless the re-
cipient or subrecipient demonstrates (3) The cost assigned to each fiscal
that costs in relationship to salaries year should be determined in accord-
and wages do not differ significantly ance with GAAP, except for State and
for different groups of employees. local governments.
(e) Insurance. See also § 200.447(d)(1) (4) The costs assigned to a given fis-
and (2). cal year are funded for all plan partici-
(1) Provisions for a reserve under a pants within six months after the end
self-insurance program for unemploy- of that year. However, increases to nor-
ment compensation or workers’ com- mal and past service pension costs
pensation are allowable to the extent caused by a delay in funding the actu-
that the provisions represent reason- arial liability beyond 30 calendar days
able estimates of the liabilities for after each quarter of the year to which
such compensation and the types of such costs are assignable are unallow-
coverage, the extent of coverage, and able. The recipient or subrecipient may
rates and premiums would have been follow the ‘‘Cost Accounting Standard
allowable had insurance been pur- for Composition and Measurement of
chased to cover the risks. However, Pension Costs’’ (48 CFR 9904.412).
provisions for self-insured liabilities (5) Premiums for pension plan termi-
which do not become payable for more nation insurance that are paid accord-
than one year after the provision is ing to the Employee Retirement In-
made must not exceed the present come Security Act (ERISA) of 1974 (29
value of the liability. U.S.C. 1301–1461) are allowable. Late
(2) Insurance costs on the lives of payment charges on such premiums are
trustees, officers, or other employees unallowable. Excise taxes on accumu-
holding positions of similar responsi- lated funding deficiencies and other
bility are allowable only to the extent penalties imposed under ERISA are un-
that the insurance represents addi- allowable.
tional compensation. The cost of such (6) Pension plan costs may be com-
insurance is unallowable when the re- puted using a pay-as-you-go method or
cipient or subrecipient is named as an actuarial cost method recognized by
beneficiary. GAAP and following the recipient’s or
(3) Actual claims paid to or on behalf subrecipient’s established written poli-
of employees or former employees for cies.
rmajette on LAPJN3WLY3PROD with CFR
workers’ compensation, unemployment (i) For pension plans financed on a
compensation, severance pay, and simi- pay-as-you-go method, allowable costs
lar employee benefits (for example, will be limited to those representing
161
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00173 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.431 2 CFR Ch. II (1–1–26 Edition)
actual payments to retirees or their and their spouses, dependents, and sur-
beneficiaries. vivors. PRHP costs may be computed
(ii) Pension costs calculated using an using a pay-as-you-go method or an ac-
actuarial cost method recognized by tuarial cost method recognized by
GAAP are allowable for a given fiscal GAAP and following the recipient’s or
year if they are funded for that year subrecipient’s established written poli-
within six months after the end of that cies.
year. Costs funded after six months (or (1) For PRHP financed on a pay-as-
a later period agreed to by the cog- you-go method, allowable costs will be
nizant agency for indirect costs) are al- limited to those representing actual
lowable in the year funded. The cog- payments to retirees or their bene-
nizant agency for indirect costs may ficiaries.
agree to an extension if an appropriate (2) PRHP costs calculated using an
adjustment is made to compensate for actuarial cost method recognized by
the timing of the charges to the Fed- GAAP are allowable for a given fiscal
eral Government and related Federal year if they are funded for that year
reimbursement and the recipient’s or within six months after the end of that
subrecipient’s contribution to the pen- year. Costs funded after six months (or
sion fund. Adjustments may be made a later period agreed to by the cog-
by cash refund or other equitable pro- nizant agency for indirect costs) are al-
cedures to compensate the Federal lowable in the year funded. The cog-
Government for the time value of Fed- nizant agency for indirect costs may
eral reimbursements in excess of con- agree to an extension if an appropriate
tributions to the pension fund. adjustment is made to compensate for
(iii) Amounts funded by the recipient the timing of the charges to the Fed-
or subrecipient in excess of the actuari- eral Government and related Federal
ally determined amount for a fiscal reimbursement and the recipient’s or
year may be used as the recipient’s or subrecipient’s contributions to the
subrecipient’s contribution in future PRHP fund. Adjustments may be made
periods. by cash refund, reduction in the cur-
(iv) When a recipient or subrecipient rent year’s PRHP costs, or other equi-
establishes or converts to an accept- table procedures to compensate the
able actuarial cost method, as defined Federal Government for the time value
by GAAP, and funds pension costs in of Federal reimbursements in excess of
accordance with this method, the un- contributions to the PRHP fund.
funded liability at the time of conver- (3) Amounts funded by the recipient
sion is allowable if amortized over a or subrecipient in excess of the actuari-
period of years in accordance with ally determined amount for a fiscal
GAAP. year may be used as the recipient’s or
(v) Payments for unfunded pension subrecipient’s contribution in future
costs must be charged in accordance periods.
with the allocation principles of this (4) If a recipient or subrecipient es-
subpart. Specifically, the recipient or tablishes or converts to an actuarial
subrecipient may not charge unfunded cost method and funds PRHP costs in
pension costs directly to a Federal accordance with this method, the ini-
award if those unfunded pension costs tial unfunded liability attributable to
are not allocable to that award. prior years is allowable if amortized
(vi) The recipient or subrecipient over a period of years in accordance
must provide the Federal Government with GAAP, or, if no such GAAP period
an equitable share of any previously al- exists, over a period negotiated with
lowed pension costs (including subse- the cognizant agency for indirect costs.
quent earnings) that revert or inure to (5) Payments for unfunded PRHP
the recipient or subrecipient through a costs must be charged in accordance
refund, withdrawal, or other credit. with the allocation principles of this
(h) Post-retirement health. A post-re- subpart. Specifically, the recipient or
tirement health plan (PRHP) refers to subrecipient may not charge unfunded
rmajette on LAPJN3WLY3PROD with CFR
the costs of health insurance or health PRHP costs directly to a Federal
services not included in a pension plan award if those unfunded PRHP costs
covered by paragraph (g) for retirees are not allocable to that award.
162
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00174 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.431
(6) To be allowable in the current nizant agency for indirect cost, as ap-
year, the PRHP costs must be paid ei- propriate, is required.
ther to: (3) Costs incurred in severance pay
(i) An insurer or other benefit pro- packages that are in excess of the
vider as current year costs or pre- standard severance pay provided by the
miums; or recipient or subrecipient to an em-
(ii) An insurer or trustee that will ployee upon termination of employ-
maintain a trust fund or reserve for the ment and that are paid to the employee
sole purpose of providing post-retire- contingent upon a change in manage-
ment benefits to retirees and other ment control over, or ownership of, the
beneficiaries. recipient’s or subrecipient’s assets, are
(7) The recipient or subrecipient unallowable.
must provide the Federal Government
(4) Severance payments to foreign na-
an equitable share of any previously al-
tionals employed by the recipient or
lowed post-retirement benefit costs (in-
cluding subsequent earnings) that re- subrecipient outside the United States,
vert or inure to the recipient or sub- to the extent that the amount exceeds
recipient through a refund, withdrawal, the customary or prevailing practices
or other credit. for the recipient or subrecipient in the
(i) Severance pay. (1) Severance pay, United States, are unallowable unless
also commonly referred to as dismissal they are required by applicable foreign
wages, is a payment in addition to reg- law or necessary for the performance of
ular salaries and wages, by recipients Federal programs and approved by the
and subrecipients to workers whose Federal agency.
employment is being terminated. Sev- (5) Severance payments to foreign na-
erance pay is allowable only to the ex- tionals employed by the recipient or
tent that, in each case, it is required subrecipient outside the United States
by: due to the termination of the foreign
(i) Law; national as a result of the closing of, or
(ii) Employer-employee agreement; curtailment of activities by, the recipi-
(iii) Established policy that con- ent or subrecipient in that country, are
stitutes, in effect, an implied agree- unallowable unless they are either:
ment on the recipient’s or subrecipi- (i) Required by applicable foreign
ent’s part; or law; or
(iv) Circumstances of the particular (ii) Necessary for the performance of
employment. Federal programs and approved by the
(2) Costs of severance payments are Federal agency.
divided into two categories as follows: (j) For IHEs only. (1) Fringe benefits
(i) Actual severance payments for in the form of undergraduate and grad-
normal turnover must be allocated to
uate tuition or tuition remission for
all activities; or, where the recipient or
individual employees are allowable,
subrecipient provides for a reserve for
provided such benefits are granted in
normal severances, such method is ac-
accordance with established written
ceptable if the charge to current oper-
policies of the IHE and are distributed
ations is reasonable in light of pay-
ments made for normal severances over to all IHE activities on an equitable
a representative past period, and if basis. Tuition benefits for family mem-
amounts charged are allocated to all bers other than the employee are unal-
activities of the recipient or sub- lowable.
recipient. (2) Fringe benefits in the form of un-
(ii) Measuring the costs of abnormal dergraduate and graduate tuition or
or mass severance pay by means of an tuition remission for individual em-
accrual method will not achieve equity ployees not employed by the IHE are
for both parties. Therefore, accruals limited to the tax-free amount allowed
are not allowable. However, the Fed- by the Internal Revenue Code as
eral Government recognizes its respon- amended (26 U.S.C. 127).
rmajette on LAPJN3WLY3PROD with CFR
sibility to contribute its fair share to- (3) IHEs may offer employees tuition
ward a specific payment. Prior ap- waivers or reductions, provided that
proval by the Federal agency or cog- the benefit does not discriminate in
163
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00175 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.432 2 CFR Ch. II (1–1–26 Edition)
favor of highly compensated employ- § 200.433 Contingency provisions.
ees. Employees can exercise these ben- (a) Contingency provisions are part
efits at other institutions according to of a budget estimate of future costs
institutional policy. See § 200.466, for (typically of large construction
treatment of tuition remission pro- projects, IT systems, or other items ap-
vided to students. proved by the Federal agency) which
(k) Fringe benefit programs and other are associated with possible events or
benefit costs. (1) For IHEs whose costs conditions arising from causes for
are paid by a State or local govern- which the precise outcome is indeter-
ment, fringe benefit programs (such as minable at the time of estimate and
pension costs and FICA) and any other that are likely to result, in the aggre-
benefits costs incurred specifically on gate, in additional costs for the ap-
behalf of, and in direct benefit to, the proved activity or project. Contingency
IHE, are allowable, subject to the fol- amounts for major project scope
lowing: changes, unforeseen risks, or extraor-
(i) The costs meet the requirements
dinary events must not be included in
of Basic Considerations in §§ 200.402
the budget estimates for a Federal
through 200.411;
award.
(ii) The costs are properly supported
(b) It is permissible for contingency
by approved cost allocation plans in ac-
amounts other than those excluded in
cordance with applicable Federal cost
paragraph (a) of this section to be ex-
accounting principles; and
plicitly included in budget estimates to
(iii) The costs are not otherwise
the extent necessary to improve their
borne directly or indirectly by the Fed-
precision. Contingency amounts must
eral Government.
be estimated using broadly-accepted
(2) The allowability of these costs for
cost estimating methodologies, speci-
the IHE does not depend on whether
fied in the budget documentation of
they are recorded in the accounting
the Federal award, and accepted by the
records of the IHE.
Federal agency. As such, contingency
[89 FR 30136, Apr. 22, 2024, as amended at 89 amounts are to be included in the Fed-
FR 79732, Oct. 1, 2024] eral award. In order for actual costs in-
curred to be allowable, they must com-
§ 200.432 Conferences. ply with the cost principles and other
A conference means an event whose requirements of this part (see §§ 200.300
primary purpose is to disseminate and 200.403), be necessary and reason-
technical information beyond the re- able for proper and efficient accom-
cipient or subrecipient and is necessary plishment of project or program objec-
and reasonable for successful perform- tives, and be verifiable from the recipi-
ance under the Federal award. Allow- ent’s or subrecipient’s records.
able conference costs may include the (c) Payments to a recipient’s or sub-
rental of facilities, speakers’ fees, at- recipient’s ‘‘contingency reserve’’ or
tendance fees, costs of meals and re- any similar payment made for events
freshments, local transportation, and the occurrence of which cannot be
other items incidental to such con- foretold with certainty as to the time
ferences unless further restricted by or intensity, or with an assurance of
the terms and conditions of the Federal their happening, are unallowable, ex-
award. The costs of identifying and cept as noted in §§ 200.431 and 200.447.
providing locally available dependent-
care resources for participants are al- § 200.434 Contributions and donations.
lowable as needed. Conference hosts/ (a) Costs of contributions and dona-
sponsors must exercise discretion and tions, including cash, property, and
judgment in ensuring that conference services, from the recipient or sub-
costs are appropriate, necessary, and recipient to other entities are unallow-
managed to minimize costs to the Fed- able.
eral award. The Federal agency may (b) The value of services and property
authorize exceptions for programs in- donated (that is, in-kind donations) to
rmajette on LAPJN3WLY3PROD with CFR
cluding Indian Tribes, children, and the the recipient or subrecipient may not
elderly. See also §§ 200.438, 200.456, and be charged to the Federal award either
200.475. as a direct or indirect cost. The value
164
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00176 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.435
of donated services and property may (g) Personal property and use of
be used to meet cost sharing require- space.
ments (see § 200.306). Depreciation on (1) Donated personal property and
donated assets is permitted so long as use of space may be furnished to a re-
the donated property is not counted to- cipient or subrecipient. The value of
wards meeting cost sharing require- the personal property and space may
ments (see § 200.436). not be charged to the Federal award ei-
(c) Services donated or volunteered ther as a direct or indirect cost.
to the recipient or subrecipient may be (2) The value of the donations of per-
provided by professional and technical sonal property and use of space may be
personnel, consultants, and other used to meet cost sharing requirements
skilled and unskilled labor. The value described in § 200.300. The recipient or
of these services may not be charged to subrecipient must value the donations
the Federal award as a direct or indi- in accordance with § 200.300. Where the
rect cost. However, the value of do- recipient or subrecipient treats dona-
nated services may be used to meet tions as indirect costs, indirect cost
cost sharing requirements in accord- rates must separate the value of the
ance with the provisions of § 200.306. donations so that reimbursement is not
(d) To the extent feasible, services made.
donated to the recipient or sub-
recipient will be supported by the same § 200.435 Defense and prosecution of
methods used to support the criminal and civil proceedings,
allocability of regular personnel serv- claims, appeals and patent infringe-
ments.
ices.
(e) The following provisions apply to (a) Definitions for this section—(1) Con-
nonprofit organizations. The value of viction means a judgment or conviction
services donated to a nonprofit organi- of a criminal offense by any court of
zation and used in the performance of a competent jurisdiction, whether en-
direct cost activity must be considered tered upon verdict or a plea, including
in the determination of the recipient’s a conviction due to a plea of nolo
or subrecipient’s indirect cost rate(s) contendere.
and, accordingly, must be allocated a (2) Costs include the services that
proportionate share of applicable indi- bear a direct relationship to a judicial
rect costs when the following cir- or administrative proceeding and pro-
cumstances exist: vided by in-house or private counsel,
(1) The aggregate value of the serv- accountants, consultants, or others en-
ices is material; gaged to assist the recipient or sub-
(2) The services are supported by a recipient before, during, or after the
significant amount of the indirect commencement of that proceeding.
costs incurred by the recipient or sub- (3) Fraud means:
recipient; (i) Acts of fraud or corruption or at-
(i) In those instances where there is tempts to defraud the Federal Govern-
no basis for determining the fair mar- ment or to corrupt its agents,
ket value of the services rendered, the (ii) Acts that constitute a cause for
recipient or subrecipient and the cog- debarment or suspension (as specified
nizant agency for indirect costs must in agency regulations), and
negotiate an appropriate allocation of (iii) Acts that violate the False
indirect cost to the services. Claims Act (31 U.S.C. 3729–3732) or the
(ii) Where donated services directly Anti-kickback Act (42 U.S.C. 1320a–
benefit a project supported by the Fed- 7b(b)).
eral award, the indirect costs allocated (4) Penalty does not include restitu-
to the services will be considered as a tion, reimbursement, or compensatory
part of the project’s total costs. Such damages.
indirect costs may be reimbursed under (5) Proceeding includes an investiga-
the Federal award or used to meet cost tion.
sharing requirements. (b) Costs. (1) Except as otherwise de-
rmajette on LAPJN3WLY3PROD with CFR
(f) Fair market value of donated scribed herein, costs incurred in con-
services must be computed as described nection with any criminal, civil, or ad-
in § 200.306. ministrative proceeding (including the
165
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00177 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.435 2 CFR Ch. II (1–1–26 Edition)
filing of a false certification) com- proceeding referred to in paragraph (b)
menced by the Federal Government, a of this section is commenced by the
State, local government, or foreign Federal Government and is resolved by
government, or joined by the Federal consent or compromise pursuant to an
Government (including a proceeding agreement by the recipient or sub-
under the False Claims Act), against recipient and the Federal Government,
the recipient or subrecipient, (or com- then the costs incurred may be allowed
menced by third parties or a current or to the extent expressly authorized in
former employee of the recipient or the agreement.
subrecipient who submits a whistle- (d) Allowability of costs for proceeding
blower complaint of reprisal in accord- commenced by State, local, or foreign gov-
ance with 10 U.S.C. 4701 or 41 U.S.C. ernment. If a proceeding referred to in
4712), are not allowable if the pro-
paragraph (b) of this section is com-
ceeding:
menced by a State, local or foreign
(i) Relates to a violation of, or failure
government, then the costs incurred
to comply with, a Federal, State, local
may be allowed if the authorized Fed-
or foreign statute, regulation, or the
terms and conditions of the Federal eral official determines that the costs
award by the recipient or subrecipient were incurred as a result of:
(including its agents and employees); (1) A specific term or condition of the
and Federal award, or
(ii) Results in any of the following (2) Specific written direction of an
dispositions: authorized official of the Federal agen-
(A) In a criminal proceeding, a con- cy.
viction. (e) Allowability of costs in general.
(B) In a civil or administrative pro- Costs incurred in connection with pro-
ceeding involving an allegation of ceedings described in paragraph (b),
fraud or similar misconduct, a deter- and not made unallowable by that
mination of recipient or subrecipient paragraph, may be allowed to the ex-
liability. tent that:
(C) In the case of any civil or admin- (1) The costs are reasonable and nec-
istrative proceeding, the disallowance essary for the administration of the
of costs, the imposition of a monetary Federal award and activities required
penalty, or an order issued by the Fed- to deal with the proceeding and the un-
eral agency head or delegate to the re- derlying cause of action;
cipient or subrecipient to take correc- (2) Payment of the reasonable, nec-
tive action under 10 U.S.C. 4701 or 41 essary, allocable and otherwise allow-
U.S.C. 4712. able costs incurred is not prohibited by
(D) A final decision by an appropriate any other provision(s) of the Federal
Federal official to debar or suspend the
award;
recipient or subrecipient, to rescind or
(3) The costs are not recovered from
void a Federal award, or to terminate a
Federal award because of a violation or the Federal Government or a third
failure to comply with a statute, regu- party, either directly as a result of the
lation, or the terms and conditions of proceeding or otherwise; and,
the Federal award. (4) An authorized Federal official has
(E) A disposition by consent or com- determined the percentage of costs al-
promise if the action could have re- lowed considering the complexity of
sulted in any of the dispositions de- litigation, generally accepted prin-
scribed in paragraphs (b)(1)(ii)(A) ciples governing the award of legal fees
through (D) of this section. in civil actions involving the United
(2) If more than one proceeding in- States, and other factors that may be
volves the same alleged misconduct, appropriate. This percentage must not
the costs of all such proceedings are exceed 80 percent unless an agreement
unallowable if any results in one of the under paragraph (c) has explicitly con-
dispositions shown in paragraph (b) of sidered this limitation and permitted a
rmajette on LAPJN3WLY3PROD with CFR
this section. higher percentage. In that case, the
(c) Allowability of costs for proceeding total amount of costs incurred may be
commenced by Federal Government. If a allowable.
166
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00178 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.436
(f) Major Fraud Act. Costs incurred by (c) Depreciation is computed apply-
the recipient or subrecipient in connec- ing the following rules. The computa-
tion with the defense of suits brought tion of depreciation must be based on
by its employees or ex-employees the acquisition cost of the assets in-
under section 2 of the Major Fraud Act volved. For an asset donated to the re-
of 1988 (18 U.S.C. 1031), including the cipient or subrecipient by a third
cost of all relief necessary to make the party, its fair market value at the time
employee whole, where the recipient or of the donation must be considered as
subrecipient was found liable or set- the acquisition cost. Such assets may
tled, are unallowable. be depreciated or claimed as cost shar-
(g) Un-allowability of costs for pros- ing but not both. When computing de-
ecuting claims against Federal Govern- preciation charges, the acquisition cost
ment. Costs for prosecuting claims will exclude:
against the Federal Government, in- (1) The cost of land;
cluding appeals of final Federal agency (2) Any portion of the cost of build-
decisions, are unallowable. ings and equipment borne by or do-
(h) Patent infringement litigation. nated by the Federal Government, irre-
Costs of legal, accounting, and consult- spective of where the title was origi-
ant services, and related costs incurred nally vested or is presently located;
in connection with patent infringement (3) Any portion of the cost of build-
litigation, are unallowable unless oth- ings and equipment contributed by or
erwise provided for in the Federal for the recipient or subrecipient that is
award. already claimed as cost sharing or
(i) Potentially unallowable costs. Costs where law or agreement prohibits re-
that may be unallowable under this covery; and
section, including directly associated (4) Any asset acquired solely for the
costs, must be segregated and ac- performance of a non-Federal award.
counted for separately. During the (d) When computing depreciation
pendency of any proceeding covered by charges, the following must be ob-
paragraphs (b) and (f) of this section, served:
the Federal Government must gen- (1) The period of useful service or
erally withhold payment of such costs. useful life established in each case for
However, if in its best interests, the usable capital assets must take into
Federal Government may provide for consideration such factors as the type
conditional payment upon provision of of construction, nature of the equip-
adequate security, or other adequate ment, technological developments in
assurance, and agreement to repay all the particular area, historical data,
unallowable costs, plus interest, if the and the renewal and replacement poli-
costs are subsequently determined to cies followed for the individual items
be unallowable. or classes of assets involved.
(2) The depreciation method used to
§ 200.436 Depreciation.
charge the cost of an asset (or group of
(a) Depreciation is the method for al- assets) to accounting periods must re-
locating the cost of fixed assets to peri- flect the pattern of consumption of the
ods benefitting from asset use. The re- asset during its useful life. In the ab-
cipient or subrecipient may be com- sence of clear evidence indicating that
pensated for the use of its buildings, the expected consumption of the asset
capital improvements, equipment, and will be significantly greater in the
software projects capitalized in accord- early portions than in the later por-
ance with GAAP provided that they are tions of its useful life, the straight-line
needed and used in the recipient’s or method must be presumed to be the ap-
subrecipient’s activities and correctly propriate method. Once used, deprecia-
allocated to Federal awards. The com- tion methods may not be changed un-
pensation must be made by computing less approved in advance by the cog-
the proper depreciation. nizant agency for indirect costs. The
rmajette on LAPJN3WLY3PROD with CFR
(b) The allocation for depreciation depreciation methods used to calculate
must be made in accordance with Ap- the depreciation amounts for indirect
pendices III through IX of this part. cost rate purposes must be the same
167
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00179 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.437 2 CFR Ch. II (1–1–26 Edition)
methods used by the recipient or sub- § 200.437 Employee health and welfare
recipient for its financial statements. costs.
(3) The entire building, including the (a) Costs incurred in accordance with
shell and all components, may be treat- the recipient’s or subrecipient’s estab-
ed as a single asset and depreciated lished written policies for improving
over a single useful life. A building working conditions, employer-em-
may also be divided into multiple com- ployee relations, employee health, and
ponents. Each component may be de- employee performance are allowable.
preciated over its estimated useful life (b) These costs must be equitably ap-
in this case. The building components portioned to all activities of the recipi-
must be grouped into three general ent or subrecipient. Income generated
components: building shell (including from these activities must be credited
construction and design costs), build- to the cost thereof unless such income
ing services systems (for example, ele- has been irrevocably sent to employee
vators, HVAC, and plumbing system), welfare organizations.
and fixed equipment (for example, (c) Losses resulting from operating
sterilizers, casework, fume hoods, cold food services are allowable only if the
rooms, and glassware/washers). A cog- recipient’s or subrecipient’s objective
nizant agency for indirect costs may is to operate food services on a break-
authorize a recipient or subrecipient to even basis. Losses sustained because of
use more than these three groupings in operating objectives other than the
exceptional cases. When a recipient or above are allowable only when:
subrecipient elects to depreciate its (1) The recipient or subrecipient can
buildings by their components, the demonstrate unusual circumstances;
same depreciation method must be and
used for indirect and financial state- (2) Approved by the cognizant agency
ments purposes, as described in para- for indirect costs.
graphs (d)(1) and (2). § 200.438 Entertainment and prizes.
(4) No depreciation may be allowed
on assets that have outlived their de- (a) Entertainment costs. Costs of enter-
preciable lives. tainment, including amusement, diver-
sion, and social activities and any asso-
(5) Where the depreciation method is
ciated costs (such as gifts), are unal-
introduced to replace the use allow-
lowable unless they have a specific and
ance method, depreciation must be
direct programmatic purpose and are
computed as if the asset had been de-
included in a Federal award.
preciated over its entire life (meaning, (b) Prizes. Costs of prizes or chal-
from the date the asset was acquired lenges are allowable if they have a spe-
and ready for use to the date of dis- cific and direct programmatic purpose
posal or withdrawal from service). The and are included in the Federal award.
total amount of use allowance and de- Federal agencies should refer to OMB
preciation for an asset (including im- guidance in M–10–11 ‘‘Guidance on the
puted depreciation applicable to peri- Use of Challenges and Prizes to Pro-
ods before the conversion from the use mote Open Government,’’ issued March
allowance method and depreciation 8, 2010, or its successor.
after the conversion) may not exceed
the total acquisition cost of the asset. § 200.439 Equipment and other capital
(e) Adequate property records must expenditures.
support depreciation charges, and (a) See § 200.1 for the definitions of
physical inventories must be taken at capital expenditures, equipment, special
least once every two years to ensure purpose equipment, general purpose
that the assets exist and are usable, equipment, acquisition cost, and capital
used, and needed. The recipient or sub- assets.
recipient may use statistical sampling (b) The following rules of allow-
techniques when taking these inven- ability must apply to equipment and
tories. In addition, the recipient or other capital expenditures:
rmajette on LAPJN3WLY3PROD with CFR
subrecipient must maintain adequate (1) Capital expenditures for general
depreciation records showing the purpose equipment, buildings, and land
amount of depreciation. are allowable as direct costs, but only
168
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00180 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.442
with the prior written approval of the rency fluctuations in order to avoid a
Federal agency or pass-through entity. violation of the Antideficiency Act.
(2) Capital expenditures for special (b) The recipient or subrecipient is
purpose equipment are allowable as di- required to make reviews of local cur-
rect costs, provided that items with a rency gains to determine the need for
unit cost of $10,000 or more have the additional Federal funding before the
prior written approval of the Federal expiration date of the Federal award.
agency or pass-through entity. Subsequent adjustments for currency
(3) Capital expenditures for improve- increases may be allowable only when
ments to land, buildings, or equipment the recipient or subrecipient provides
that materially increase their value or the Federal agency with adequate
useful life are allowable as a direct source documentation from a com-
cost, but only with the prior written monly used source in effect at the time
approval of the Federal agency or pass- the expense was made, and to the ex-
through entity. See § 200.436 on the al- tent that sufficient Federal funds are
lowability of depreciation on buildings, available.
capital improvements, and equipment.
See § 200.465 on the allowability of real § 200.441 Fines, penalties, damages
property and equipment rental costs. and other settlements.
(4) When approved as a direct cost in Costs resulting from recipient or sub-
accordance with paragraphs (b)(1) recipient violations of, alleged viola-
through (3), capital expenditures must tions of, or failure to comply with,
be charged in the period in which the Federal, State, local, tribal, or foreign
expenditure is incurred or as otherwise
laws and regulations are unallowable,
determined appropriate and negotiated
except when incurred as a result of
with the Federal agency.
compliance with specific provisions of
(5) The recipient or subrecipient may
the Federal award, or with the prior
claim the unamortized portion of any
written approval of the Federal agency.
equipment written off as a result of a
See § 200.435.
change in capitalization levels by con-
tinuing to claim the otherwise allow- § 200.442 Fundraising and investment
able depreciation on the equipment or management costs.
by amortizing the amount to be writ-
ten off over a period of years nego- (a) Costs of organized fundraising, in-
tiated with the cognizant agency for cluding financial campaigns, endow-
indirect cost. ment drives, solicitation of gifts and
(6) Cost of equipment disposal. If the bequests, and similar expenses incurred
Federal agency instructs the recipient to raise capital or obtain contribu-
or subrecipient to otherwise dispose of tions, are unallowable. Fundraising
or transfer the equipment, the costs of costs for meeting the Federal program
disposal or transfer are allowable. objectives are allowable with the prior
(7) Equipment and other capital ex- written approval of the Federal agency.
penditures are unallowable as indirect (b) Costs of investment counsel and
costs. See § 200.436. staff and similar expenses incurred to
enhance income from investments are
§ 200.440 Exchange rates. unallowable except when associated
(a) Cost increases for fluctuations in with investments covering pension,
exchange rates are allowable costs sub- self-insurance, or other funds, which
ject to the availability of funding. include Federal participation allowed
Prior approval of exchange rate fluc- by this part.
tuations is required only when the (c) Costs related to the physical cus-
change results in the need for addi- tody and control of monies and securi-
tional Federal funding, or the in- ties are allowable.
creased costs result in the need to sig- (d) Both allowable and unallowable
nificantly reduce the scope of the fundraising and investment activities
rmajette on LAPJN3WLY3PROD with CFR
project. Before providing approval, the must be allocated an appropriate share
Federal agency must ensure that ade- of indirect costs in accordance with
quate funds are available to cover cur- § 200.413.
169
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00181 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.443 2 CFR Ch. II (1–1–26 Edition)
§ 200.443 Gains and losses on the dis- similar local governmental body, such
position of depreciable assets. as a county supervisor, city council, or
(a) The recipient or subrecipient school board, whether incurred for pur-
must include gains and losses on the poses of legislation or executive direc-
sale, retirement, or other disposition of tion;
depreciable property in the year they (3) Costs of the judicial branch of a
occur as credits or charges to the asset government;
cost grouping(s) of the property. The (4) Costs of prosecutorial activities
amount of the gain or loss is the dif- unless treated as a direct cost to a spe-
ference between the amount realized on cific program if authorized by statute
the property and the undepreciated or regulation. However, this does not
basis of the property. preclude the allowability of other legal
(b) Gains and losses from the disposi- activities of the Attorney General as
tion of depreciable property must not described in § 200.435; and
be recognized as a separate credit or (5) Costs of other general types of
charge under the following conditions: government services normally provided
(1) The gain or loss is processed to the general public, such as fire and
through a depreciation account and is police, unless provided as a direct cost
reflected in the depreciation allowable under a program statute or regulation.
under §§ 200.436 and 200.439. (b) Indian Tribes and Councils of
(2) The property is given in exchange Governments (COGs) (see definition for
as part of the purchase price of a simi- Local government in § 200.1) may include
lar item, and the gain or loss is taken up to 50 percent of salaries and ex-
into account in determining the depre- penses directly attributable to man-
ciation cost basis of the new item. aging and operating Federal programs
(3) A loss results from failing to by the chief executive and their staff in
maintain proper insurance, except as the indirect cost calculation without
provided in § 200.447. documentation.
(4) Compensation for the use of the
property was provided through use al- § 200.445 Goods or services for per-
lowances instead of depreciation. sonal use.
(5) Gains and losses arising from ex- (a) Costs of goods or services for the
traordinary or bulk sales, retirements, personal use of the recipient’s or sub-
or other dispositions must be consid- recipient’s employees are unallowable
ered on a case-by-case basis. regardless of whether the cost is re-
(c) Gains or losses of any nature aris- ported as taxable income to the em-
ing from the sale or exchange of prop- ployees.
erty other than the property covered in (b) Housing costs (for example, depre-
paragraph (a) of this section must be ciation, maintenance, utilities, fur-
excluded in computing Federal award nishings, rent), housing allowances,
costs. and personal living expenses for the re-
(d) When assets acquired with Fed- cipient’s or subrecipient’s employees
eral funds, in part or wholly, are dis- are only allowable as direct costs and
posed of, the distribution of the pro- must be approved in advance by the
ceeds must be made in accordance with Federal agency.
§§ 200.310 through 200.316.
§ 200.446 Idle facilities and idle capac-
§ 200.444 General costs of government. ity.
(a) For states, local governments, (a) Definitions for the purpose of this
and Indian Tribes, the general costs of section:
government are unallowable except as (1) Facilities means land and build-
provided in § 200.475. Unallowable costs ings or any portion thereof, equipment
include: individually or collectively, or any
(1) Salaries and expenses of the Office other tangible capital asset, wherever
of the Governor of a State or the chief located, and whether owned or leased
executive of a local government or the by the recipient or subrecipient.
rmajette on LAPJN3WLY3PROD with CFR
chief executive of an Indian Tribe; (2) Idle facilities mean completely
(2) Salaries and other expenses of a unused facilities that exceed the recipi-
State legislature, tribal council, or ent’s or subrecipient’s current needs.
170
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00182 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.447
(3) Idle capacity means the unused ance with sound business, economic, or
capacity of partially used facilities. It security practices. Widespread idle ca-
is the difference between: pacity throughout an entire facility or
(i) That which a facility could among a group of assets having sub-
achieve under 100 percent operating stantially the same function may be
time on a one-shift basis less operating considered idle facilities.
interruptions resulting from time lost
for repairs, setups, unsatisfactory ma- § 200.447 Insurance and indemnifica-
terials, and other normal delays; and tion.
(ii) The extent to which the facility (a) Costs of insurance required or ap-
was actually used to meet demands proved and maintained by the terms
during the accounting period. A multi- and conditions of the Federal award
shift basis should be used if it can be are allowable.
shown that this amount of usage would (b) Costs of other insurance in con-
normally be expected for the type of fa- nection with the general conduct of ac-
cility involved. tivities are allowable subject to the
(4) Cost of idle facilities or idle ca- following limitations:
pacity means maintenance, repair, (1) The types, extent, and cost of cov-
housing, rent, and other related costs erage are in accordance with the re-
(for example, insurance, interest, and cipient’s or subrecipient’s established
depreciation). These costs could in- written policy and sound business prac-
clude the costs of idle public safety tices.
emergency facilities, telecommuni- (2) Costs of insurance or contribu-
cations, or information technology sys- tions to any reserve covering the risk
tem capacity that is built to withstand of loss of, or damage to, Federal Gov-
major fluctuations in load (for exam- ernment property are unallowable ex-
ple, consolidated data centers). cept to the extent that the Federal
(b) The costs of idle facilities are un- agency has approved the costs.
allowable except to the extent that: (3) Costs allowed for business inter-
(1) They are necessary to meet work- ruption or other similar insurance
load requirements which may fluc- must exclude coverage of management
tuate, and are allocated appropriately fees.
to all benefiting programs; or (4) Insurance costs on the lives of
(2) Although not necessary to meet trustees, officers, or other employees
fluctuations in workload, they were holding positions of similar respon-
necessary when acquired and are now sibilities are allowable only when the
idle because of changes in program re- insurance represents additional com-
quirements, efforts to achieve more ec- pensation (see § 200.431). This insurance
onomical operations, reorganization, is unallowable when the recipient or
termination, or other causes which subrecipient is identified as the bene-
could not have been reasonably fore- ficiary.
seen. Under this exception, costs of idle (5) Insurance costs to correct defects
facilities are allowable for a reasonable in the recipient’s or subrecipient’s ma-
period, ordinarily not to exceed one terials or workmanship are unallow-
year, depending on the initiative taken able.
to use, lease, or dispose of such facili- (6) Medical liability (malpractice) in-
ties. surance is an allowable cost of a Fed-
(c) The costs of idle capacity are nor- eral research program only when the
mal costs of doing business and are a program involves human subjects or
factor in the normal fluctuations of training of participants in research
usage or indirect cost rates from period techniques. Medical liability insurance
to period. These costs are allowable, costs must be treated as a direct cost
provided that the capacity is reason- and assigned to individual projects
ably anticipated to be necessary to based on how the insurer allocates the
carry out the purpose of the Federal risk to the population covered by the
award or was originally reasonable and insurance.
rmajette on LAPJN3WLY3PROD with CFR
is not subject to reduction or elimi- (c) Actual losses which could have
nation by use on other Federal awards, been covered by permissible insurance
subletting, renting, or sale, in accord- (through a self-insurance program or
171
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00183 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.448 2 CFR Ch. II (1–1–26 Edition)
otherwise) are unallowable unless ex- (4) Accounting records, actuarial
pressly authorized in the Federal studies, and cost allocations (or bil-
award. However, costs incurred because lings) must recognize any significant
of losses not covered under nominal de- differences due to the types of insured
ductible insurance coverage provided risk and losses generated by the var-
in keeping with sound management ious insured activities or agencies of
practice, and minor losses not covered the recipient or subrecipient. If indi-
by insurance, such as spoilage, break- vidual departments or agencies of the
age, and disappearance of small hand recipient or subrecipient experience
tools, which occur in the ordinary significantly different levels of claims
course of operations, are allowable. for a particular risk, those differences
(d) Contributions to a reserve for a must be recognized by using separate
self-insurance program, including allocations or other techniques result-
workers’ compensation, unemployment ing in an equitable allocation.
compensation, and severance pay, are (5) Whenever funds are transferred
allowable subject to the following re- from a self-insurance reserve to other
quirements: accounts (for example, general fund or
(1) The type, extent, and cost of cov- unrestricted account), refunds must be
erage and the rates and premiums made to the Federal Government for
would have been allowed had insurance its share of funds transferred, including
(including reinsurance) been purchased earned or imputed interest from the
to cover the risks. However, a provi- date of transfer and debt interest, if ap-
sion for known or reasonably estimated plicable, chargeable in accordance with
self-insured liabilities, which do not the claims collection regulations of the
become payable for more than one year cognizant agency for indirect cost.
after the provision is made, must not (e) Insurance refunds must be cred-
exceed the discounted present value of ited against insurance costs in the year
the liability. The rate used for dis- the refund is received.
counting the liability must be deter- (f) Indemnification includes securing
mined by considering factors such as the recipient or subrecipient against li-
the recipient’s or subrecipient’s settle- abilities to third persons and other
ment rate for those liabilities and its losses not compensated by insurance or
investment rate of return. otherwise. The Federal Government is
(2) Earnings or investment income on obligated to indemnify the recipient or
reserves must be credited to those re- subrecipient only to the extent ex-
serves. pressly provided for in the Federal
(3)(i) Contributions to reserves must award, except as provided in paragraph
be based on sound actuarial principles (c).
using historical experience and reason-
able assumptions. Reserve levels must § 200.448 Intellectual property.
be analyzed and updated at least bien- (a) Patent and copyright costs. (1) The
nially for each major risk being in- following costs related to securing pat-
sured and take into account any rein- ents and copyrights are allowable:
surance, coinsurance, and other rel- (i) Costs of preparing disclosures, re-
evant factors or information. Reserve ports, and other documents required by
levels related to employee-related cov- the Federal award and of searching the
erages must normally be limited to the art to the extent necessary to make
value of claims: such disclosures;
(A) Submitted and adjudicated but (ii) Costs of preparing documents and
not paid; any other patent costs in connection
(B) Submitted but not adjudicated; with the filing and prosecution of a
and United States patent application where
(C) Incurred but not submitted. the Federal Government requires that
(ii) Reserve exceeding the levels de- a title or a royalty-free license be con-
scribed in paragraph (d)(3)(i) of this veyed to the Federal Government; and
rmajette on LAPJN3WLY3PROD with CFR
section must be identified and justified (iii) General counseling services re-
in the cost allocation plan or indirect lating to patent and copyright matters,
cost rate proposal. such as advice on patent and copyright
172
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00184 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.449
laws, regulations, clauses, and em- § 200.449 Interest.
ployee intellectual property agree-
(a) General. Costs incurred for inter-
ments (See § 200.459).
est on borrowed capital, temporary use
(2) The following costs related to se-
of endowment funds, or the use of the
curing patents and copyrights are unal-
recipient’s or subrecipient’s own funds
lowable:
are unallowable. Financing costs (in-
(i) Costs of preparing disclosures, re-
cluding interest) to acquire, construct,
ports, and other documents and of
or replace capital assets are allowable,
searching the art to make disclosures
subject to the requirements of this sec-
not required by the Federal award;
tion.
(ii) Costs in connection with filing
and prosecuting any foreign patent ap- (b) Capital assets. (1) Capital assets is
plication, or any United States patent defined in § 200.1. An asset cost includes
application, where the Federal award (as applicable) acquisition costs, con-
does not require conveying title or a struction costs, and other costs cap-
royalty-free license to the Federal italized in accordance with GAAP.
Government. (2) For recipient or subrecipient fis-
(b) Royalties and other costs for the use cal years beginning on or after January
of patents and copyrights. (1) Royalties 1, 2016, intangible assets include pat-
on a patent or copyright or amortiza- ents and computer software. For soft-
tion of the cost of acquiring by pur- ware development projects, only inter-
chase a copyright, patent, or rights est attributable to the portion of the
thereto, necessary for the proper per- project costs capitalized in accordance
formance of the Federal award are al- with GAAP is allowable.
lowable unless: (c) Requirements for all recipients and
(i) The Federal Government already subrecipients. (1) The recipient or sub-
has a license or the right to free use of recipient uses the capital assets in sup-
the patent or copyright. port of Federal awards;
(ii) The patent or copyright has been (2) The allowable asset costs to ac-
adjudicated to be invalid or adminis- quire facilities and equipment are lim-
tratively determined to be invalid. ited to a fair market value available to
(iii) The patent or copyright is con- the recipient or subrecipient from an
sidered to be unenforceable. unrelated (arm’s length) third party.
(iv) The patent or copyright is ex- (3) The recipient or subrecipient ob-
pired. tains the financing via an arm’s-length
(2) Special care should be exercised in transaction (meaning, a transaction
determining reasonableness when the with an unrelated third party); or
royalties may have been obtained as a claims reimbursement of actual inter-
result of less-than-arm’s-length bar- est cost at a rate available via such a
gaining, such as: transaction.
(i) Royalties paid to persons, includ- (4) The recipient or subrecipient lim-
ing corporations, affiliated with the re- its claims for Federal reimbursement
cipient or subrecipient. of interest costs to the least expensive
(ii) Royalties paid to unaffiliated alternative. For example, a lease con-
parties, including corporations, under tract that transfers ownership by the
an agreement entered into in con- end of the contract may be determined
templation that a Federal award would less costly than purchasing through
be made. other types of debt financing, in which
(iii) Royalties paid under an agree- case reimbursement must be limited to
ment entered into after a Federal the amount of interest determined if
award is made to a recipient or sub- leasing had been used.
recipient. (5) The recipient or subrecipient ex-
(3) In any case involving a patent or penses or capitalizes allowable interest
copyright formerly owned by the re- cost in accordance with GAAP.
cipient or subrecipient, the amount of (6) Earnings generated by the invest-
royalty allowed must not exceed the ment of borrowed funds pending their
rmajette on LAPJN3WLY3PROD with CFR
cost which would have been allowed disbursement for the asset costs are
had the recipient or subrecipient re- used to offset the current period’s al-
tained ownership. lowable interest cost, whether that
173
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00185 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.450 2 CFR Ch. II (1–1–26 Edition)
cost is expensed or capitalized. Earn- Tribes, the recipient or subrecipient
ings subject to being reported to the must have incurred the interest costs
Federal Internal Revenue Service for buildings after October 1, 1980, or
under arbitrage requirements are ex- after September 1, 1995, for land and
cludable. equipment.
(7) The following conditions must (1) The requirement to offset the in-
apply to debt arrangements over $1 terest earned on borrowed funds
million to purchase or construct facili- against allowable interest cost (para-
ties unless the recipient or sub- graph (c)(5) of this section) also applies
recipient makes an initial equity con- to earnings on debt service reserve
tribution to the purchase of 25 percent funds.
or more. For this purpose, ‘‘initial eq- (2) The recipient or subrecipient
uity contribution’’ means the amount must negotiate the amount of allow-
or value of contributions made by the able interest cost related to the acqui-
recipient or subrecipient for the acqui- sition of facilities with asset costs of $1
sition of facilities prior to occupancy. million or more, as described in para-
(i) The recipient or subrecipient must graph (c)(7) of this section. For this
reduce claims for reimbursement of in- purpose, a recipient or subrecipient
terest cost by an amount equal to im- must consider only cash inflows and
puted interest earnings on excess cash outflows attributable to that portion of
flow attributable to the portion of the the real property used for Federal
facility used for Federal awards. awards.
(ii) The recipient or subrecipient
(e) Additional requirements for IHEs.
must impute interest on excess cash
For interest costs to be allowable, the
flow as follows:
IHE must have incurred the interest
(A) Annually, the recipient or sub-
costs after July 1, 1982, in connection
recipient must prepare a cumulative
with acquisitions of capital assets that
(from the project’s inception) report of
occurred after that date.
monthly cash inflows and outflows, re-
gardless of the funding source. For this (f) Additional requirements for non-
purpose, inflows consist of Federal re- profit organizations. For interest costs
imbursement for depreciation, amorti- to be allowable, the nonprofit organiza-
zation of capitalized construction in- tion must have incurred the interest
terest, and annual interest cost. Out- costs after September 29, 1995, in con-
flows consist of initial equity contribu- nection with acquisitions of capital as-
tions, debt principal payments (less the sets that occurred after that date.
pro-rata share attributable to the cost (g) Requirements for nonprofit organi-
of land), and interest payments. zations subject to full coverage under
(B) To compute monthly cash inflows CAS. The interest allowability provi-
and outflows, the recipient or sub- sions of this section do not apply to a
recipient must divide the above-men- nonprofit organization subject to ‘‘full
tioned annual amounts by the months coverage’’ under the Cost Accounting
in the year (usually 12) that the build- Standards (CAS), as defined at 48 CFR
ing is in service. 9903.201–2(a). The nonprofit organiza-
(C) For any month in which cumu- tion’s Federal awards are instead sub-
lative cash inflows exceed cumulative ject to CAS 414 (48 CFR 9904.414), ‘‘Cost
outflows, interest must be calculated of Money as an Element of the Cost of
on the excess inflows for that month Facilities Capital,’’ and CAS 417 (48
and be treated as a reduction to allow- CFR 9904.417), ‘‘Cost of Money as an
able interest cost. The interest rate to Element of the Cost of Capital Assets
be used must be the three-month Under Construction.’’
Treasury bill closing rate as of the last
business day of that month. § 200.450 Lobbying.
(8) Interest attributable to a fully de- (a) Lobbying costs associated with ob-
preciated asset is unallowable. taining Federal assistance awards. The
(d) Additional requirements for states, costs of certain influencing activities
rmajette on LAPJN3WLY3PROD with CFR
local governments and Indian Tribes. For associated with obtaining grants, coop-
interest costs to be allowable for erative agreements, contracts, or loans
states, local governments, and Indian are unallowable. Lobbying with respect
174
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00186 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.450
to certain grants, cooperative agree- using publicity or propaganda or by
ments, contracts, and loans is governed urging members of the general public,
by relevant statutes, including the pro- or any segment thereof, to contribute
visions of 31 U.S.C. 1352, as well as the to or participate in any mass dem-
common rule, ‘‘New Restrictions on onstration, march, rally, fundraising
Lobbying,’’ published on February 26, drive, lobbying campaign or letter
1990, including definitions, and the Of- writing or telephone campaign; or
fice of Management and Budget ‘‘Gov- (D) Any government official or em-
ernment-wide Guidance for New Re- ployee in connection with a decision to
strictions on Lobbying’’ and notices sign or veto enrolled legislation;
published on December 20, 1989, June (iv) Legislative liaison activities, in-
15, 1990, January 15, 1992, and January cluding attendance at legislative ses-
19, 1996. sions or committee hearings, gathering
(b) Executive lobbying costs. Costs in- information regarding legislation, and
curred in attempting to improperly in- analyzing the effect of legislation,
fluence, either directly or indirectly, when such activities are carried on in
an employee or officer of the executive support of or in knowing preparation
branch of the Federal Government to for an effort to engage in unallowable
give consideration or to act regarding a lobbying.
Federal award or a regulatory matter (2) The following activities are ex-
are unallowable. Improper influence cepted from the coverage of paragraph
means any influence that induces or (c)(1) of this section:
tends to induce a Federal employee or (i) Technical and factual presen-
officer to give consideration or to act tations on topics directly related to
regarding a Federal award or regu- the performance of a grant, contract,
latory matter on any basis other than or other agreement (through hearing
the merit. testimony, statements, or letters to
(c) Restrictions on nonprofit organiza- the Congress or a State legislature, or
tions and IHEs. In addition, the fol- subdivision, member, or cognizant staff
lowing restrictions apply to nonprofit member thereof), in response to a docu-
organizations and IHEs: mented request (including a Congres-
(1) Costs associated with the fol- sional Record notice requesting testi-
lowing activities are unallowable: mony or statements for the record at a
(i) Attempts to influence the out- regularly scheduled hearing) made by
comes of any Federal, State, or local the recipient’s or subrecipient’s mem-
election, referendum, initiative, or ber of congress, legislative body, sub-
similar procedure through in-kind or division, or a cognizant staff member
cash contributions, endorsements, pub- thereof, provided such information is
licity, or similar activity; readily obtainable and can be readily
(ii) Establishing, administering, con- put in deliverable form, and further
tributing to, or paying the expenses of provided that costs under this section
a political party, campaign, political for travel, lodging or meals are unal-
action committee, or other organiza- lowable unless incurred to offer testi-
tion established to influence the out- mony at a regularly scheduled Congres-
comes of elections in the United sional hearing pursuant to a written
States; request for such presentation made by
(iii) Any attempt to influence: the Chairman or Ranking Minority
(A) The introduction of Federal or Member of the Committee or Sub-
State legislation; committee conducting such hearings;
(B) The enactment or modification of (ii) Any lobbying made unallowable
any pending Federal or State legisla- by paragraph (c)(1)(iii) of this section
tion through communication with any to influence State legislation to di-
member or employee of the Congress or rectly reduce the cost, or to avoid ma-
State legislature (including efforts to terial impairment of the recipient’s or
influence State or local officials to en- subrecipient’s authority to perform the
gage in similar lobbying activity); grant, contract, or other agreement;
rmajette on LAPJN3WLY3PROD with CFR
(C) The enactment or modification of (iii) Any activity specifically author-
any pending Federal or State legisla- ized by statute to be undertaken with
tion by preparing, distributing, or funds from the Federal award; or
175
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00187 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.451 2 CFR Ch. II (1–1–26 Edition)
(iv) Any activity excepted from the (B) of this section are met, the absence
definitions of ‘‘lobbying’’ or ‘‘influ- of time logs, calendars, or similar
encing legislation’’ by the Internal records will not serve as a basis for dis-
Revenue Code provisions that require allowing costs by contesting estimates
nonprofit organizations to limit their of lobbying time spent by employees
participation in direct and ‘‘grass during a calendar month.
roots’’ lobbying activities to retain (iii) In consultation with OMB, the
their charitable deduction status and Federal agency must establish proce-
avoid punitive excise taxes, 26 U.S.C. dures for resolving, in advance, any
(I.R.C.) 501(c)(3), 501(h), 4911(a), includ- significant questions or disagreements
ing: concerning the interpretation or appli-
(A) Nonpartisan analysis, study, or cation of this section. Any such ad-
research reports; vance resolutions must be binding in
(B) Examinations and discussions of any subsequent settlements, audits, or
broad social, economic, and similar investigations with respect to that
problems; and grant or contract for purposes of inter-
(C) Information provided upon re- pretation of this part, provided, how-
quest by a legislator for technical ad- ever, that this must not be construed
vice and assistance, as defined by I.R.C. to prevent a contractor or recipient or
4911(d)(2) and 26 CFR 56.4911–2(c)(1) subrecipient from contesting the law-
through (c)(3). fulness of such a determination.
(3) When a recipient or subrecipient
seeks reimbursement for indirect costs, § 200.451 Losses on other awards or
total lobbying costs must be identified contracts.
separately in the indirect cost rate pro-
Any excess costs over income under
posal and thereafter be treated as other
any other award or contract of any na-
unallowable activity costs in accord-
ture is unallowable. This includes, but
ance with § 200.413.
is not limited to, the recipient’s or sub-
(4) The recipient or subrecipient
recipient’s contributed portion by rea-
must submit a certification that the
son of cost sharing agreements or any
requirements and standards of this sec-
under-recoveries through negotiation
tion have been complied with as part of
its annual indirect cost rate proposal. of flat amounts for indirect costs. Also,
(See § 200.415.) any excess of costs over authorized
(5)(i) Time logs, calendars, or similar funding levels transferred from any
records are not required to be created award or contract to another is unal-
for purposes of complying with the lowable. All losses are not allowable
record-keeping requirements in § 200.302 indirect costs and must be included in
with respect to lobbying costs during a the appropriate indirect cost rate base
particular calendar month when: for allocating indirect costs.
(A) The employee engages in lob-
§ 200.452 Maintenance and repair
bying (as defined in paragraphs (c)(1) costs.
and (2) of this section) for 25 percent or
less of the employee’s compensated Costs incurred for utilities, insur-
hours of employment during that cal- ance, security, necessary maintenance,
endar month; and janitorial services, repair, or upkeep of
(B) Within the preceding five-year pe- buildings and equipment (including
riod, the recipient or subrecipient has Federal property unless otherwise pro-
not materially misstated allowable or vided for) which neither add to the per-
unallowable costs of any nature, in- manent value of the property nor ap-
cluding legislative lobbying costs. preciably prolong its intended life, but
(ii) When conditions in paragraph keep it in an efficient operating condi-
(c)(5)(i)(A) and (B) of this section are tion, are allowable. Costs incurred for
met, recipients and subrecipients are improvements that add to the perma-
not required to establish records to nent value of the buildings and equip-
support the allowability of claimed ment or appreciably prolong their in-
rmajette on LAPJN3WLY3PROD with CFR
costs in addition to records already re- tended life must be treated as capital
quired or maintained. Also, when con- expenditures (see § 200.439). These costs
ditions in paragraphs (c)(5)(i)(A) and are only allowable to the extent not
176
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00188 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.457
paid through rental or other agree- nection with the establishment or reor-
ments. ganization of an organization, are unal-
lowable except with prior approval of
§ 200.453 Materials and supplies costs, the Federal agency.
including costs of computing de-
vices. (b) The costs of any of the following
activities are unallowable: activities
(a) Costs incurred for materials, sup- undertaken to persuade employees of
plies, and fabricated parts necessary the recipient or subrecipient, or any
for the performance of a Federal award other entity, to exercise or not to exer-
are allowable. cise, or concerning the manner of exer-
(b) Purchased materials and supplies cising, the right to organize and bar-
must be charged at their actual prices, gain collectively through representa-
net of applicable credits. Withdrawals tives of the employees’ own choosing.
from general stores or stockrooms (c) The costs related to data and
must be charged at their actual net evaluation are allowable. Data costs
cost under any recognized method of include (but are not limited to) the ex-
pricing inventory withdrawals, consist- penditures needed to gather, store,
ently applied. Incoming transportation
track, manage, analyze, disaggregate,
charges are an allowable part of mate-
secure, share, publish, or otherwise use
rials and supplies costs.
data to administer or improve the pro-
(c) Materials and supplies used for
gram, such as data systems, personnel,
the performance of a Federal award
data dashboards, cybersecurity, and re-
may be charged as direct costs. Charg-
lated items. Data costs may also in-
ing computing devices as direct costs is
clude direct or indirect costs associ-
allowable for devices that are essential
ated with building integrated data sys-
and allocable, but not solely dedicated,
tems—data systems that link indi-
to the performance of a Federal award.
vidual-level data from multiple State
(d) Where Federally-donated or fur-
and local government agencies for pur-
nished materials are used in per-
poses of management, research, and
forming the Federal award, the mate-
evaluation. Evaluation costs include
rials will be used without charge.
(but are not limited to) evidence re-
§ 200.454 Memberships, subscriptions, views, evaluation planning and feasi-
and professional activity costs. bility assessment, conducting evalua-
tions, sharing evaluation results, and
(a) Costs of the recipient’s or sub-
other personnel or materials costs re-
recipient’s membership in business,
lated to the effective building and use
technical, and professional organiza-
of evidence and evaluation for program
tions are allowable.
design, administration, or improve-
(b) Costs of the recipient’s or sub-
ment.
recipient’s subscriptions to business,
professional, and technical periodicals § 200.456 Participant support costs.
are allowable.
(c) Costs of membership in any civic Participant support costs are allow-
or community organization are allow- able (see § 200.1). The classification of
able. items as participant support costs
(d) Costs of membership in any coun- must be documented in the recipient’s
try club or social or dining club or or- or subrecipient’s written policies and
ganization are unallowable. procedures and treated consistently
(e) Costs of membership in organiza- across all Federal awards.
tions whose primary purpose is lob-
bying are unallowable. See § 200.450. § 200.457 Plant and security costs.
Necessary and reasonable expenses
§ 200.455 Organization costs. incurred for the protection and secu-
(a) Costs such as incorporation fees, rity of facilities, personnel, and work
brokers’ fees, fees to promoters, orga- products are allowable. Such costs in-
nizers or management consultants, at- clude, but are not limited to, wages
rmajette on LAPJN3WLY3PROD with CFR
torneys, accountants, or investment and uniforms of personnel engaged in
counselors, whether or not employees security activities; equipment; bar-
of the recipient or subrecipient in con- riers; protective (non-military) gear,
177
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00189 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.458 2 CFR Ch. II (1–1–26 Edition)
devices, and equipment; contractual se- ent’s total business influences the re-
curity services; and consultants. Cap- cipient or subrecipient in favor of in-
ital expenditures for plant security curring the cost, particularly where
purposes are subject to § 200.439. the services rendered are not of a con-
tinuing nature and have little relation-
§ 200.458 Pre-award costs. ship to work under Federal awards.
Pre-award costs are those incurred (6) Whether the service can be per-
before the start date of the Federal formed more economically by direct
award or subaward directly pursuant to employment rather than contracting.
the negotiation and in anticipation of (7) The qualifications of the indi-
the Federal award where such costs are vidual or entity providing the service
necessary for efficient and timely per- and the customary fees charged, espe-
formance of the scope of work. These cially on non-federally funded activi-
costs are allowable only to the extent ties.
that they would have been allowed if (8) Adequacy of the contractual
incurred after the start date of the agreement for the service (for example,
Federal award and only with the writ- description of the service, estimate of
ten approval of the Federal agency. If the time required, rate of compensa-
approved, these costs must be charged tion, and termination provisions).
to the initial budget period of the Fed- (c) To be allowable, retainer fees
eral award unless otherwise specified must be supported by evidence of bona
by the Federal agency or pass-through fide services available or rendered in
entity. addition to the factors in paragraph (b)
§ 200.459 Professional service costs. of this section.
(a) Costs of professional and consult- § 200.460 Proposal costs.
ant services rendered by persons who
are members of a particular profession Proposal costs are the costs of pre-
or possess a special skill and who are paring bids, proposals, or applications
not officers or employees of the recipi- on potential Federal and non-Federal
ent or subrecipient are allowable, sub- awards or projects, including devel-
ject to paragraphs (b) and (c) of this oping data necessary to support the re-
section when reasonable in relation to cipient’s or subrecipient’s bids or pro-
the services rendered and when not posals. Proposal costs of the current
contingent upon recovery of the costs accounting period of both successful
from the Federal Government. In addi- and unsuccessful bids and proposals
tion, legal and related services are lim- normally should be treated as indirect
ited under § 200.435. costs and allocated to all current ac-
(b) In determining the allowability of tivities of the recipient or sub-
costs in a particular case, no single fac- recipient. No proposal costs of past ac-
tor or any combination of factors is counting periods may be allocated to
necessarily determinative. However, the current period.
the following factors are relevant:
§ 200.461 Publication and printing
(1) The nature and scope of the serv- costs.
ice rendered in relation to the service
required. (a) Publication costs for electronic
(2) The necessity of contracting for and print media, including distribu-
the service, considering the recipient’s tion, promotion, and general handling,
or subrecipient’s capability in the par- are allowable. These costs should be al-
ticular area. located as indirect costs to all bene-
(3) The past pattern of such costs, fiting activities of the recipient or sub-
particularly in the years prior to re- recipient if they are not identifiable
ceiving a Federal award(s). with a particular cost objective.
(4) The impact of Federal awards on (b) Page charges, article processing
the recipient’s or subrecipient’s busi- charges (APCs), or similar fees such as
ness (meaning, what new problems open access fees for professional jour-
rmajette on LAPJN3WLY3PROD with CFR
have arisen). nal publications and other peer-re-
(5) Whether the proportion of Federal viewed publications resulting from a
work to the recipient’s or subrecipi- Federal award are allowable where:
178
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00190 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.464
(1) The publications report work sup- (b) Special emoluments, fringe bene-
ported by the Federal Government; and fits, and salary allowances incurred to
(2) The charges are levied impartially attract professional personnel that do
on all items published by the journal, not meet the test of reasonableness or
whether or not under a Federal award. do not conform with the established
(3) The recipient or subrecipient may practices of the recipient or sub-
charge the Federal award during close- recipient, are unallowable.
out for the costs of publication or shar- (c) If relocation costs incurred inci-
ing of research results if the costs were dent to recruitment of a new employee
not incurred during the period of per- have been funded in whole or in part by
formance of the Federal award. These a Federal award, and the newly hired
costs must be charged to the final employee resigns for reasons within
budget period of the award unless oth- the employee’s control within 12
erwise specified by the Federal agency. months after hire, the recipient or sub-
recipient must refund or credit the
§ 200.462 Rearrangement and recon- Federal Government for its share of
version costs.
those relocation costs. See § 200.464.
(a) Costs incurred for ordinary and (d) Short-term visas (as opposed to
normal rearrangement and alteration longer-term immigration visas) are
of facilities are allowable as indirect generally an allowable cost and they
costs. Special arrangements and alter- may be proposed as a direct cost be-
ations are allowable as a direct cost if cause they are issued for a specific pe-
the costs are incurred specifically for a riod and purpose and can be clearly
Federal award and with the prior ap- identified as directly connected to
proval of the Federal agency or pass- work performed on a Federal award.
through entity. For these costs to be directly charged
(b) Costs incurred in restoring or re- to a Federal award, they must:
habilitating the recipient’s or sub- (1) Be critical and necessary for the
recipient’s facilities to approximately conduct of the project;
the same condition existing imme- (2) Be allowable under the applicable
diately before the commencement of a cost principles;
Federal award(s), less costs related to (3) Be consistent with the recipient’s
normal wear and tear, are allowable. or subrecipient’s cost accounting prac-
§ 200.463 Recruiting costs. tices and established written policy;
and
(a) Subject to paragraphs (b) and (c) (4) Meet the definition of ‘‘direct
of this section, and provided that the cost’’ as described in the applicable
size of the staff recruited and main- cost principles.
tained is in keeping with workload re-
quirements, costs of ‘‘help wanted’’ ad- § 200.464 Relocation costs of employ-
vertising, operating costs of an em- ees.
ployment office necessary to secure
(a) Relocation costs are costs inci-
and maintain adequate staff, costs of
dent to the permanent change of duty
operating an aptitude and educational
testing program, travel costs of em- assignment (for an indefinite period or
ployees while engaged in recruiting a stated period of not less than 12
personnel, travel costs of applicants for months) of an existing employee or
interviews for prospective employ- upon recruitment of a new employee.
ment, and relocation costs incurred in- Relocation costs are allowable, subject
cident to recruitment of new employ- to the limitations described in para-
ees, are allowable to the extent that graphs (b), (c), and (d) of this section,
such costs are incurred pursuant to the provided that:
recipient’s or subrecipient’s standard (1) The move is for the benefit of the
recruitment program. When the recipi- employer.
ent or subrecipient uses employment (2) Reimbursement to the employee
rmajette on LAPJN3WLY3PROD with CFR
agencies, costs not in excess of stand- is in accordance with an established
ard commercial rates for such services written policy consistently followed by
are allowable. the employer.
179
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00191 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.465 2 CFR Ch. II (1–1–26 Edition)
(3) The reimbursement does not ex- in accordance with § 200.474, not reloca-
ceed the employee’s actual (or reason- tion costs under this section.
ably estimated) expenses. (d) The following costs related to re-
(b) Allowable relocation costs for location are unallowable:
current employees are limited to the (1) Fees and other costs associated
following: with acquiring a new home.
(1) The costs of transportation of the (2) A loss on the sale of a former
employee, members of their immediate home.
family and their household, and per- (3) Continuing mortgage principal
sonal effects to the new location. and interest payments on a home being
(2) The costs of finding a new home, sold.
such as advance trips by employees and (4) Income taxes paid by an employee
spouses to locate living quarters and related to reimbursed relocation costs.
temporary lodging during the transi-
tion period, up to a maximum period of § 200.465 Rental costs of real property
30 calendar days. and equipment.
(3) Closing costs, such as brokerage, (a) Subject to the limitations de-
legal, and appraisal fees, incidental to scribed in paragraphs (b) through (d) of
the disposition of the employee’s this section, rental costs are allowable
former home. These costs, together to the extent that the rates are reason-
with those described in paragraph (b)(4) able in light of such factors as costs of
of this section, are limited to eight per- comparable rental properties; market
cent of the sales price of the employ- conditions in the area; alternatives
ee’s former home. available; and the type, life expect-
(4) The continuing costs of ownership ancy, condition, and value of the prop-
(for up to six months) of the vacant erty leased. Rental arrangements
former home after the settlement or should be reviewed periodically to de-
lease date of the employee’s new per- termine if circumstances have changed
manent home, such as maintenance of and if other options are available.
buildings and grounds (exclusive of fix- (b) Rental costs under ‘‘sale and lease
ing-up expenses), utilities, taxes, and back’’ arrangements are allowable only
property insurance. up to the amount that would have been
(5) Other necessary and reasonable allowed if the recipient or subrecipient
expenses normally incident to reloca- had continued to own the property.
tion, such as canceling an unexpired This amount would include expenses
lease, transportation of personal prop- such as depreciation, maintenance,
erty, and purchasing insurance against taxes, and insurance.
loss of or damages to personal prop- (c) Rental costs under ‘‘less-than-
erty. The cost of canceling an unex- arm’s-length’’ leases are allowable only
pired lease is limited to three times up to the amount described in para-
the monthly rental. graph (b) of this section. For this pur-
(c) Allowable relocation costs for new pose, a less-than-arm’s-length lease is
employees are limited to those de- one under which one party to the lease
scribed in paragraphs (b)(1) and (2) of agreement can control or substantially
this section. If relocation costs in- influence the actions of the other. Such
curred incident to the recruitment of a leases include, but are not limited to,
new employee have been funded in those between:
whole or in part by a Federal award, (1) Divisions of the recipient or sub-
and the newly hired employee resigns recipient;
for reasons within the employee’s con- (2) The recipient or subrecipient and
trol within 12 months after hire, the re- another entity under common control
cipient or subrecipient must refund or through common officers, directors, or
credit the Federal Government for its members; and
share of the cost. If a new employee is (3) The recipient or subrecipient and
relocating to an overseas location and a director, trustee, officer, or key em-
dependents are not permitted for any ployee of the recipient or subrecipient
rmajette on LAPJN3WLY3PROD with CFR
reason, and the costs do not include or an immediate family member, either
transporting household goods, the directly or through corporations,
costs must be considered travel costs trusts, or similar arrangements in
180
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00192 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.468
which they hold a controlling interest. § 200.466 Scholarships, student aid
For example, the recipient or sub- costs, and tuition remission.
recipient may establish a separate cor- (a) Costs of scholarships, fellowships,
poration to own property and lease it and student aid programs at IHEs are
back to the recipient or subrecipient. allowable only when the purpose of the
(4) Family members include one Federal award is to provide training to
party with any of the following rela- participants, and the Federal agency
tionships to another party: approves the cost.
(i) Spouse and parents thereof; (b) Tuition remission and other forms
(ii) Children and spouses thereof; of compensation paid as, or instead of,
(iii) Parents and spouses thereof; wages to students performing nec-
essary work are allowable provided
(iv) Siblings and spouses thereof;
that:
(v) Grandparents and grandchildren (1) The individual is conducting ac-
and spouses thereof; tivities necessary to the Federal
(vi) Domestic partner and parents award;
thereof, including domestic partners of (2) Tuition remission and other sup-
any individual in 2 through 5 of this port are provided in accordance with
definition; and the established written policy of the
(vii) Any individual related by blood IHE and consistently provided in a like
or affinity whose close association with manner to students in return for simi-
the employee is the equivalent of a lar activities conducted under Federal
family relationship. awards as well as other activities; and
(d) Rental costs under leases which (3) The student is enrolled in an ad-
are required to be accounted for as a fi- vanced degree program at the IHE or
an affiliated institution during the aca-
nanced purchase under GASB stand-
demic period and the student’s activi-
ards or a finance lease under FASB
ties under the Federal award are re-
standards are allowable only up to the lated to their degree program;
amount (described in paragraph (b) of (4) The tuition or other payments are
this section) that would have been al- reasonable compensation for the work
lowed if the recipient or subrecipient performed and are conditioned explic-
had purchased the property on the date itly upon the performance of necessary
the lease agreement was executed. In- work; and
terest costs related to these leases are (5) The IHE compensates students
allowable if they meet the criteria in under Federal awards as well as other
§ 200.449. Unallowable costs include activities in similar manners.
costs that would not have been in- (c) Charges for tuition remission and
curred if the recipient or subrecipient other forms of compensation paid to
had purchased the property, such as students as, or instead of, salaries and
amounts paid for profit, management wages are subject to the reporting re-
fees, and taxes. quirements in § 200.430. The charges
(e) Rental or lease payments are al- must be treated as a direct or indirect
lowable under lease contracts where cost in accordance with the actual
work performed. Tuition remission
the recipient or subrecipient is re-
may be charged on an average rate
quired to recognize an intangible right-
basis. See § 200.431.
to-use lease asset under GASB stand-
ards or right-of-use operating lease § 200.467 Selling and marketing costs.
asset under FASB standards for pur- Costs of selling and marketing any
poses of financial reporting in accord- products or services of the recipient or
ance with GAAP. subrecipient are unallowable unless
(f) The rental of any property owned they are allowed under § 200.421 and are
by any individuals or entities affiliated necessary to meet the requirements of the
with the recipient or subrecipient, in- Federal award.
cluding commercial or residential real
rmajette on LAPJN3WLY3PROD with CFR
estate, for purposes such as the home § 200.468 Specialized service facilities.
office is unallowable. (a) The costs of services provided by
highly complex or specialized facilities
181
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00193 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.469 2 CFR Ch. II (1–1–26 Edition)
operated by the recipient or sub- (2) Gasoline taxes, motor vehicle
recipient are allowable provided the fees, and other taxes that are, in effect,
charges for the services meet the con- user fees for benefits provided to the
ditions of either paragraph (b) or (c) of Federal Government are allowable.
this section and take into account any (3) This provision does not restrict
items of income or Federal financing the authority of the Federal agency to
that qualify as applicable credits under identify taxes where Federal participa-
§ 200.406. These costs include charges tion is inappropriate. The cognizant
for facilities such as computing facili- agency for indirect costs may accept a
ties, wind tunnels, and reactors. reasonable approximation in cir-
(b) The costs of such services, when cumstances where determining the
material, must be charged directly to amount of unallowable taxes would re-
the applicable Federal awards based on quire an excessive amount of effort.
actual usage of the services on the (b) For nonprofit organizations and
basis of a schedule of rates or estab- IHEs. (1) Taxes that the recipient or
lished methodology that: subrecipient is required to pay and
(1) Does not discriminate between ac- which are paid or accrued in accord-
tivities under Federal awards and other ance with GAAP are generally allow-
activities of the recipient or sub- able. These costs include payments
recipient, including usage by the re- made to local governments instead of
cipient or subrecipient for internal pur- taxes and that are commensurate with
poses; and the local government services received.
(2) Is designed to recover only the ag- The following taxes are unallowable:
gregate costs of the services. Each (i) Taxes for which exemptions are
service’s costs must normally consist available to the recipient or sub-
of its direct costs and an allocable recipient directly or which are avail-
share of all indirect costs. Rates must able to the recipient or subrecipient
be adjusted at least biennially and based on an exemption afforded the
must consider any over or under-ap- Federal Government and, in the latter
plied costs of the previous period(s). case, when the Federal agency makes
(c) Where the costs incurred for a available the necessary exemption cer-
service are not material, they may be tificates;
allocated as indirect costs. (ii) Special assessments on land
which represent capital improvements;
(d) Under extraordinary cir-
and
cumstances, the cognizant agency for
(iii) Federal income taxes.
indirect costs and the recipient or sub-
(2) Any refund of taxes and interest
recipient may negotiate and establish
thereon, which were allowed as Federal
an alternative costing arrangement if
award costs, must be credited to the
it is in the Federal Government’s best
Federal Government as a cost reduc-
interest.
tion or cash refund, as appropriate.
§ 200.469 Student activity costs. However, any interest paid or credited
to a recipient or subrecipient incident
Costs incurred for intramural activi- to a refund of tax, interest, and penalty
ties, student publications, student will be paid or credited to the Federal
clubs, and other student activities are Government only to the extent that
unallowable unless expressly author- such interest accrued over the period
ized in the Federal award. during which the Federal Government
has reimbursed the recipient or sub-
§ 200.470 Taxes (including Value recipient for the taxes, interest, and
Added Tax). penalties.
(a) For States, local governments, and (c) Value Added Tax (VAT). Foreign
Indian Tribes. (1) Taxes that a govern- taxes charged for procurement trans-
mental unit is legally required to pay actions that a recipient or subrecipient
are allowable, except for self-assessed is legally required to pay in a country
taxes that disproportionately affect are allowable. Foreign tax refunds or
rmajette on LAPJN3WLY3PROD with CFR
Federal programs or changes in tax applicable credits under Federal
policies that disproportionately affect awards refer to receipts or reduction of
Federal programs. expenditures, which operate to offset
182
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00194 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.472
or reduce expense items that are allo- or pass-through entity should consider
cable to Federal awards as direct or in- the recipient’s or subrecipient’s plans
direct costs. To the extent that such and orders for current and scheduled
credits accrued or received by the re- activity. Contemporaneous purchases
cipient or subrecipient relate to allow- of common items by the recipient or
able cost, these costs must be credited subrecipient must be considered evi-
to the Federal agency as a cost reduc- dence that the items are reasonably us-
tion or cash refunds, as appropriate. In able on the recipient’s or subrecipient’s
cases where the costs are credited back other work. Any acceptance of common
to the Federal award, the recipient or items as allocable to the terminated
subrecipient may reduce the Federal portion of the Federal award must be
share of costs by the amount of the for- limited to the extent that the quan-
eign tax reimbursement, or where Fed- tities of such items on hand, in transit,
eral award has not expired, the Federal and on order do not exceed the reason-
agency may allow the recipient or sub- able quantitative requirements of
recipient to use the foreign govern- other work.
ment tax refund for approved activities (2) If the recipient or subrecipient
under the Federal award. cannot discontinue certain costs imme-
diately after the effective termination
§ 200.471 Telecommunication and
video surveillance costs. date, despite making all reasonable ef-
forts, then the costs are generally al-
(a) Costs incurred for telecommuni- lowable within the limitations of this
cations and video surveillance services part. Any costs continuing after termi-
or equipment such as phones, internet, nation due to the negligent or willful
video surveillance, and cloud servers failure of the recipient or subrecipient
are allowable except for the following to immediately discontinue the costs
circumstances: are unallowable.
(b) Obligating or expending covered
(3) Loss of useful value of special
telecommunications and video surveil-
tooling, machinery, and equipment is
lance services or equipment or services
generally allowable if:
as described in § 200.216 to:
(1) Procure or obtain, extend or (i) Such special tooling, special ma-
renew a contract to procure or obtain; chinery, or equipment is not reason-
(2) Enter into a contract (or extend ably capable of use in the other work of
or renew a contract) to procure; or the recipient or subrecipient;
(3) Obtain the equipment, services, or (ii) The interest of the Federal Gov-
systems. ernment is protected by transfer of
title or by other means deemed appro-
§ 200.472 Termination and standard priate by the Federal agency (see
closeout costs. § 200.313 (d)); and
(a) Termination Costs. Termination of (iii) The loss of useful value for any
a Federal award generally gives rise to one terminated Federal award is lim-
the incurrence of costs or the need for ited to the portion of the acquisition
special treatment of costs, which would cost which bears the same ratio to the
not have arisen had the Federal award total acquisition cost as the termi-
not been terminated. Cost principles nated portion of the Federal award
covering these items are set forth in bears to the entire terminated Federal
this section. They must be used in con- award and other Federal awards for
junction with the other termination re- which the special tooling, machinery,
quirements of this part. or equipment was acquired.
(1) The cost of items reasonably usa- (4) If paragraph (a)(4)(i) and (ii) below
ble on the recipient’s or subrecipient’s are satisfied, rental costs under unex-
other work is unallowable unless the pired leases (less the residual value of
recipient or subrecipient submits evi- such leases) are generally allowable
dence that it would not retain such where clearly shown to have been rea-
items without sustaining a loss. In de- sonably necessary for the performance
rmajette on LAPJN3WLY3PROD with CFR
ciding whether such items are reason- of the terminated Federal award. These
ably usable on other work of the recipi- rental costs may include the cost of al-
ent or subrecipient, the Federal agency terations of the leased property and
183
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00195 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.473 2 CFR Ch. II (1–1–26 Edition)
the cost of reasonable restoration re- costs may be incurred until the due
quired by the lease, provided the alter- date of the final report(s). If incurred,
ations were necessary for the perform- these costs must be liquidated prior to
ance of the Federal award. the due date of the final report(s) and
(i) The amount of claimed rental charged to the final budget period of
costs does not exceed the reasonable the award unless otherwise specified by
use value of the property leased for the the Federal agency.
period of the Federal award and a fur-
ther period as may be reasonable; and § 200.473 Training and education costs.
(ii) The recipient or subrecipient The cost of training and education
makes all reasonable efforts to termi- provided for employee development is
nate, assign, settle, or otherwise re- allowable.
duce the cost of the lease.
(5) The following settlement expenses § 200.474 Transportation costs.
are generally allowable. Costs incurred for freight, express,
(i) Accounting, legal, clerical, and cartage, postage, and other transpor-
similar costs that are reasonably nec- tation services relating to goods pur-
essary for: chased, in process, or delivered, are al-
(A) The preparation and presentation lowable. When the costs can be readily
to the Federal agency or pass-through identified with the items involved,
entity of settlement claims and sup- they may be charged directly as trans-
porting data with respect to the termi- portation costs or added to the cost of
nated portion of the Federal award, un- such items. When identification with
less the termination is for cause (see the materials received cannot be read-
§§ 200.339–200.343); and ily made, the inbound transportation
(B) The termination and settlement cost may be charged to the appropriate
of subawards. indirect cost accounts if the recipient
(ii) Reasonable costs for the storage, or subrecipient follows a consistent,
transportation, protection, and disposi- equitable procedure in this respect. If
tion of property provided by the Fed- reimbursable under the terms and con-
eral Government or acquired or pro- ditions of the Federal award, outbound
duced for the Federal award. freight should be treated as a direct
(6) Claims under subawards, includ- cost.
ing the allocable portion of claims
common to the Federal award and § 200.475 Travel costs.
other work of the recipient or sub- (a) General. Travel costs include the
recipient, are generally allowable. An transportation, lodging, subsistence,
appropriate share of the recipient’s or and related items incurred by employ-
subrecipient’s indirect costs may be al- ees who are in travel status on official
located to the amount of settlements business of the recipient or sub-
with contractors and subrecipients, recipient. These costs may be charged
provided that the amount allocated is on an actual cost basis, on a per diem
consistent with the requirements of or mileage basis, or on a combination
§ 200.414. These allocated indirect costs of the two, provided the method used is
must exclude the same and similar applied to an entire trip and not to se-
costs claimed directly or indirectly as lected days of the trip. The method
settlement expenses. used must be consistent with those
(b) Closeout Costs. Administrative normally allowed in like circumstances
costs associated with the closeout ac- in the recipient’s or subrecipient’s
tivities of a Federal award are allow- other activities and in accordance with
able. The recipient or subrecipient may the recipient’s or subrecipient’s estab-
charge the Federal award during the lished written policies. Notwith-
closeout for the necessary administra- standing the provisions of § 200.444,
tive costs of that Federal award (for travel costs of officials covered by that
example, salaries of personnel pre- section are allowable with the prior
paring final reports, publication and written approval of the Federal agency
rmajette on LAPJN3WLY3PROD with CFR
printing costs, costs associated with or pass-through entity when they are
the disposition of equipment and prop- specifically related to the Federal
erty, and related indirect costs). These award.
184
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00196 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.501
(b) Lodging and subsistence. Costs in- (iv) Result in additional costs that
curred by employees and officers for would offset the transportation sav-
travel, including costs of lodging, other ings; or
subsistence, and incidental expenses, (v) Offer accommodations not reason-
must be considered reasonable and oth- ably adequate for the traveler’s med-
erwise allowable only to the extent ical needs. The recipient or sub-
such costs do not exceed charges nor- recipient must justify and document
mally allowed by the recipient or sub- these conditions on a case-by-case
recipient in its regular operations as basis for the use of first-class or busi-
the result of the recipient’s or sub- ness-class airfare to be allowable in
recipient’s established written policy. such cases.
In addition, if these costs are charged (2) Unless a pattern of avoidance is
directly to the Federal award docu- detected, the Federal Government will
mentation must justify that: generally not question a recipient’s or
(1) Participation of the individual is subrecipient’s determinations that cus-
necessary for the Federal award; and tomary standard airfare or other dis-
(2) The costs are reasonable and con- count airfare is unavailable for specific
sistent with the recipient’s or sub- trips if the recipient or subrecipient
recipient’s established written policy. can demonstrate that such airfare was
not available in the specific case.
(c) Dependents. (1) Temporary depend-
ent care costs (dependent is defined in (f) Air travel by other than commercial
26 U.S.C. 152) above and beyond regular carrier. Travel costs by recipient or
subrecipient-owned, -leased, or -char-
dependent care are allowable provided
tered aircraft include the cost of the
that these costs:
lease, charter, operation (including
(i) Are a direct result of the individ- personnel costs), maintenance, depre-
ual’s travel to a conference for the Fed- ciation, insurance, and other related
eral award; costs. The portion of these costs that
(ii) Are consistent with the recipi- exceeds the cost of airfare, as provided
ent’s or subrecipient’s established writ- for in paragraph (d), is unallowable.
ten policy for all travel; and
(iii) Are only temporary during the § 200.476 Trustees.
travel period. Travel and subsistence costs of trust-
(2) Travel costs for dependents are ees (or directors) at IHEs and nonprofit
unallowable, except for travel of six organizations are allowable. See
months or more with prior approval of § 200.475.
the Federal agency. See § 200.432.
(d) Establishing rates and amounts. In
the absence of an established written
Subpart F—Audit Requirements
policy regarding travel costs, the rates GENERAL
and amounts established under 5 U.S.C.
5701–11 (‘‘Travel and Subsistence Ex- § 200.500 Purpose.
penses; Mileage Allowances’’), by the
This part sets forth standards for ob-
Administrator of General Services, or
taining consistency and uniformity
by the President (or their designee) among Federal agencies for the audit
pursuant to any provisions of such sub- of non-Federal entities expending Fed-
chapter must apply to travel under eral awards.
Federal awards (48 CFR 31.205–46(a)).
(e) Commercial air travel. (1) Airfare AUDITS
costs in excess of the basic least expen-
sive unrestricted accommodations § 200.501 Audit requirements.
class offered by commercial airlines (a) Audit required. A non-Federal enti-
are unallowable except when such ac- ty that expends $1,000,000 or more dur-
commodations would: ing the non-Federal entity’s fiscal year
(i) Require circuitous routing; in Federal awards must have a single
rmajette on LAPJN3WLY3PROD with CFR
(ii) Require travel during unreason- or program-specific audit conducted for
able hours; that year in accordance with the provi-
(iii) Excessively prolong travel; sions of this part.
185
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00197 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.502 2 CFR Ch. II (1–1–26 Edition)
(b) Single audit. A non-Federal entity (g) Subrecipients and contractors. An
that expends $1,000,000 or more in Fed- auditee may simultaneously be a re-
eral awards during the non-Federal en- cipient, a subrecipient, and a con-
tity’s fiscal year must have a single tractor. Unless a program is exempt by
audit conducted in accordance with Federal statute, Federal awards ex-
§ 200.514 except when it elects to have a pended as a recipient or a subrecipient
program-specific audit conducted in ac- are subject to audit under this part.
cordance with paragraph (c) or (d) of Payments received for goods or serv-
this section. ices provided as a contractor under a
(c) Program-specific audit election (in Federal award (see § 200.331) are not
general). A non-Federal entity may subject to audit under this part.
elect to have a program-specific audit (h) Compliance responsibility for con-
conducted in accordance with § 200.507 tractors. In most cases, the auditee’s
if the following conditions are met: compliance responsibility for contrac-
(1) The non-Federal entity expends tors is to ensure that the procurement,
Federal awards under only one Federal receipt, and payment for goods and
program (excluding research and devel- services comply with Federal statutes,
opment); and regulations, and the terms and condi-
(2) The Federal program’s statutes or tions of a Federal award. Federal
award compliance requirements nor-
regulations, or terms and conditions of
mally do not flow down to contractors.
the Federal award, do not require a fi-
However, for procurement transactions
nancial statement audit of the non-
in which the contractor is made re-
Federal entity.
sponsible for meeting program require-
(d) Program-specific audit election for ments, the auditee must ensure those
research and development. A non-Federal requirements are met, including by
entity may elect to have a program- clearly stating the contractor’s respon-
specific audit for research and develop- sibilities within the contract and re-
ment conducted in accordance with viewing the contractor’s records to de-
§ 200.507, but only if all of the following termine compliance. Also, when these
conditions are met: procurement transactions relate to a
(1) The non-Federal entity expends major program, the scope of the audit
Federal awards only from the same must include a determination of
Federal agency, or the same Federal whether these transactions comply
agency and the same pass-through en- with Federal statutes, regulations, and
tity; and the terms and conditions of a Federal
(2) The Federal agency, or pass- award. See also § 200.318(b).
through entity in the case of a sub- (i) For-profit subrecipient. This sub-
recipient, approves a program-specific part does not apply to for-profit orga-
audit in advance. nizations. As necessary, the pass-
(e) Exemption when Federal awards ex- through entity is responsible for estab-
pended are less than $1,000,000. A non- lishing requirements to ensure compli-
Federal entity that expends less than ance by for-profit subrecipients. The
$1,000,000 in Federal awards during its subaward with a for-profit subrecipient
fiscal year is exempt from Federal must describe applicable compliance
audit requirements for that year, ex- requirements and the for-profit sub-
cept as noted in § 200.503. However, in recipient’s compliance responsibility.
all instances, the records of the non- Methods to ensure compliance for Fed-
Federal entity must be available for re- eral awards made to for-profit sub-
view or audit by appropriate officials recipients may include pre-award au-
of the Federal agency, pass-through en- dits, monitoring throughout the per-
tity, and the Government Account- formance of the subaward, and post-
ability Office (GAO). award audits (see § 200.332).
(f) Federally Funded Research and De-
velopment Centers (FFRDC). Manage- § 200.502 Basis for determining Fed-
ment of an auditee that owns or oper- eral awards expended.
rmajette on LAPJN3WLY3PROD with CFR
ates a FFRDC may elect to treat the (a) Determining Federal awards ex-
FFRDC as a separate entity for pur- pended. The determination of when a
poses of this part. Federal award is expended must be
186
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00198 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.502
based on when the activity related to (d) Prior loan and loan guarantees
the Federal award occurs. Generally, (loans). Loans, the proceeds of which
the activity related to the Federal were received and expended in prior
award pertains to events that require years, are not considered Federal
the non-Federal entity to comply with awards expended under this part when
Federal statutes, regulations, and the Federal statutes, regulations, and the
terms and conditions of Federal terms and conditions of Federal awards
awards, such as: pertaining to such loans impose no
(1) Expenditure/expense transactions continuing compliance requirements
associated with grants, cooperative other than to repay the loans.
agreements, cost-reimbursement con- (e) Endowment funds. The cumulative
tracts under the FAR, compacts with balance of Federal awards for endow-
Indian Tribes, and direct appropria-
ment funds that are federally re-
tions;
stricted is considered Federal awards
(2) The disbursement of funds to sub-
expended in each audit period in which
recipients;
the funds are still restricted.
(3) The use of loan proceeds under
loan and loan guarantee programs; (f) Free rent. Free rent received by
(4) The receipt of property (including itself is not considered a Federal award
surplus property); expended under this part. However, free
(5) The receipt or use of program in- rent received as part of a Federal
come; award to carry out a Federal program
(6) The distribution or use of food must be included in determining Fed-
commodities; eral awards expended and is subject to
(7) The disbursement of amounts en- audit under this part.
titling the non-Federal entity to an in- (g) Valuing non-cash assistance. Fed-
terest subsidy; and eral non-cash assistance (such as free
(8) The period when insurance is in rent, food commodities, donated prop-
force. erty, or donated surplus property that
(b) Loan and loan guarantees (loans). is received as part of a Federal award
The Federal Government is at risk for to carry out a Federal program) must
loans until the debt is repaid. There- be valued at fair market value at the
fore, the following guidelines must be time of receipt or the assessed value
used to calculate the value of Federal provided by the Federal agency and
awards expended under loan programs must be included in determining Fed-
(except as noted in paragraphs (c) and eral awards expended under this part.
(d)): (h) Medicare. Medicare payments to a
(1) The value of new loans made or non-Federal entity for providing pa-
received during the audit period; plus
tient care services to Medicare-eligible
(2) The balance of loans from pre-
individuals are not considered Federal
vious years at the beginning of the
awards expended under this part.
audit period for which the Federal Gov-
ernment imposes continuing compli- (i) Medicaid. Medicaid payments to a
ance requirements; plus subrecipient for providing patient care
(3) Any interest subsidy, cash, or ad- services to Medicaid-eligible individ-
ministrative cost allowance received. uals are not considered Federal awards
(c) Loan and loan guarantees (loans) at expended under this part unless a State
Institutions of Higher Education (IHE). requires the funds to be treated as Fed-
When loans are made to students of an eral awards expended because reim-
IHE, but the IHE itself does not have bursement is on a cost-reimbursement
continuing compliance requirements basis.
for the loans, then only the value of (j) Certain loans provided by the Na-
loans made during the audit period are tional Credit Union Administration. For
considered Federal awards expended in purposes of this part, loans from the
that audit period. The balance of loans National Credit Union Share Insurance
for previous audit periods is not in- Fund and the Central Liquidity Facil-
rmajette on LAPJN3WLY3PROD with CFR
cluded as Federal awards expended be- ity funded by contributions from in-
cause the lender accounts for the prior sured non-Federal entities are not con-
balances. sidered Federal awards expended.
187
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00199 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.503 2 CFR Ch. II (1–1–26 Edition)
§ 200.503 Relation to other audit re- consistent with other applicable Fed-
quirements. eral statutes and regulations, arrange
(a) Other financial audits. An audit for funding the full cost of such addi-
conducted in accordance with this part tional audits.
must be in lieu of any financial audit (e) Request for a program to be audited
of Federal awards which a non-Federal as a major program. A Federal agency
entity is required to undergo under any may request that an auditee have a
other Federal statute or regulation. To particular Federal program audited as
the extent that such an audit provides a major program in lieu of the Federal
a Federal agency with the information agency conducting or arranging for the
it requires to carry out its responsibil- additional audits. Such requests should
ities under Federal statute or regula- be made at least 180 calendar days
tion, a Federal agency must rely upon prior to the end of the fiscal year to be
and use that information. audited to allow for planning. After
(b) Conducting additional audits. Not- consultation with its auditor, the
withstanding paragraph (a) of this sec- auditee should promptly respond to
tion, a Federal agency, Inspectors Gen- such a request by informing the Fed-
eral, or GAO may conduct or arrange eral agency whether the program
additional audits to carry out its re- would otherwise be audited as a major
sponsibilities under Federal statute or program using the risk-based audit ap-
regulation. The provisions of this part proach described in § 200.518 and, if not,
do not authorize any non-Federal enti- the estimated incremental cost. The
ty to constrain, in any manner, such Federal agency must then promptly
Federal agency from carrying out or confirm to the auditee whether it
arranging for such additional audits, wants the program audited as a major
except that the Federal agency must program. If the program is to be au-
plan such audits not to be duplicative dited as a major program based upon
of other audits of Federal awards. Prior this Federal agency request, and the
to commencing such an audit, the Fed- Federal agency agrees to pay the full
eral agency or pass-through entity incremental costs, then the auditee
must review the FAC for recent audits must have the program audited as a
submitted by the non-Federal entity, major program. With approval of the
and to the extent such audits meet a Federal agency, a pass-through entity
Federal agency or pass-through enti- may use the provisions of this para-
ty’s needs, the Federal agency or pass- graph for a subrecipient.
through entity must rely upon and use
such audits. Any additional audits § 200.504 Frequency of audits.
must be planned and performed in such
a way as to build upon work performed, Audits required by this part must be
including the audit documentation, performed annually unless biennial au-
sampling, and testing already per- dits are permitted under paragraph (a)
formed by other auditors. or (b) of this section. Biennial audits
(c) Authority to conduct additional au- must cover both fiscal years within the
dits. The provisions of this part do not biennial period.
limit the authority of Federal agencies (a) A State, local government, or In-
to conduct, or arrange for the conduct dian Tribe that is required by constitu-
of, audits and evaluations of Federal tion or statute, in effect on January 1,
awards, nor limit the authority of any 1987, to undergo its audits less fre-
Federal agency Inspector General or quently than annually, is permitted to
other Federal officials. For example, undergo biennial (every other year) au-
requirements that may be applicable dits pursuant to this part. This require-
under the FAR or CAS and the terms ment must still be in effect for the bi-
and conditions of a cost-reimbursement ennial period.
contract may include additional appli- (b) Any nonprofit organization that
cable audits to be conducted or ar- had biennial audits for all biennial pe-
ranged for by Federal agencies. riods ending between July 1, 1992, and
rmajette on LAPJN3WLY3PROD with CFR
(d) Federal agency to pay for additional January 1, 1995, is permitted to under-
audits. A Federal agency that conducts go biennial audits pursuant to this
or arranges for additional audits must, part.
188
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00200 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.507
§ 200.505 Remedies for audit non- major program in accordance
compliance. with§ 200.514(c);
In cases of continued inability or un- (iii) Determine whether the auditee
willingness of a non-federal entity to has complied with Federal statutes,
have an audit conducted in accordance regulations, and the terms and condi-
with this part, Federal agencies or tions of Federal awards that could have
pass-through entities must take appro- a direct and material effect on the Fed-
priate action as provided in § 200.339. eral program consistent with the re-
quirements for a major program under
§ 200.506 Audit costs. § 200.514(d);
See § 200.425. (iv) Follow up on prior audit findings
and perform procedures to assess the
§ 200.507 Program-specific audits. reasonableness of the summary sched-
(a) Program-specific audit guide avail- ule of prior audit findings prepared by
able. In some cases, a program-specific the auditee in accordance with the re-
audit guide will be available to provide quirements of § 200.511 When the audi-
specific guidance to the auditor con- tor concludes that the summary sched-
cerning internal controls, compliance ule of prior audit findings materially
requirements, suggested audit proce- misrepresents the status of any prior
dures, and audit reporting require- audit finding, the auditor must report
ments. A listing of current program- this condition as a current-year audit
specific audit guides can be found in finding.; and
the compliance supplement (Appendix (v) Report any audit findings con-
VI, Program-Specific Audit Guides). sistent with the requirements of
When a current program-specific audit § 200.516.
guide is available, the auditor must (4) The auditor’s report(s) may be in
follow Generally Accepted Government the form of either combined or sepa-
Auditing Standards (GAGAS) and the rate reports. It may be organized dif-
guide when performing a program-spe- ferently from the manner presented in
cific audit. this section. The auditor’s report(s)
(b) Program-specific audit guide not must state that the audit was con-
available. (1) When a current program- ducted in accordance with this part
specific audit guide is not available, and include the following:
the auditee and auditor must have ba-
(i) An opinion (or disclaimer of opin-
sically the same responsibilities for the
ion) as to whether the financial state-
Federal program as they would have
ment(s) of the Federal program is pre-
for an audit of a major program in a
sented fairly in all material respects in
single audit.
accordance with the stated accounting
(2) The auditee must prepare the fi-
policies;
nancial statement(s) for the Federal
program that includes a schedule of ex- (ii) A report on internal control re-
penditures of Federal awards for the lated to the Federal program, which
program and notes that describe the must describe the scope of testing of
significant accounting policies used in internal control and the results of the
preparing the schedule, a summary tests;
schedule of prior audit findings con- (iii) A report on compliance that in-
sistent with the requirements of cludes an opinion (or disclaimer of
§ 200.511(b), and a corrective action plan opinion) as to whether the auditee
consistent with the requirements of complied with laws, regulations, and
§ 200.511(c). the terms and conditions of Federal
(3) The auditor must: awards which could have a direct and
(i) Perform an audit of the financial material effect on the Federal pro-
statement(s) for the Federal program gram; and
in accordance with GAGAS; (iv) A schedule of findings and ques-
(ii) Obtain an understanding of inter- tioned costs for the Federal program
rmajette on LAPJN3WLY3PROD with CFR
nal controls and perform tests of inter- that includes a summary of the audi-
nal controls over the Federal program tor’s results relative to the Federal
consistent with the requirements for a program in a format consistent with
189
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00201 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.508 2 CFR Ch. II (1–1–26 Edition)
§ 200.515(d)(1) and findings and ques- (3) 200.508 Auditee responsibilities
tioned costs consistent with the re- through 200.509 Auditor selection;
quirements of § 200.515(d)(3). (4) 200.511 Audit findings follow-up;
(c) Report submission for program-spe- (5) 200.512 Report submission, para-
cific audits. (1) Submission deadline and graphs (e) through (h);
public availability. The audit must be (6) 200.513 Responsibilities;
completed and submitted in accordance (7) 200.516 Audit findings through
with paragraph (c)(2) or (c)(3) of this 200.517 Audit documentation;
section. Unless a different period is (8) 200.521 Management decision; and
specified in the program-specific audit (9) Other referenced provisions of this
guide, the audit must be submitted part unless contrary to the provisions
within 30 calendar days after the of this section, a program-specific
auditee receives the auditor’s report(s) audit guide, or program statutes and
or nine months after the end of the regulations.
audit period (whichever is earlier). The
AUDITEES
submission is due the next business day
when the due date falls on a Saturday, § 200.508 Auditee responsibilities.
Sunday, or Federal holiday. Unless re-
stricted by Federal law or regulation, The auditee must:
the auditee must make copies of the re- (a) Arrange for the audit required by
porting package available for public in- this part in accordance with § 200.509,
spection. Auditees and auditors must and ensure it is properly performed and
ensure that their respective parts of submitted in accordance with § 200.512.
the reporting package do not include (b) Prepare financial statements, in-
cluding the schedule of expenditures of
protected personally identifiable infor-
Federal awards in accordance with
mation.
§ 200.510.
(2) Program-specific audit guide avail-
(c) Promptly follow up and take cor-
able. When a program-specific audit rective action on audit findings. This
guide is available, the auditee must includes preparing a summary schedule
electronically submit the data collec- of prior audit findings and a corrective
tion form prepared in accordance with action plan in accordance with
§ 200.512(b), as applicable to the pro- § 200.511(b) and (c), respectively.
gram-specific audit, to the Federal (d) Provide the auditor access to per-
Audit Clearinghouse (FAC). The sub- sonnel, accounts, books, records, sup-
mission must also include the report- porting documentation, and any other
ing required by the program-specific information needed for the auditor to
audit guide. perform the audit required by this
(3) Program-specific audit guide not part.
available. When a program-specific
audit guide is not available, the § 200.509 Auditor selection.
auditee must electronically submit the (a) Auditor procurement. When pro-
data collection form prepared in ac- curing audit services, the auditee must
cordance with § 200.512(b) to the FAC. follow the procurement standards in
The submission must also include the §§ 200.317 through 200.327 of subpart D or
financial statement(s) of the Federal the FAR (48 CFR part 42), as applica-
program, summary schedule of prior ble. When requesting proposals for
audit findings, and corrective action audit services, the objectives and scope
plan as described in paragraph of the audit must be made clear, and
§ 200.507(b)(2) and the auditor’s report(s) the non-Federal entity must request a
described in paragraph § 200.507(b)(4). copy of the audit organization’s peer
(d) Other sections of this part may review report, which the auditor must
apply. Program-specific audits are sub- provide under GAGAS. Factors to be
ject to: considered in evaluating each proposal
(1) 200.500 Purpose through 200.503 Re- for audit services include the respon-
lation to other audit requirements, siveness to the request for proposal,
rmajette on LAPJN3WLY3PROD with CFR
paragraph (d); relevant experience, availability of
(2) 200.504 Frequency of audits staff with professional qualifications
through 200.506 Audit costs; and technical abilities, the results of
190
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00202 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.511
peer and external quality control re- awards expended for each year of a
views, and price. Whenever possible, Federal award. The schedule must:
the auditee must make efforts to con- (1) List individual Federal programs
tract with businesses as stated in by Federal agency using the applicable
§ 200.321 or the FAR (48 CFR part 42), as Assistance Listing number(s). For a
applicable. cluster of programs, the non-Federal
(b) Restriction on auditor preparing in- entity must provide the cluster name,
direct cost proposals. An auditor who a list of individual Federal programs
prepares the indirect cost proposal or within the cluster, and provide the
cost allocation plan may not be se- Federal agency name and the applica-
lected to perform the audit required by ble Assistance Listing number(s). For
this part when the indirect costs recov- research and development, total Fed-
ered by the auditee during the prior eral awards expended must be shown
year exceed $1 million. This restriction either by individual Federal award or
applies to the base year used to prepare by Federal agency and major subdivi-
the indirect cost proposal or cost allo- sion within the Federal agency. For ex-
cation plan and any subsequent years ample, the National Institutes of
in which the resulting indirect cost Health is a major subdivision within
agreement or cost allocation plan is the Department of Health and Human
used to recover costs. Services.
(c) Use of Federal auditors. Federal (2) For Federal awards received as a
auditors may perform all or part of the subrecipient, the name of the pass-
work required under this part if they through entity and identifying number
assigned by the pass-through entity
fully comply with the requirements of
must be included.
this part.
(3) Provide total Federal awards ex-
§ 200.510 Financial statements. pended for each individual Federal pro-
gram and the Assistance Listings num-
(a) Financial statements. The auditee ber or other identifying number when
must prepare financial statements that the Assistance Listings information is
reflect its financial position, results of unavailable. For a cluster of programs,
operations or changes in net assets, the auditee must also provide the total
and, where appropriate, cash flows for for the cluster.
the fiscal year audited. The financial (4) Include the total amount provided
statements must be for the same orga- to subrecipients from each Federal pro-
nizational unit and fiscal year chosen gram.
to meet this part’s requirements. How- (5) For loan or loan guarantee pro-
ever, organization-wide financial state- grams described in § 200.502(b), identify
ments of the non-Federal entity may in the notes to the schedule the bal-
also include departments, agencies, and ances outstanding at the end of the
other organizational units that have audit period. This requirement is in ad-
separate audits in accordance with dition to including the total Federal
§ 200.514(a) and prepare separate finan- awards expended for loan or loan guar-
cial statements. antee programs in the schedule.
(b) Schedule of expenditures of Federal (6) Include notes describing the sig-
awards. The auditee must also prepare nificant accounting policies used in
a schedule of expenditures of Federal preparing the schedule and whether the
awards for the period covered by the auditee elected to use the de minimis
auditee’s financial statements. The indirect cost rate of up to 15 percent
schedule must include the total Fed- (see § 200.414).
eral awards expended as determined in
accordance with § 200.502. The auditee § 200.511 Audit findings follow-up.
may choose to provide information re- (a) General. The auditee is responsible
quested by Federal agencies or pass- for follow-up and corrective action on
through entities to make the schedule all audit findings. As part of this re-
easier to use. For example, when a Fed- sponsibility, the auditee must prepare
rmajette on LAPJN3WLY3PROD with CFR
eral program has multiple Federal a summary schedule of prior audit find-
award years, the auditee may sepa- ings. The auditee must also prepare a
rately list the amount of Federal corrective action plan for current year
191
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00203 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.512 2 CFR Ch. II (1–1–26 Edition)
audit findings. The summary schedule lowing up with the auditee on the audit
of prior audit findings and the correc- finding; and
tive action plan must include the ref- (iii) A management decision was not
erence numbers the auditor assigns to issued.
audit findings under § 200.516(c). Since (c) Corrective action plan. At the com-
the summary schedule may include pletion of the audit, the auditee must
audit findings from multiple years, it prepare a corrective action plan to ad-
must include the fiscal year in which dress each audit finding included in the
the finding initially occurred. The cor- auditor’s report for the current year.
rective action plan and summary The corrective action plan must be a
schedule of prior audit findings must document separate from the auditor’s
include financial statement findings findings described in § 200.516. The cor-
that the auditor was required to report rective action plan must also provide
in accordance with GAGAS. the name(s) of the contact person(s) re-
(b) Summary schedule of prior audit sponsible for the corrective action, the
findings. The summary schedule of corrective action to be taken, and the
prior audit findings must report the anticipated completion date. When the
status of all audit findings included in auditee does not agree with the audit
the prior audit’s schedule of findings findings or believes corrective action is
and questioned costs. The summary not required, the corrective action plan
schedule must also include audit find- must include a detailed explanation of
ings reported in the prior audit’s sum- the reasons.
mary schedule of prior audit findings
except audit findings listed as cor- § 200.512 Report submission.
rected in accordance with paragraph (a) General. (1) The audit, the data
(b)(1) of this section or no longer valid collection form, and the reporting
or not warranting further action in ac- package must be submitted within 30
cordance with paragraph (b)(3) of this calendar days after the auditee re-
section. ceives the auditor’s report(s) or nine
(1) When audit findings were fully months after the end of the audit pe-
corrected, the summary schedule need riod (whichever is earlier). The cog-
only list the audit findings and state nizant agency for audit or oversight
that corrective action was taken. agency for audit (in the absence of a
(2) When audit findings were not cor- cognizant agency for audit) may au-
rected or only partially corrected, the thorize an extension when the nine-
summary schedule must describe the month timeframe would place an undue
reasons for the finding’s recurrence, burden on the auditee. If the due date
planned corrective action, and any par- falls on a Saturday, Sunday, or Federal
tial corrective action taken. When the holiday, the reporting package is due
corrective action taken significantly the next business day.
differs from the corrective action pre- (2) The auditee must make copies
viously reported in a corrective action available for public inspection unless
plan or the Federal agency’s or pass- restricted by Federal statute or regula-
through entity’s management decision, tion. Auditees and auditors must en-
the summary schedule must provide an sure that their respective parts of the
explanation. reporting package do not include pro-
(3) When the auditee believes the tected personally identifiable informa-
audit findings are no longer valid or do tion.
not warrant further action, the reasons (b) Data collection. The FAC is the re-
for this position must be described in pository of record for subpart F report-
the summary schedule. A valid reason ing packages and the data collection
for considering an audit finding as not form. All Federal agencies, pass-
warranting further action is that all of through entities and others interested
the following have occurred: in a reporting package and data collec-
(i) Two years have passed since the tion form must obtain it by accessing
audit report in which the finding oc- the FAC.
rmajette on LAPJN3WLY3PROD with CFR
curred was submitted to the FAC; (1) The auditee must submit the re-
(ii) The Federal agency or pass- quired data collection form described
through entity is not currently fol- in Appendix X of this part. This form
192
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00204 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.512
provides information about the ing package available for public inspec-
auditee, its Federal programs, the re- tion.
sults of the audit, and whether the (4) The auditor must complete the
audit was completed in accordance applicable data elements of the data
with this part. The form must include collection form using the information
all information required by this part included in the reporting package de-
that is necessary for Federal agencies scribed in paragraph (c) of this section.
to use the audit to ensure the integrity The auditor must sign a statement to
of Federal programs. The form includes be included as part of the data collec-
data elements and a format that OMB tion form stating:
must approve, is available from the (i) The source of information in-
FAC, and include collections of infor- cluded in the data collection form;
mation from the reporting package de- (ii) The auditor’s responsibility for
scribed in paragraph (c). the information;
(2) A senior-level representative of (iii) The data collection form is not a
the auditee (for example, a State con- substitute for the reporting package
troller, director of finance, chief execu- described in paragraph (c); and
tive officer, or chief financial officer) (iv) The content of the form is lim-
must sign a statement to be included ited to the collection of information
as part of the data collection form prescribed by OMB.
stating that the auditee complied with (c) Reporting package. The reporting
the requirements of this part, includ- package must include the following:
ing that: (1) Financial statements and sched-
(i) The data collection form was pre- ule of expenditures of Federal awards
pared in accordance with this part (and discussed in § 200.510(a) and (b), respec-
the instructions accompanying the tively;
form); (2) Summary schedule of prior audit
(ii) The reporting package does not findings discussed in § 200.511(b);
include protected personally identifi- (3) Auditor’s report(s) discussed in
able information; § 200.515; and
(iii) The information included in its (4) Corrective action plan discussed
entirety is accurate and complete; and in § 200.511(c).
(iv) The FAC is authorized to make (d) Submission to FAC. The auditee
the reporting package and the form must electronically submit the data
publicly available on a website. collection form described in paragraph
(3) An auditee that is an Indian Tribe (b) of this section and the reporting
or a tribal organization (as defined in package described in paragraph (c) of
the Indian Self-Determination, Edu- this section to the FAC.
cation and Assistance Act (ISDEAA), (e) Requests for management letters
25 U.S.C. 450b(l)) may opt not to au- issued by the auditor. Auditees must
thorize the FAC to make the reporting submit, when requested by a Federal
package publicly available on a agency or pass-through entity, a copy
website. To opt-out, an Indian Tribe or of any management letters issued by
tribal organization must exclude the the auditor.
authorization described in paragraph (f) Report retention requirements.
(b)(2)(iv) of this section. In these in- Auditees must keep a copy of the data
stances, the Indian Tribe is responsible collection form described in paragraph
for submitting the reporting package (b) of this section and a copy of the re-
directly to any pass-through entities porting package described in paragraph
through which it has received a Fed- (c) on file for three years from the date
eral award and to pass-through entities of submission to the FAC. Copies of
for which the summary schedule of audit records must be maintained in
prior audit findings reported the status accordance with § 200.336.
of any findings related to those Federal (g) FAC responsibilities. The FAC must
awards that the pass-through entity make available the reporting packages
provided. Unless restricted by Federal received in accordance with paragraph
rmajette on LAPJN3WLY3PROD with CFR
statute or regulation, if the Indian (c) of this section and § 200.507(c) to the
Tribe opts not to authorize publica- public, except for Indian Tribes exer-
tion, it must make copies of the report- cising the option in paragraph (b)(3) of
193
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00205 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.513 2 CFR Ch. II (1–1–26 Edition)
this section, and maintain a database non-Federal auditors and provide the
of completed audits, provide appro- results to other interested organiza-
priate information to Federal agencies, tions.
and follow up with known auditees (iii) Cooperate and support the Fed-
that have not submitted the required eral agency designated by OMB to lead
data collection forms and reporting a government-wide analysis to assess
packages. the quality of single audits. The gov-
(h) Electronic filing. Nothing in this ernment-wide analysis may rely on the
part must preclude electronic submis- current and ongoing quality control re-
sions to the FAC in such a manner as view work performed by Federal agen-
may be approved by OMB. cies, State auditors, and professional
audit associations. This government-
FEDERAL AGENCIES wide audit analysis must be performed
at an interval determined by OMB, and
§ 200.513 Responsibilities. the results must be posted publicly. In
(a) Cognizant agency for audit respon- providing support to the government-
sibilities. (1) A non-Federal entity ex- wide analysis, a Federal agency must
pending more than $50 million a year in provide the following:
Federal awards must have a cognizant (A) An assessment of the extent to
agency for audit. The cognizant agency which single audits conform to the re-
for audit must be the Federal agency quirements, standards, and procedures
that provides the largest amount of di- of this part; and
rect funding (as listed on the non-Fed- (B) Recommendations to address
eral entity’s Schedule of expenditures audit quality issues, including rec-
of Federal awards, see § 200.510(b)) un- ommendations for any changes to this
less OMB designates a specific cog- part’s requirements, standards, and
nizant agency for audit. When the di- procedures.
rect funding represents less than 25 (iv) Promptly inform the appropriate
percent of the total expenditures (as di- Federal law enforcement officials and
rect and subawards) by the non-Federal impacted Federal agencies of any di-
entity, then the Federal agency with rect reporting by the auditee or its
the predominant amount of total fund- auditor required by GAGAS, Federal
ing is the designated cognizant agency statute, or regulation.
for audit. (v) Advise the community of inde-
(2) To provide for continuity of cog- pendent auditors of any noteworthy or
nizance, the determination of the pre- important factual trends related to the
dominant amount of direct funding quality of audits stemming from qual-
must be based upon direct Federal ity control reviews. Significant prob-
awards expended in the non-Federal en- lems or quality issues consistently
tity’s fiscal years ending in 2019 and identified through quality control re-
every fifth year after that. views of audit reports must be referred
(3) Notwithstanding how audit cog- to appropriate State licensing agencies
nizance is determined, a Federal agen- and professional bodies.
cy may reassign cognizance to another (vi) Advise the auditor, Federal
Federal agency that provides substan- awarding agencies, and, where appro-
tial funding to an auditee if it agrees priate, the auditee of any deficiencies
to be the cognizant agency for audit. found in the audits when the defi-
Within 30 calendar days after any reas- ciencies require corrective action by
signment, both the old and the new the auditor. When advised of defi-
cognizant agency for audit must notify ciencies, the auditee must work with
the FAC, the auditee, and the auditor the auditor to take corrective action.
(if known) of the change. If corrective action is not taken, the
(4) The cognizant agency for audit cognizant agency for audit must notify
must: the auditor, the auditee, and applicable
(i) Provide technical audit advice and Federal awarding agencies and pass-
liaison assistance to auditees and audi- through entities of the facts and make
rmajette on LAPJN3WLY3PROD with CFR
tors. recommendations for follow-up action.
(ii) Obtain or conduct quality control Major inadequacies or repetitive sub-
reviews on selected audits made by standard performance by auditors must
194
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00206 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.513
be referred to appropriate State licens- (1) Ensure that audits are completed,
ing agencies and professional bodies for and reports are received in a timely
disciplinary action. manner in accordance with the require-
(vii) Coordinate, to the extent prac- ments of this part.
tical, audits or reviews made by or for (2) Provide technical advice and as-
Federal agencies that are in addition sistance to auditees and auditors.
to the audits made pursuant to this (3) Follow-up on audit findings to en-
part, so that the additional audits or sure that non-Federal entities take ap-
reviews build upon, rather than dupli- propriate and timely corrective action.
cate, audits performed in accordance Follow-up includes:
with this part. (i) Issuing a management decision in
(viii) Coordinate a management deci- accordance with § 200.521;
sion for cross-cutting audit findings (ii) Monitoring the non-Federal enti-
that affect the Federal programs of ty’s progress implementing a correc-
more than one agency when requested tive action;
by any Federal agency whose awards (iii) Using a cooperative audit resolu-
are included in the audit finding of the tion approach to improve Federal pro-
auditee. Cross-cutting audit finding gram outcomes through better audit
means an audit finding where the same resolution, follow-up, and corrective
underlying condition or issue affects action, which means the use of audit
all Federal awards (including Federal follow-up techniques promoting
awards of more than one Federal agen- prompt corrective action by improving
cy or pass-through entity); for exam- communication, fostering collabora-
ple, a cross-cutting audit finding may tion, promoting trust, and developing
include an issue related to the recipi- an understanding between the Federal
ent’s accounting system. agency and the non-Federal entity.
This approach is based upon:
(ix) Coordinate the audit work and
(A) A strong commitment by Federal
reporting responsibilities among audi-
agency and non-Federal entity leader-
tors to achieve the most cost-effective
ship to Federal program integrity;
audit.
(B) Federal agencies strengthening
(x) Provide advice to auditees as to partnerships and working coopera-
how to handle changes in fiscal year. tively with non-Federal entities and
(b) Oversight agency for audit respon- their auditors; non-Federal entities
sibilities. An auditee who does not have and their auditors working coopera-
a designated cognizant agency for tively with Federal agencies;
audit will be under the general over- (C) A focus on current conditions and
sight of the Federal agency determined corrective action going forward;
in accordance with § 200.1 oversight (D) Federal agencies offering appro-
agency for audit. A Federal agency with priate relief for past noncompliance
oversight for an auditee may reassign when audits show prompt corrective
oversight to another Federal agency action has occurred; and
that agrees to be the oversight agency (E) Federal agency leadership send-
for audit. Within 30 calendar days after ing a clear message that continued
any reassignment, both the old and the failure to correct conditions identified
new oversight agency for audit must by audits likely to cause improper pay-
provide notice of the change to the ments, fraud, waste, or abuse is unac-
FAC, the auditee, and, if known, the ceptable and will result in sanctions.
auditor. The oversight agency for (iv) Tracking the effectiveness of the
audit: Federal agency’s follow-up processes,
(1) Must provide technical advice and the effectiveness of single audits in im-
assistance to auditees and auditors. proving non-Federal entity account-
(2) May assume all or some of the re- ability, and the use of single audits in
sponsibilities normally performed by a making Federal award decisions. The
cognizant agency for audit. Federal agency should develop a base-
(c) Awarding Federal agency respon- line, metrics, and targets to track,
rmajette on LAPJN3WLY3PROD with CFR
sibilities. In addition to all other re- over time, the effectiveness of the Fed-
quirements of this part, the awarding eral agency’s process to follow up on
Federal agency must: audit findings.
195
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00207 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.514 2 CFR Ch. II (1–1–26 Edition)
(4) Provide OMB with annual updates (v) Coordinate the Federal agency’s
to the compliance supplement. These audit follow-up processes and ensure
updates include working with OMB to non-Federal entities implement correc-
ensure that the compliance supplement tive actions for audit findings.
focuses the auditor on testing the com- (vi) Ensure the Federal agency ful-
pliance requirements most likely to fills its responsibility, as a cognizant
cause improper payments, fraud, waste, agency for audit, to coordinate a man-
abuse, or generate audit findings for agement decision for cross-cutting
which the Federal agency will take ac- audit findings under (a)(4)(viii) of this
tion in accordance with § 200.505. Prior section. Cross-cutting audit findings
to submitting compliance supplement means an audit finding where the same
drafts to OMB, Federal agencies should underlying condition or issue affects
engage with external audit stake- all Federal awards (including Federal
holders, the Federal agency’s Office of awards of more than one Federal agen-
Inspector General, and the National cy or pass-through entity). For exam-
Single Audit Coordinator (NSAC). ple, this may include an issue related
(5) Provide OMB with the name of a to the recipient’s accounting system.
single audit accountable official from (vii) Ensure the Federal agency pro-
among the senior policy officials of the vides OMB with annual updates to the
Federal agency. The accountable offi- compliance supplement consistent with
cial must be: the compliance supplement prepara-
(i) Responsible for ensuring that the tion guide.
Federal agency fulfills the require- (viii) Support the mission of the Fed-
ments of this section and effectively eral agency’s single audit accountable
uses the single audit process to reduce official and coordinate with the Fed-
improper payments and improve Fed- eral agency’s Office of Inspector Gen-
eral program outcomes. eral and National Single Audit Coordi-
(ii) Accountable for improving the ef- nator (NSAC).
fectiveness of the Federal agency’s sin-
gle audit processes in accordance with AUDITORS
paragraph (c)(3)(iv).
(iii) Responsible for designating the § 200.514 Standards and scope of audit.
Federal agency’s key management sin- (a) General. The audit must be con-
gle audit liaison. ducted in accordance with GAGAS. The
(6) Provide OMB with the name of a audit must also cover the entire oper-
key management single audit liaison. ations of the auditee, or, at the option
The liaison must: of the auditee, such audit must include
(i) Serve as the Federal agency’s a series of audits that cover depart-
point of contact for the single audit ments, agencies, and other organiza-
process within and outside the Federal tional units that expended or otherwise
Government. administered Federal awards during
(ii) Promote interagency coordina- the audit period. In these instances,
tion, consistency, and information the audit must include the financial
sharing. This includes coordinating statements and schedule of expendi-
audit follow-up, identifying higher risk tures of Federal awards for each such
non-Federal entities, providing input department, agency, and other organi-
on single audit and follow-up policy, zational unit, which must be consid-
enhancing the utility of the FAC, and ered to be a non-Federal entity. The fi-
identifying ways to use single audit re- nancial statements and schedule of ex-
sults to improve Federal award ac- penditures of Federal awards must be
countability and best practices. for the same audit period.
(iii) Oversee training for the Federal (b) Financial statements. The auditor
agency’s program management per- must determine whether the auditee’s
sonnel related to the single audit proc- financial statements are presented
ess. fairly in all material respects in ac-
(iv) Promote the Federal agency’s cordance with generally accepted ac-
rmajette on LAPJN3WLY3PROD with CFR
use of a cooperative audit resolution counting principles (or a special pur-
approach as described in paragraph pose framework such as cash, modified
(c)(3)(iii) of this section. cash, or regulatory as required by
196
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00208 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.515
State law). The auditor must also de- (2) The principal compliance require-
termine whether the schedule of ex- ments applicable to most Federal pro-
penditures of Federal awards is stated grams and the compliance require-
fairly in all material respects in rela- ments of the largest Federal programs
tion to the auditee’s financial state- are included in the compliance supple-
ments as a whole. ment.
(c) Internal control. (1) The compli- (3) For the compliance requirements
ance supplement provides guidance on related to Federal programs contained
internal controls over Federal pro- in the compliance supplement, an audit
grams based upon the guidance in of these compliance requirements will
Standards for Internal Control in the meet the requirements of this part.
Federal Government issued by the Where there have been changes to the
Comptroller General of the United compliance requirements, and the
States and the Internal Control-Inte- changes are not reflected in the com-
grated Framework, issued by the Com- pliance supplement, the auditor must
mittee of Sponsoring Organizations of determine the current compliance re-
the Treadway Commission (COSO). quirements and modify the audit proce-
(2) In addition to the requirements of dures accordingly. For those Federal
GAGAS, the auditor must perform pro- programs not covered in the compli-
cedures to obtain an understanding of ance supplement, the auditor must fol-
internal control over Federal programs low the compliance supplement’s guid-
sufficient to plan the audit to support ance for programs not included.
a low assessed level of control risk of (4) The compliance testing must in-
noncompliance for major programs. clude tests of transactions or other au-
(3) Except as provided in paragraph diting procedures necessary to provide
(c)(4) of this section, the auditor must: the auditor with sufficient appropriate
(i) Plan the testing of internal con- audit evidence to support an opinion on
trol over compliance for major pro-
compliance.
grams to support a low assessed level
(e) Audit follow-up. The auditor must
of control risk for assertions relevant
follow up on prior audit findings re-
to the compliance requirements for
each major program; and gardless of whether a prior audit find-
(ii) Perform testing of internal con- ing is related to a major program in
trol as planned in paragraph (c)(3)(i) of the current year. Audit follow-up in-
this section. cludes performing procedures to assess
(4) When internal control over some the reasonableness of the summary
or all of the compliance requirements schedule of prior audit findings pre-
for a major program are likely to be in- pared by the auditee in accordance
effective in preventing or detecting with the requirements of § 200.511.
noncompliance, the planning and per- When the auditor concludes that the
forming of testing described in para- summary schedule of prior audit find-
graph (c)(3) of this section are not re- ings materially misrepresents the sta-
quired for those compliance require- tus of any prior audit finding, the audi-
ments. However, the auditor must re- tor must report this condition as a cur-
port a significant deficiency or mate- rent-year audit finding.
rial weakness in accordance with (f) Data collection form. As required in
§ 200.516, assess the related control risk § 200.512(b)(4), the auditor must com-
at the maximum, and consider whether plete and sign specified sections of the
additional compliance tests are re- data collection form.
quired because of ineffective internal
control. § 200.515 Audit reporting.
(d) Compliance. (1) In addition to the The auditor’s report(s) may be in the
requirements of GAGAS, the auditor form of either combined or separate re-
must determine whether the auditee ports. It may be organized differently
has complied with Federal statutes, from the manner presented in this sec-
regulations, and the terms and condi- tion. The auditor’s report(s) must state
rmajette on LAPJN3WLY3PROD with CFR
tions of Federal awards that may have that the audit was conducted in ac-
a direct and material effect on each of cordance with this part and include the
its major programs. following:
197
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00209 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.515 2 CFR Ch. II (1–1–26 Edition)
(a) An opinion (or disclaimer of opin- (iii) A statement as to whether the
ion) on whether the financial state- audit disclosed any noncompliance
ment(s) of the auditee is presented fair- that is material to the financial state-
ly in all material respects in accord- ments of the auditee;
ance with generally accepted account- (iv) A statement about whether sig-
ing principles (or a special purpose nificant deficiencies or material weak-
framework such as cash, modified cash, nesses in internal control over major
or regulatory as required by State programs were disclosed by the audit;
law). The auditor must also decide (v) The type of report the auditor
whether the schedule of expenditures of issued (unmodified opinion, qualified
Federal awards is stated fairly in all opinion, adverse opinion, or disclaimer
material respects in relation to the of opinion) on compliance for major
auditee’s financial statements as a programs;
whole. (vi) A statement as to whether the
(b) A report on internal control over audit disclosed any audit findings that
financial reporting and compliance the auditor is required to report under
with provisions of laws, regulations, § 200.516(a);
contracts, and award agreements, non- (vii) An identification of major pro-
compliance with which could have a grams by listing each individual major
material effect on the financial state- program; however, in the case of a clus-
ments. This report must describe the ter of programs, only the cluster name
scope of internal control and compli- as shown on the schedule of expendi-
ance testing and the results of the tures of Federal Awards is required;
tests. Where applicable, the report (viii) The dollar threshold used to dis-
must refer to the separate schedule of tinguish between Type A and Type B
findings and questioned costs described programs, as described in § 200.518(b)(1)
in paragraph (d) of this section. or (3) when a recalculation of the Type
A threshold is required for large loan
(c) A report on compliance for each
or loan guarantees; and
major program and a report on internal
(ix) A statement as to whether the
control over compliance. This report
auditee qualified as a low-risk auditee
must describe the scope of testing of
under§ 200.520.
internal control over compliance and
(2) Findings relating to the financial
include an opinion (or disclaimer of
statements required to be reported in
opinion) as to whether the auditee
accordance with GAGAS.
complied with Federal statutes, regula-
(3) Findings and questioned costs for
tions, and the terms and conditions of
Federal awards which must include
Federal awards that could have a di-
audit findings as defined in § 200.516(a)
rect and material effect on each major and be reported in the following man-
program and refer to the separate ner:
schedule of findings and questioned (i) Audit findings (for example, inter-
costs described in paragraph (d) of this nal control findings, compliance find-
section. ings, questioned costs, or fraud) that
(d) A schedule of findings and ques- relate to the same issue must be pre-
tioned costs which must include the sented as a single audit finding. Where
following three components: practical, audit findings should be or-
(1) A summary of the auditor’s re- ganized by Federal agency or pass-
sults, which must include: through entity.
(i) The type of report the auditor (ii) Audit findings that relate to both
issued (unmodified opinion, qualified the financial statements (paragraph
opinion, adverse opinion, or disclaimer (d)(2) of this section) and Federal
of opinion) on whether the audited fi- awards (this paragraph (d)(3)) must be
nancial statements were prepared in reported in both sections of the sched-
accordance with GAAP; ule. However, the reporting in one sec-
(ii) A statement about whether sig- tion of the schedule may be in sum-
nificant deficiencies or material weak- mary form and reference a detailed re-
rmajette on LAPJN3WLY3PROD with CFR
nesses in internal control were dis- porting in the other section.
closed by the audit of the financial (e) Nothing in this part precludes
statements; combining the reporting required by
198
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00210 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.516
this section with the reporting re- (5) The circumstances concerning
quired by § 200.512(b) when allowed by why the auditor’s report on compliance
GAGAS and Appendix X of this part. for each major program is other than
an unmodified opinion. This must be
§ 200.516 Audit findings. included unless the circumstances are
(a) Audit findings reported. The audi- otherwise reported as audit findings in
tor must report the following as an the schedule of findings and questioned
audit finding in the schedule of find- costs.
ings and questioned costs: (6) Known or likely fraud affecting a
(1) Significant deficiencies and mate- Federal award, unless the fraud is oth-
rial weaknesses in internal control erwise reported as an audit finding in
the schedule of findings and questioned
over major programs. The auditor’s de-
costs. This paragraph does not require
termination of whether a deficiency in
the auditor to publicly report informa-
internal control is a significant defi-
tion that could compromise investiga-
ciency or a material weakness for the
tive or legal proceedings or to make an
purpose of reporting an audit finding is
additional reporting when the auditor
in relation to a type of compliance re-
confirms that the fraud was reported
quirement for a major program identi-
outside the auditor’s reports under the
fied in the compliance supplement.
direct reporting requirements of
(2) Material noncompliance with the GAGAS.
provisions of Federal statutes, regula- (7) Instances where the results of
tions, or the terms and conditions of audit follow-up procedures disclosed
Federal awards related to a major pro- that the summary schedule of prior
gram. The auditor’s determination of audit findings prepared by the auditee
whether noncompliance with the provi- in accordance with § 200.511(b) materi-
sions of Federal statutes, regulations, ally misrepresents the status of any
or the terms and conditions of Federal prior audit finding.
awards is material for the purpose of (b) Audit finding detail and clarity.
reporting an audit finding is in relation Audit findings must be presented with
to a type of compliance requirement sufficient detail and clarity for the
for a major program identified in the auditee to prepare a corrective action
compliance supplement. plan and take corrective action and for
(3) Known questioned costs when ei- Federal agencies or pass-through enti-
ther known or likely questioned costs ties to arrive at a management deci-
are greater than $25,000 for a type of sion. As applicable, the following infor-
compliance requirement for a major mation must be included in audit find-
program. When reporting questioned ings:
costs, the auditor must include infor- (1) The Federal program and specific
mation to provide proper perspective Federal award identification, including
for evaluating the prevalence and con- the Assistance Listings title and num-
sequences of the questioned costs. ber, Federal award identification num-
(4) Known questioned costs greater ber and year, the name of the Federal
than $25,000 for a Federal program that agency, and name of the applicable
is not audited as a major program. Ex- pass-through entity. When informa-
cept for audit follow-up, the auditor is tion, such as the Assistance Listings
not required to perform audit proce- title and number or Federal award
dures for such a Federal program; identification number, is unavailable,
therefore, the auditor will normally the auditor must provide the best in-
not find questioned costs for a program formation available to describe the
that is not audited as a major program. Federal award.
However, if the auditor does become (2) The criteria or specific require-
aware of questioned costs for a Federal ment for the audit finding (for exam-
program that is not audited as a major ple, the specific Federal statute, regu-
program (for example, as part of audit lation, or term and condition of the
follow-up or other audit procedures) Federal award). The criteria or specific
rmajette on LAPJN3WLY3PROD with CFR
and the known questioned costs are requirement provides a context for
greater than $25,000, the auditor must evaluating evidence and understanding
report this as an audit finding. findings. The criteria should generally
199
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00211 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.517 2 CFR Ch. II (1–1–26 Edition)
identify the required or desired state or (11) Views of responsible officials of
expectation with respect to the pro- the auditee.
gram or operation. (c) Reference numbers. Each audit
(3) The condition found, including finding in the schedule of findings and
facts that support the deficiency iden- questioned costs must include a ref-
tified in the audit finding. erence number in the format meeting
(4) A statement of cause that identi- the requirements of the data collection
fies the reason or explanation for the form submission (see § 200.512(b)).
condition or the factors responsible for
§ 200.517 Audit documentation.
the difference between the situation
that exists (condition) and the required (a) Retention of audit documentation.
or desired state (criteria), which may The auditor must retain audit docu-
also serve as a basis for recommenda- mentation and reports for a minimum
tions for corrective action of three years after the date of
(5) The possible asserted effect to issuance of the auditor’s report(s) to
provide sufficient information to the the auditee. The cognizant agency for
auditee and Federal agency or pass- audit, oversight agency for audit, cog-
through entity to permit them to de- nizant agency for indirect costs, or
termine the cause and effect to facili- pass-through entity may extend the re-
tate prompt and proper corrective ac- tention period by providing written no-
tion. A statement of the effect or po- tification to the auditor. When the
tential effect should provide a clear, auditor is aware that the Federal agen-
logical link to establish the impact or cy, pass-through entity, or auditee is
potential impact of the difference be- contesting an audit finding, the audi-
tor must contact the parties contesting
tween the condition and the criteria.
the audit finding for guidance prior to
(6) The identification of known ques-
the destruction of the audit docu-
tioned costs, by applicable Assistance
mentation and reports.
Listing number(s) and Federal award (b) Access to audit documentation.
identification number(s), and how Audit documentation must be made
these questioned costs were computed. available upon request to the cognizant
(7) When there are known questioned or oversight agency for audit or its des-
costs but the dollar amount is undeter- ignee, cognizant agency for indirect
mined or not reported, a description of cost, a Federal agency, or GAO at the
why the dollar amount was undeter- completion of the audit, as part of a
mined or otherwise could not be re- quality review, to resolve audit find-
ported. ings, or to carry out oversight respon-
(8) Information to provide proper per- sibilities consistent with the purposes
spective for evaluating the prevalence of this part. Access to audit docu-
and consequences of the audit finding. mentation includes the right of Federal
For example, whether the audit finding agencies to obtain copies of audit docu-
represents an isolated instance or a mentation as is reasonable and nec-
systemic problem. Where appropriate, essary.
instances identified must be related to
the universe and the number of cases § 200.518 Major program determina-
examined and be quantified in terms of tion.
dollar value. In addition, the audit (a) General. The auditor must use a
finding should indicate whether the risk-based approach to determine
sampling was a statistically valid sam- which Federal programs are major pro-
ple. grams. This risk-based approach must
(9) The identification of whether the consider current and prior audit experi-
audit finding is a repeat of a finding in ence, oversight by Federal agencies and
the immediately prior audit. The audit pass-through entities, and the inherent
finding must identify the applicable risk of the Federal program. The proc-
prior year audit finding reference num- ess described in paragraphs (b) through
bers in these instances. (h) of this section must be followed.
rmajette on LAPJN3WLY3PROD with CFR
(10) Recommendations to prevent fu- (b) Step one. (1) The auditor must
ture occurrences of the deficiency iden- identify and label the larger Federal
tified in the audit finding. programs as Type A programs. Type A
200
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00212 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.518
programs are defined as Federal pro- during the audit period exceeding the
grams with Federal awards expended levels outlined in table 1:
TABLE 1 TO PARAGRAPH (b)(1)
Total Federal awards expended Type A threshold
Equal to or exceed $1,000,000 but less than or equal to $34 $1,000,000.
million.
Exceed $34 million but less than or equal to $100 million ......... Total Federal awards expended times .03.
Exceed $100 million but less than or equal to $1 billion ............ $3 million.
Exceed $1 billion but less than or equal to $10 billion ............... Total Federal awards expended times .003.
Exceed $10 billion but less than or equal to $20 billion ............. $30 million.
Exceed $20 billion ....................................................................... Total Federal awards expended times .0015.
(2) Federal programs not labeled least one of the two most recent audit
Type A under paragraph (b)(1) of this periods (in the most recent audit pe-
section must be labeled Type B pro- riod in the case of a biennial audit),
grams. and, in the most recent audit period,
(3) Including large loans and loan the program must not have had:
guarantees (loans) must not result in (i) Internal control deficiencies that
the exclusion of other programs as were identified as material weaknesses
Type A programs. A Federal program in the auditor’s report on internal con-
providing loans is considered a large trol for major programs as required
loan program when it exceeds four under § 200.515(c);
times the largest non-loan program. (ii) A modified opinion on the pro-
The auditor must identify each large gram in the auditor’s report on major
loan program as a Type A program and programs as required under § 200.515(c);
exclude its values in determining other or
Type A programs. This recalculation of (iii) Known or likely questioned costs
the Type A program is performed after that exceed five percent of the total
removing the total of all large loan Federal awards expended for the pro-
programs. For this paragraph, a pro- gram.
gram is only considered a Federal pro- (2) Notwithstanding paragraph (c)(1)
gram providing loans if the value of of this section, OMB may approve a
Federal awards expended for loans Federal agency request that a Type A
within the program comprises 50 per- program not be considered low-risk for
cent or more of the total Federal a specific recipient. For example, it
awards expended for the program. A may be necessary for a large Type A
cluster of programs is treated as one program to be audited as a major pro-
program, and the value of Federal gram each year for a particular recipi-
awards expended under a loan program ent for the Federal agency to comply
is determined as described in § 200.502. with 31 U.S.C. 3515. The Federal agency
(4) For biennial audits (see § 200.504), must notify the auditee and, if known,
the determination of Type A and Type the auditor of OMB’s approval at least
B programs must be based on the Fed- 180 calendar days prior to the end of
eral awards expended during the two- the fiscal year to be audited.
year audit period. (d) Step three. (1) The auditor must
(c) Step two. (1) The auditor must identify high-risk Type B programs
identify Type A programs that are low- using professional judgment and the
risk. In making this determination, the criteria in § 200.519. However, the audi-
auditor must consider whether the re- tor is not required to identify more
quirements in § 200.519(c), the results of high-risk Type B programs than at
audit follow-up, or any changes in per- least one-fourth of the number of low-
sonnel or systems affecting the pro- risk Type A programs identified as low-
gram indicate significantly increased risk under step two. Except for known
risk and preclude the program from material weakness in internal control
rmajette on LAPJN3WLY3PROD with CFR
being low-risk. For a Type A program or compliance problems as discussed in
to be considered low-risk, it must have § 200.519(b)(1), (2), and (c)(1), a single
been audited as a major program in at criterion in risk would rarely cause a
201
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00213 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
§ 200.519 2 CFR Ch. II (1–1–26 Edition)
Type B program to be considered high- clearly improper use of the require-
risk. When identifying which Type B ments in this part. However, a Federal
programs to assess for risk, the auditor agency or pass-through entity may
is encouraged to use an approach that provide auditors guidance about the
provides an opportunity for different risk of a particular Federal program.
high-risk Type B programs to be au- The auditor must consider this guid-
dited as major programs over a period ance in determining major programs in
of time. audits not yet completed.
(2) The auditor is not expected to per-
form risk assessments on relatively § 200.519 Criteria for Federal program
small Federal programs. Therefore, the risk.
auditor is only required to perform risk (a) General. The auditor’s determina-
assessments on Type B programs that tion should be based on an overall eval-
exceed 25 percent (0.25) of the Type A uation of the risk of noncompliance oc-
threshold determined in step one. curring that could be material to the
(e) Step four. At a minimum, the Federal program. The auditor must
auditor must audit all of the following consider criteria, such as those de-
as major programs: scribed in paragraphs (b), (c), and (d) of
(1) All Type A programs not identi- this section, to identify risk in Federal
fied as low-risk under step two. programs. Also, as part of the risk
(2) All Type B programs identified as analysis, the auditor may wish to dis-
high-risk under step three. cuss a particular Federal program with
(3) Additional programs as necessary auditee management and the Federal
to comply with the percentage of cov- agency or pass-through entity.
erage rule described in paragraph (f). (b) Current and prior audit experience.
This rule may require the auditor to (1) Weaknesses in internal control over
audit more programs as major pro- Federal programs would indicate high-
grams than the number of Type A pro- er risk. Therefore, consideration should
grams. be given to the control environment
(f) Percentage of coverage rule. When over Federal programs. This includes
the auditee meets the criteria in considering factors such as the expec-
§ 200.520, the auditor only needs to tation of management’s adherence to
audit the major programs identified in Federal statutes, regulations, and the
paragraphs (e)(1) and (2) of this section terms and conditions of Federal
and such additional Federal programs awards, and the competence and expe-
with Federal awards expended that, in rience of personnel who administer the
the aggregate, all major programs en- Federal programs.
compass at least 20 percent (0.20) of (i) A Federal program administered
total Federal awards expended. Other- under multiple internal control struc-
wise, the auditor must audit the major tures may have higher risk. When as-
programs identified in paragraphs (e)(1) sessing risk in a large single audit, the
and (2) of this section and such addi- auditor must consider whether weak-
tional Federal programs with Federal nesses are isolated in a single oper-
awards expended that, in the aggre- ating unit (for example, one college
gate, all major programs encompass at campus) or pervasive throughout the
least 40 percent (0.40) of total Federal entity.
awards expended. (ii) A weak system for monitoring
(g) Documentation of risk. The auditor subrecipients would indicate higher
must include in the audit documenta- risk when significant parts of a Federal
tion the risk analysis used for deter- program are passed to subrecipients
mining major programs. through subawards.
(h) Auditor’s judgment. The auditor’s (2) Prior audit findings would indi-
judgment in applying the risk-based cate higher risk, especially when the
approach to determine major programs situations identified in the audit find-
must be presumed correct when the de- ings could significantly impact a Fed-
termination was performed and docu- eral program or have not been cor-
rmajette on LAPJN3WLY3PROD with CFR
mented in accordance with this part. rected.
Challenges by a Federal agency or (3) Federal programs not recently au-
pass-through entity must only be for dited as major programs may be of
202
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00214 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
OMB Guidance § 200.521
higher risk than those recently audited § 200.520 Criteria for a low-risk
as major programs without audit find- auditee.
ings. An auditee that meets all of the fol-
(c) Oversight exercised by Federal agen- lowing conditions for each of the pre-
cies and pass-through entities. (1) The ceding two audit periods must qualify
oversight exercised by Federal agencies as a low-risk auditee and be eligible for
or pass-through entities may be used to reduced audit coverage in accordance
assess risk. For example, recent moni- with § 200.518.
toring or other reviews performed by (a) Single audits were performed on
an oversight entity that disclosed no an annual basis in accordance with the
significant problems would indicate provisions of this subpart, including
lower risk, whereas monitoring that submitting the data collection form
disclosed significant problems would and the reporting package to the FAC
indicate higher risk. within the timeframe specified in
(2) With the concurrence of OMB, a § 200.512. A non-Federal entity that has
Federal agency may identify Federal biennial audits does not qualify as a
programs that are higher risk. OMB low-risk auditee.
will identify these Federal programs in (b) The auditor’s opinion on whether
the compliance supplement. the financial statements were prepared
(d) Inherent risk of the Federal pro- in accordance with generally accepted
gram. (1) The nature of a Federal pro- accounting principles (or a special pur-
gram may indicate risk. Consideration pose framework such as cash, modified
should be given to the complexity of cash, or regulatory as required by
the program and the extent to which State law), and the auditor’s in-rela-
the Federal program contracts for tion-to opinion on the schedule of ex-
penditures of Federal awards were un-
goods and services. For example, Fed-
modified.
eral programs that disburse funds
(c) No internal control deficiencies
through third-party contracts or have
were identified as material weaknesses
eligibility criteria may be higher risk.
under the requirements of GAGAS.
Federal programs primarily involving
(d) The auditor did not report a sub-
staff payroll costs may be at high risk
stantial doubt about the auditee’s abil-
for noncompliance with the require-
ity to continue as a going concern.
ments of § 200.430 but otherwise be at
(e) None of the Federal programs had
low risk.
audit findings from any of the fol-
(2) The phase of a Federal program in lowing in either of the preceding two
its lifecycle at the Federal agency may audit periods in which they were classi-
indicate risk. For example, a new Fed- fied as Type A programs:
eral program with new or interim regu- (1) Internal control deficiencies that
lations may have higher risk than an were identified as material weaknesses
established program with time-tested in the auditor’s report on internal con-
regulations. Also, significant changes trol for major programs as required
in Federal programs, statutes, regula- under § 200.515(c);
tions, or the terms and conditions of (2) A modified opinion on a major
Federal awards may increase risk. program in the auditor’s report on
(3) The phase of a Federal program in major programs as required under
its lifecycle at the auditee may indi- § 200.515(c); or
cate risk. For example, during the first (3) Known or likely questioned costs
and last years that an auditee partici- that exceeded five percent (.05) of the
pates in a Federal program, the risk total Federal awards expended for a
may be higher due to the start-up or Type A program during the audit pe-
closeout of program activities and riod.
staff.
(4) Type B programs with larger Fed- MANAGEMENT DECISIONS
eral awards expended would be of high-
§ 200.521 Management decisions.
rmajette on LAPJN3WLY3PROD with CFR
er risk than programs with substan-
tially smaller Federal awards ex- (a) General. The management deci-
pended. sion must clearly state whether or not
203
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00215 Fmt 8010 Sfmt 8010 Y:\SGML\268005.XXX 268005
Pt. 200, App. I 2 CFR Ch. II (1–1–26 Edition)
the audit finding is sustained, the rea- (1) Requirements for developing NOFOs. In
sons for the decision, and the expected developing a notice of funding opportunity
auditee action to repay disallowed (NOFO), Federal agencies must:
costs, make financial adjustments or (i) Be concise and use plain language per
the guidance at PlainLanguage.gov wherever
take other action. If the auditee has possible.
not completed corrective action, a (ii) For electronic NOFOs and other infor-
timetable for follow-up should be mation about them, comply with Section 508
given. Prior to issuing the manage- of the Rehabilitation Act of 1973 (29 U.S.C.
ment decision, the Federal agency or 794d).
pass-through entity may request addi- (2) Considerations for developing NOFOs.
tional information or documentation Federal agencies may:
from the auditee, including a request (i) Link to standard content to include re-
for auditor assurance related to the quired information rather than including the
full language in the NOFO. The NOFO should
documentation, as a way of mitigating
make clear if linked information is critical—
disallowed costs. The management de- for example, standard terms and conditions,
cision should describe any appeal proc- administrative and national policy require-
ess available to the auditee. While not ments, and standard templates.
required, the Federal agency or pass- (ii) Include links to relevant regulations
through entity may also issue a man- and other sources.
agement decision on findings relating (iii) Use cross-references between the sec-
to the financial statements, which are tions, including hyperlinks in electronic
required to be reported in accordance versions.
(3) Required Consistency. Potential appli-
with GAGAS. cants must be able to find similar informa-
(b) Federal agency. The cognizant tion across all Federal NOFOs. To that end,
agency for audit is responsible for co- Federal agencies must include the same or
ordinating a management decision for similar section headings and a table of con-
audit findings that affect the programs tents with at least these sections:
of more than one Federal agency (see (i) Basic Information
§ 200.513(a)(4)(viii)). The awarding Fed- (ii) Eligibility
eral agency is responsible for issuing a (iii) Program Description
management decision for audit find- (iv) Application Contents and Format
(v) Submission Requirements and Dead-
ings that affect the Federal awards it lines
makes to a non-Federal entity (see (vi) Application Review Information
§ 200.513(c)(3)(i)). (vii) Award Notices
(c) Pass-through entity. The pass- (viii) Post-Award Requirements and Ad-
through entity is responsible for ministration
issuing a management decision for (b) Required Sections and Information.
audit findings that affect subawards it As required below, the Federal agency
issues to subrecipients under a Federal must include the following sections and in-
formation in the text of a NOFO and a table
award (see § 200.332(e)).
of contents.
(d) Time requirements. The Federal (1) Basic Information.
agency or pass-through entity respon- This section provides sufficient informa-
sible for issuing a management deci- tion to help an applicant make an informed
sion must do so within six months of decision about whether to submit a proposal.
the FAC’s acceptance of the audit re- (i) This section must include the following:
port. The auditee must initiate and (A) Federal Agency Name.
proceed with corrective action as rap- (B) Funding Opportunity Title.
idly as possible and corrective action (C)I Announcement Type (whether the
funding opportunity is the initial announce-
should begin no later than upon receipt
ment or a modification of a previously an-
of the audit report. nounced opportunity).
(e) Reference numbers. Management (D) Funding Opportunity Number (re-
decisions must include the reference quired, if the Federal agency has assigned a
numbers the auditor assigned to each number to the funding opportunity an-
audit finding in accordance with nouncement).
§ 200.516(c). (E) Assistance Listing Number(s).
(F) Funding Details. The total amount of
APPENDIX I TO PART 200—FULL TEXT OF funding that the Federal agency expects to
rmajette on LAPJN3WLY3PROD with CFR
NOTICE OF FUNDING OPPORTUNITY award, the anticipated number of awards,
and the expected dollar values of individual
(a) General Requirements. awards, which may be a range.
204
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00216 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
OMB Guidance Pt. 200, App. I
(G) Key Dates. Key dates include due dates amount or in the form of contributions of
for submitting applications or Executive specified items or activities (for example, pro-
Order 12372 submissions, as well as for any vision of equipment).
letters of intent or preapplications. For any (C) Any restrictions on the types of cost,
announcement issued before a program’s ap- such as in-kind contributions, acceptable as
plication materials are available, key dates cost sharing.
also include the date on which those mate- (D) Any requirement to commit to cost
rials will be released; and any other addi- sharing. This section should refer to the ap-
tional information, as deemed applicable by propriate portions of section (b)(4) stating
the Federal agency. If possible, the Federal any pre-award requirements for the submis-
agency should provide an anticipated award sion of letters or other documentation to
date. If the NOFO is evaluated on a ‘‘rolling’’ verify commitments to meet cost-sharing re-
basis, the Federal agency should provide an quirements if a Federal award is made.
estimate of the time needed to process an ap- (3) Program Description. This section con-
plication and notify the applicant of the Fed- tains the full program description of the
eral agency’s decision. funding opportunity.
(H) Executive Summary. A brief descrip- (i) This section must include the following:
tion that is written in plain language and (A) The general purpose of the funding and
summarizes the goals and objectives of the what it is expected to achieve for the public
program, the target audience, and eligible good.
recipients. The text of the executive sum- (B) The Federal agency’s funding priorities
mary should not exceed 500 words or focus areas, if any.
(I) Agency contact information. (C) Program goals and objectives.
(ii) This section could include the fol- (D) A description of how the award will
lowing: contribute to achieving the program’s goals
(A) The amount of funding per Federal and objectives.
award, on average, experienced in previous (E) The expected performance goals, indi-
years. cators, targets, baseline data, data collec-
(B) Whether this is a new program or a tion, and other outcomes the Federal agency
one-time initiative. expects recipients to achieve.
(2) Eligibility. (F) For cooperative agreements, the ‘‘sub-
This section addresses the factors that de- stantial involvement’’ that the Federal agen-
termine applicant or application eligibility. cy expects to have or should reference where
(i) Eligible Applicants. This subsection must the potential applicant can find that infor-
identify the following: mation.
(A) A complete and specific list of entity (G) Information on program specific unal-
types eligible to apply. lowable costs so that the applicant can de-
(B) Any additional restrictions on eligi- velop an application and budget consistent
bility beyond the type of entity. with program requirements and any limits
(C) Eligibility factors for the principal in- on indirect costs.
vestigator or project director, if any. (H) Any eligibility criteria for bene-
(D) Criteria that would make any par- ficiaries or program participants other than
ticular projects ineligible. Federal award recipients.
(E) A reference to any funding restriction (I) Citations for authorizing statutes and
elsewhere in the NOFO that could affect an regulations for the funding opportunity.
applicant’s or project’s eligibility. (ii) This section could also include the fol-
(F) A reference or link to any other factors lowing:
that would disqualify an applicant or appli- (A) Any program history, such as whether
cation, such as the responsiveness criteria in it is a new program or a new or changed area
6a. of program emphasis.
(G) Any limit on the number of applica- (B) Examples of successful projects funded
tions an applicant may submit under the an- in the past.
nouncement. Make clear whether the limita- (C) For infrastructure projects subject to
tion is on the submitting organization, indi- Build America, Buy America requirements,
vidual investigator or program director, or information on key items anticipated to be
both. purchased under the program, and any re-
(ii) Cost Sharing. This subsection must lated domestic sourcing concerns based on
state: market research.
(A) Whether there is required cost sharing. (D) Other information the Federal agency
This statement must be clear that not com- finds necessary.
mitting to the required cost sharing will (4) Application Contents and Format. This
make the application ineligible. If cost shar- section must identify the required content of
ing is not required, the announcement must an application and the forms or formats an
say so. applicant must use. If any requirements are
rmajette on LAPJN3WLY3PROD with CFR
(B) An explanation of the calculation for stated elsewhere, this section should refer to
the required cost sharing. Required cost where those requirements may be found.
sharing may be a certain percentage or This section also should include required
205
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00217 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
Pt. 200, App. I 2 CFR Ch. II (1–1–26 Edition)
forms or formats as part of the announce- (ii) Unique entity identifier and System for
ment or state where the applicant may ob- Award Management (SAM.gov). This section
tain them. must state the requirements for unique enti-
(i) This section must specifically address ty identifiers and registration in SAM.gov. It
content and form or format requirements must include the following:
for: (A) Each applicant must:
(A) Whether pre-applications, letters of in- (1) Be registered in SAM.gov before submit-
tent, or white papers are required or encour- ting its application;
aged. (2) Provide a valid unique entity identifier
(B) The application as a whole. in its application; and
(C) Component pieces of the application. (3) Continue to maintain an active reg-
(D) Information that successful applicants istration in SAM.gov with current informa-
must submit after notification of intent to tion at all times during which it has an ac-
make a Federal award but prior to a Federal tive Federal award or an application or plan
award. For example, this could include evi- under consideration by a Federal agency.
dence of compliance with requirements re- (B) If individuals are eligible to apply, they
lating to human subjects or information are exempt from this requirement under 2
needed to comply with the National Environ- CFR 25.110(b).
mental Policy Act (NEPA) (42 U.S.C. 4321 et (C) If the Federal agency exempts any ap-
seq.). plicants from this requirement under 2 CFR
(ii) Within each of the categories above, 25.110(c) or (d), a statement to that effect.
this subsection must include, where rel- (iii) Submission Instructions. This section
evant: addresses how the applicant will submit the
(A) Limitations on page numbers. application. It must include the following:
(B) Formatting requirements, including (A) Actions needed prior to applying:
font and font size, margins, paper size, and (1) Instructions on any registrations re-
color limitations. quired to access electronic submission sys-
(C) Any requirements for file naming, file tems or links to them. Where possible, pro-
size limitations, or file format such as PDF. vide the expected time frames needed to
(D) The number of copies required if paper complete the registration process.
submissions are allowed. (B) The methods for submitting the appli-
(E) The sequence required for application cation:
sections or components. (1) Whether the applicant must submit in
(F) Signature requirements, including electronic or paper form or whether the ap-
those for electronic submissions. plicant has an option. Applicants should not
(G) Any requirements for third-party infor- be required to submit in more than one for-
mation such as references, letters of support, mat.
or letters of commitment to the project or to (2) Instructions on how to submit elec-
contribute to cost sharing. tronically or links to them. Must include the
(H) A reference to any requirements to pro- URL to the electronic submission system
vide documentation to support an eligibility and information on or links to information
determination, such as proof of 501(c)(3) sta- about the system or software requirements
tus or an authorizing tribal resolution. needed by the system.
(I) Instructions needed to develop the nar- (3) If the Federal agency allows paper sub-
rative portions of the application. Include missions, the process used to approve this
any requirements for its order, format, or re- option if it is not automatically allowed.
quired headings. (4) If the Federal agency allows paper sub-
(J) If applicable, the need to identify pro- missions, the method for submitting the ap-
prietary information. Include how to do so plication. This information must include a
and how the Federal agency will handle it. postal address and ‘‘care of’’ information
(5) Submission Requirements and Deadlines. needed to route the application to the appro-
(i) Address to Request Application Package. priate person, office, or email address, if the
This section must include the following: Federal agency allows such submissions.
(A) How to get application forms, kits, or (C) If applicable, this section also must say
other materials needed to apply. If the an- how applicants must submit pre-applica-
nouncement contains everything needed, tions, letters of intent, third-party informa-
this section needs only say so. If not, the tion, or other information required before
guidance must include: the award. It must include the following:
(1) An internet address where the materials (1) Instructions on how to submit elec-
can be accessed. tronically or links to them.
(2) An email address. (2) Whether the applicant must submit in
(3) A U.S. Postal Service mailing address. electronic or paper form or whether the ap-
(4) Telephone number. plicant has an option.
rmajette on LAPJN3WLY3PROD with CFR
(5) Telephone Device for the Deaf (TDD), (3) If the Federal agency allows paper sub-
Text Telephone (TTY) number, or other ap- missions, the method for submitting the re-
propriate telecommunication relay service. quired information. This information must
206
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00218 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
OMB Guidance Pt. 200, App. I
include a postal address and ‘‘care of’’ infor- criteria are distinct from eligibility criteria
mation needed to route the application to that are addressed before an application is
the appropriate person, office, or email ad- accepted for review and any program policy
dress. or other factors that are applied during the
(D) This section must also include what to selection process, after the review process is
do in the event of system problems and a completed.
point of contact who will be available if the The intent is to make the application proc-
applicant experiences technical difficulties. ess transparent so applicants can make in-
(iv) Submission Dates and Times. This sec- formed decisions when preparing their appli-
tion must include due dates and times for all cations to maximize the fairness of the proc-
submissions. If they are different for elec- ess.
tronic and paper submissions, be clear about (A) This section must include the fol-
the differences. This includes the following: lowing:
(A) Full applications. (1) A clear description of each criterion and
(B) Any preliminary submissions, such as sub-criterion used.
letters of intent, white papers, or pre-appli- (2) If criteria vary in importance, the rel-
cations. ative percentages, weights, or other means
(C) Any other submissions required before used to distinguish between them.
Federal award separate from the full applica- (3) For statutory, regulatory, or other pref-
tion. erences, an explanation of those preferences
(D) If the funding opportunity is a general with an explicit indication of their effect, for
announcement that is open for a period of example, if they result in additional points
time with no specific due dates for applica- being assigned.
tions, this section should say so. (4) How an applicant’s proposed cost shar-
(v) Intergovernmental Review. This section ing will be considered in the review process
must include the following: if it is not an eligibility criterion in Section
(A) Whether or not the funding oppor- 2b. For example, to assign a certain number
tunity is subject to Executive Order 12372, of additional points to applicants who offer
‘‘Intergovernmental Review of Federal Pro- cost sharing or to break ties among applica-
grams’’. tions with equivalent scores after evaluation
(B) If it is applicable, include the fol- against all other factors. If cost sharing will
lowing: not be considered in the evaluation, the an-
(1) A short description of this requirement. nouncement should say so. Do not include
(2) Where applicants can find their State’s statements that cost sharing is encouraged
Single Point of Contact, learn whether their without providing clarity about what that
State has an intergovernmental review proc- means.
ess, and if so, get information on their (5) The relevant information if the Federal
State’s process. The list of SPOCs is on the agency permits applicants to nominate re-
Office of Management and Budget’s website. viewers of their applications or suggest those
(6) Application Review Information. they feel may be inappropriate due to a con-
(i) Responsiveness Review. This section in- flict of interest.
cludes information on the criteria that make (B) This section could include the fol-
an application or project ineligible. These lowing:
are sometimes referred to as ‘‘responsive- (1) The types of people responsible for eval-
ness’’ criteria, ‘‘go-no-go’’ criteria, or uation against the merit criteria. For exam-
‘‘threshold’’ criteria. Federal agencies may ple, peers external to the Federal agency or
change the title of this section as appro- Federal agency personnel.
priate. This section must include the fol- (2) The number of people on an evaluation
lowing: panel and how it operates, how reviewers are
(A) A brief understanding of the Federal selected, reviewer qualifications, and how
agency responsiveness review process. conflicts of interest are avoided.
(B) A list and enough detail to understand (iii) Review and Selection Process. This sec-
the criteria or disqualifying factors to be re- tion may vary in the level of detail provided.
viewed. (A) It must include the following:
(C) A reference to the regulation or re- (1) Any program policy, factors, or ele-
quirement that describes the restriction, if ments that the selecting official may use in
applicable. For example, if entities that have selecting applications for the award. For ex-
been found to be in violation of a particular ample, geographical dispersion, program bal-
Federal statute are ineligible, say so. ance, or diversity.
(ii) Review Criteria. This section must ad- (2) A brief description of the merit review
dress the review criteria that the Federal process, including how the Federal agency
agency will use to evaluate applications for uses merit review outcomes in final decision-
merit. This information includes the merit making. For example, whether they are advi-
and other review criteria evaluators will use sory only.
rmajette on LAPJN3WLY3PROD with CFR
to judge applications, including any statu- (B) It could also include the following:
tory, regulatory, or other preferences that (1) Who makes the final selections for
will be applied in the review process. These awards.
207
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00219 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
Pt. 200, App. II 2 CFR Ch. II (1–1–26 Edition)
(2) Any multi-phase review methods. For requirements that the Federal agency nor-
example, an external panel that advises on, mally includes.
makes, or approves final recommendations (B) Any relevant specific terms and condi-
to the deciding official. tions.
(iv) Risk Review. (C) Any special requirements that could
(A) This section must include the fol- apply to specific awards after the review of
lowing: applications and other information based on
(1) A brief description of the factors used the particular circumstances of the effort to
for the Federal agency’s risk review as re- be supported. For example, if human subjects
quired by § 200.206. were to be involved or if some situations
(2) If the Federal agency expects that any may justify specific terms on intellectual
award under the NOFO will be more than the property, data sharing, or security require-
simplified acquisition threshold during its ments.
period of performance, include the following (D) As in other sections, the announcement
information: need not include all terms and conditions of
(i) That before making a Federal award the award but may refer to documents with
with a total amount of Federal share greater details on terms and conditions.
than the simplified acquisition threshold, (ii) Reporting. This section includes infor-
the Federal agency must review and consider mation needed to understand the post-award
any information about the applicant that is reporting requirements. Highlight any spe-
in the responsibility/qualification records cial reporting requirements for Federal
available in SAM.gov (see 41 U.S.C. 2313). awards under this funding opportunity that
(ii) That an applicant can review and com- differ from what the Federal agency’s Fed-
ment on any information in the responsi- eral awards usually require. For example,
bility/qualification records available in differences in report type, frequency, form,
SAM.gov. format, or circumstances for use. This sec-
(iii) That before making decisions in the tion must include the following:
risk review required by § 200.206 the Federal (A) The type of reporting required, such as
agency will consider any comments by the financial or performance.
applicant, along with information available (B) The reporting frequency.
in the responsibility/qualification records in (C) The means of submission, such as paper
SAM.gov. or electronic.
(7) Award Notices. This section must ad- (D) References to all relevant require-
dress what a successful applicant can expect ments, such as those at 2 CFR 180.335 and
to receive following selection. 180.350.
(i) It must include the following: (E) If the Federal share of any Federal
(A) If the Federal agency’s practice is to award may include more than $500,000 over
provide a separate notice stating that an ap- the period of performance, this section must
plication has been selected before it makes inform potential applicants about the post-
the Federal award, indicate that the letter is award reporting requirements reflected in
not an authorization to begin performance appendix XII to this part.
and that the Federal award is the author- (9) Other Information—Optional. This sec-
izing document. tion may include any additional information
to help potential applicants. For example,
(B) If pre-award costs are allowed, begin-
the section could include the following:
ning performance is at the applicant’s own
(i) Related programs or other upcoming or
risk.
ongoing Federal agency funding opportuni-
(C) This section should indicate that the
ties for similar activities.
notice of Federal award signed by the grants
(ii) Current internet addresses for Federal
officer, or equivalent, is the official docu-
agency websites that may be useful to an ap-
ment that obligates funds, and whether it is
plicant in understanding the program.
provided through postal mail or by elec-
(iii) Routine notices to applicants. For ex-
tronic means and to whom.
ample, the Federal Government is not obli-
(D) The timing, form, and content of noti-
gated to make any Federal award as a result
fications to unsuccessful applicants. See also
of the announcement, or only grants officers
§ 200.211.
can bind the Federal Government to the ex-
(8) Post-Award Requirements and Administra-
penditure of funds.
tion.
(i) Administrative and National Policy Re- [89 FR 30204, Apr. 22, 2024]
quirements. Providing information on admin-
istrative and policy requirements lets a po- APPENDIX II TO PART 200—CONTRACT
tential applicant identify any requirements PROVISIONS FOR NON-FEDERAL ENTI-
with which it would have difficulty com- TY CONTRACTS UNDER FEDERAL
plying. This section must include the fol- AWARDS
rmajette on LAPJN3WLY3PROD with CFR
lowing:
(A) A statement related to the ‘‘general’’ In addition to other provisions required by
terms and conditions of the award, including the Federal agency or non-Federal entity, all
208
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00220 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
OMB Guidance Pt. 200, App. II
contracts made by the non-Federal entity or Grants from the United States’’). The Act
under the Federal award must contain provi- provides that each contractor or sub-
sions covering the following, as applicable. recipient must be prohibited from inducing,
(A) Contracts for more than the simplified by any means, any person employed in the
acquisition threshold, which is the inflation construction, completion, or repair of public
adjusted amount determined by the Civilian work, to give up any part of the compensa-
Agency Acquisition Council and the Defense tion to which he or she is otherwise entitled.
Acquisition Regulations Council (Councils) The non-Federal entity must report all sus-
as authorized by 41 U.S.C. 1908, must address pected or reported violations to the Federal
administrative, contractual, or legal rem- awarding agency.
edies in instances where contractors violate (E) Contract Work Hours and Safety
or breach contract terms, and provide for Standards Act (40 U.S.C. 3701–3708). Where
such sanctions and penalties as appropriate. applicable, all contracts awarded by the non-
(B) All contracts in excess of $10,000 must Federal entity in excess of $100,000 that in-
address termination for cause and for con- volve the employment of mechanics or labor-
venience by the non-Federal entity including ers must include a provision for compliance
the manner by which it will be effected and with 40 U.S.C. 3702 and 3704, as supplemented
the basis for settlement. by Department of Labor regulations (29 CFR
(C) Equal Employment Opportunity. Ex-
Part 5). Under 40 U.S.C. 3702 of the Act, each
cept as otherwise provided under 41 CFR
contractor must be required to compute the
Part 60, all contracts that meet the defini-
wages of every mechanic and laborer on the
tion of ‘‘federally assisted construction con-
basis of a standard work week of 40 hours.
tract’’ in 41 CFR Part 60–1.3 must include the
Work in excess of the standard work week is
equal opportunity clause provided under 41
permissible provided that the worker is com-
CFR 60–1.4(b), in accordance with Executive
pensated at a rate of not less than one and a
Order 11246, ‘‘Equal Employment Oppor-
half times the basic rate of pay for all hours
tunity’’ (30 FR 12319, 12935, 3 CFR Part, 1964–
worked in excess of 40 hours in the work
1965 Comp., p. 339), as amended by Executive
Order 11375, ‘‘Amending Executive Order week. The requirements of 40 U.S.C. 3704 are
11246 Relating to Equal Employment Oppor- applicable to construction work and provide
tunity,’’ and implementing regulations at 41 that no laborer or mechanic must be re-
CFR part 60, ‘‘Office of Federal Contract quired to work in surroundings or under
Compliance Programs, Equal Employment working conditions which are unsanitary,
Opportunity, Department of Labor.’’ hazardous or dangerous. These requirements
(D) Davis-Bacon Act, as amended (40 U.S.C. do not apply to the purchases of supplies or
3141–3148). When required by Federal program materials or articles ordinarily available on
legislation, all prime construction contracts the open market, or contracts for transpor-
in excess of $2,000 awarded by non-Federal tation or transmission of intelligence.
entities must include a provision for compli- (F) Rights to Inventions Made Under a
ance with the Davis-Bacon Act (40 U.S.C. Contract or Agreement. If the Federal award
3141–3144, and 3146–3148) as supplemented by meets the definition of ‘‘funding agreement’’
Department of Labor regulations (29 CFR under 37 CFR § 401.2 (a) and the recipient or
Part 5, ‘‘Labor Standards Provisions Appli- subrecipient wishes to enter into a contract
cable to Contracts Covering Federally Fi- with a small business firm or nonprofit orga-
nanced and Assisted Construction’’). In ac- nization regarding the substitution of par-
cordance with the statute, contractors must ties, assignment or performance of experi-
be required to pay wages to laborers and me- mental, developmental, or research work
chanics at a rate not less than the prevailing under that ‘‘funding agreement,’’ the recipi-
wages specified in a wage determination ent or subrecipient must comply with the re-
made by the Secretary of Labor. In addition, quirements of 37 CFR Part 401, ‘‘Rights to In-
contractors must be required to pay wages ventions Made by Nonprofit Organizations
not less than once a week. The non-Federal and Small Business Firms Under Govern-
entity must place a copy of the current pre- ment Grants, Contracts and Cooperative
vailing wage determination issued by the De- Agreements,’’ and any implementing regula-
partment of Labor in each solicitation. The tions issued by the awarding agency.
decision to award a contract or subcontract (G) Clean Air Act (42 U.S.C. 7401–7671q.) and
must be conditioned upon the acceptance of the Federal Water Pollution Control Act (33
the wage determination. The non-Federal en- U.S.C. 1251–1387), as amended—Contracts and
tity must report all suspected or reported subgrants of amounts in excess of $150,000
violations to the Federal awarding agency. must contain a provision that requires the
The contracts must also include a provision non-Federal award to agree to comply with
for compliance with the Copeland ‘‘Anti- all applicable standards, orders or regula-
Kickback’’ Act (40 U.S.C. 3145), as supple- tions issued pursuant to the Clean Air Act
mented by Department of Labor regulations (42 U.S.C. 7401–7671q) and the Federal Water
rmajette on LAPJN3WLY3PROD with CFR
(29 CFR Part 3, ‘‘Contractors and Sub- Pollution Control Act as amended (33 U.S.C.
contractors on Public Building or Public 1251–1387). Violations must be reported to the
Work Financed in Whole or in Part by Loans Federal awarding agency and the Regional
209
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00221 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
Pt. 200, App. III 2 CFR Ch. II (1–1–26 Edition)
Office of the Environmental Protection a. Instruction means the teaching and
Agency (EPA). training activities of an institution. Except
(H) Debarment and Suspension (Executive for research training as provided in sub-
Orders 12549 and 12689)—A contract award section b, this term includes all teaching and
(see 2 CFR 180.220) must not be made to par- training activities, whether they are offered
ties listed on the governmentwide exclusions for credits toward a degree or certificate or
in the System for Award Management on a non-credit basis, and whether they are
(SAM), in accordance with the OMB guide- offered through regular academic depart-
lines at 2 CFR 180 that implement Executive ments or separate divisions, such as a sum-
Orders 12549 (3 CFR part 1986 Comp., p. 189) mer school division or an extension division.
and 12689 (3 CFR part 1989 Comp., p. 235), Also considered part of this major function
‘‘Debarment and Suspension.’’ SAM Exclu- are departmental research, and, where
sions contains the names of parties debarred, agreed to, university research.
suspended, or otherwise excluded by agen- (1) Sponsored instruction and training means
cies, as well as parties declared ineligible specific instructional or training activity es-
under statutory or regulatory authority tablished by grant, contract, or cooperative
other than Executive Order 12549. agreement. For purposes of the cost prin-
(I) Byrd Anti-Lobbying Amendment (31 ciples, this activity may be considered a
U.S.C. 1352)—Contractors that apply or bid major function even though an institution’s
for an award exceeding $100,000 must file the accounting treatment may include it in the
required certification. Each tier certifies to instruction function.
the tier above that it will not and has not (2) Departmental research means research,
used Federal appropriated funds to pay any development and scholarly activities that
person or organization for influencing or at- are not organized research and, con-
tempting to influence an officer or employee sequently, are not separately budgeted and
of any agency, a member of Congress, officer accounted for. Departmental research, for
or employee of Congress, or an employee of a purposes of this document, is not considered
member of Congress in connection with ob- as a major function, but as a part of the in-
taining any Federal contract, grant or any struction function of the institution.
other award covered by 31 U.S.C. 1352. Each (3) Only mandatory cost sharing or cost
tier must also disclose any lobbying with sharing specifically committed in the project
non-Federal funds that takes place in con- budget must be included in the organized re-
nection with obtaining any Federal award. search base for computing the indirect (F&A)
Such disclosures are forwarded from tier to cost rate or reflected in any allocation of in-
direct costs. Salary costs above statutory
tier up to the non-Federal award.
limits are not considered cost sharing.
(J) See § 200.323.
b. Organized research means all research
(K) See § 200.216.
and development activities of an institution
(L) See § 200.322.
that are separately budgeted and accounted
[78 FR 78608, Dec. 26, 2013, as amended at 79 for. It includes:
FR 75888, Dec. 19, 2014; 85 FR 49577, Aug. 13, (1) Sponsored research means all research
2020] and development activities that are spon-
sored by Federal and non-Federal agencies
APPENDIX III TO PART 200—INDIRECT and organizations. This term includes activi-
(F&A) COSTS IDENTIFICATION AND ties involving the training of individuals in
ASSIGNMENT, AND RATE DETERMINA- research techniques (commonly called re-
TION FOR INSTITUTIONS OF HIGHER search training) where such activities utilize
the same facilities as other research and de-
EDUCATION (IHES)
velopment activities and where such activi-
A. GENERAL ties are not included in the instruction func-
tion.
This appendix provides criteria for identi- (2) University research means all research
fying and computing indirect (or indirect and development activities that are sepa-
(F&A)) rates at IHEs (institutions). Indirect rately budgeted and accounted for by the in-
(F&A) costs are those that are incurred for stitution under an internal application of in-
common or joint objectives and therefore stitutional funds. University research, for
cannot be identified readily and specifically purposes of this document, must be com-
with a particular sponsored project, an in- bined with sponsored research under the
structional activity, or any other institu- function of organized research.
tional activity. See subsection B.1 for a dis- c. Other sponsored activities means programs
cussion of the components of indirect (F&A) and projects financed by Federal and non-
costs. Federal agencies and organizations which in-
volve the performance of work other than in-
1. Major Functions/Activities of an IHE
struction and organized research. Examples
rmajette on LAPJN3WLY3PROD with CFR
Refers to instruction, organized research, of such programs and projects are health
other sponsored activities and other institu- service projects and community service pro-
tional activities as defined in this section: grams. However, when any of these activities
210
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00222 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
OMB Guidance Pt. 200, App. III
are undertaken by the institution without selective allocation in accordance with the
outside support, they may be classified as guides provided in subsections b and d.
other institutional activities. (2) If any types of expense ordinarily treat-
d. Other institutional activities means all ac- ed as general administration or depart-
tivities of an institution except for instruc- mental administration are charged to Fed-
tion, departmental research, organized re- eral awards as direct costs, expenses applica-
search, and other sponsored activities, as de- ble to other activities of the institution
fined in this section; indirect (F&A) cost ac- when incurred for the same purposes in like
tivities identified in this Appendix para- circumstances must, through separate cost
graph B, Identification and assignment of in- groupings, be excluded from the indirect
direct (F&A) costs; and specialized services (F&A) costs allocable to those Federal
facilities described in § 200.468 of this part. awards and included in the direct cost of
other activities for cost allocation purposes.
2. Criteria for Distribution (3) If it is determined that certain expenses
a. Base period. A base period for distribu- are for the support of a service unit or facil-
tion of indirect (F&A) costs is the period ity whose output is susceptible of measure-
during which the costs are incurred. The ment on a workload or other quantitative
base period normally should coincide with basis, such expenses should be set aside as a
the fiscal year established by the institution, separate cost grouping for distribution on
but in any event the base period should be so such basis to organized research, instruc-
selected as to avoid inequities in the dis- tional, and other activities at the institution
tribution of costs. or within the department.
b. Need for cost groupings. The overall ob- (4) If activities provide their own pur-
jective of the indirect (F&A) cost allocation chasing, personnel administration, building
process is to distribute the indirect (F&A) maintenance or similar service, the distribu-
costs described in Section B, Identification tion of general administration and general
and assignment of indirect (F&A) costs, to expenses, or operation and maintenance ex-
the major functions of the institution in pro- penses to such activities should be accom-
portions reasonably consistent with the na- plished through cost groupings which include
ture and extent of their use of the institu- only that portion of central indirect (F&A)
tion’s resources. In order to achieve this ob- costs (such as for overall management)
jective, it may be necessary to provide for which are properly allocable to such activi-
selective distribution by establishing sepa- ties.
rate groupings of cost within one or more of (5) If the institution elects to treat fringe
the indirect (F&A) cost categories referred benefits as indirect (F&A) charges, such
to in subsection B.1. In general, the cost costs should be set aside as a separate cost
groupings established within a category grouping for selective distribution to related
should constitute, in each case, a pool of cost objectives.
those items of expense that are considered to (6) The number of separate cost groupings
be of like nature in terms of their relative within a category should be held within
contribution to (or degree of remoteness practical limits, after taking into consider-
from) the particular cost objectives to which ation the materiality of the amounts in-
distribution is appropriate. Cost groupings volved and the degree of precision attainable
should be established considering the general through less selective methods of distribu-
guides provided in subsection c of this sec- tion.
tion. Each such pool or cost grouping should d. Selection of distribution method.
then be distributed individually to the re- (1) Actual conditions must be taken into
lated cost objectives, using the distribution account in selecting the method or base to
base or method most appropriate in light of be used in distributing individual cost
the guidelines set forth in subsection d of groupings. The essential consideration in se-
this section. lecting a base is that it be the one best suit-
c. General considerations on cost groupings. ed for assigning the pool of costs to cost ob-
The extent to which separate cost groupings jectives in accordance with benefits derived;
and selective distribution would be appro- with a traceable cause-and-effect relation-
priate at an institution is a matter of judg- ship; or with logic and reason, where neither
ment to be determined on a case-by-case benefit nor a cause-and-effect relationship is
basis. Typical situations which may warrant determinable.
the establishment of two or more separate (2) If a cost grouping can be identified di-
cost groupings (based on account classifica- rectly with the cost objective benefitted, it
tion or analysis) within an indirect (F&A) should be assigned to that cost objective.
cost category include but are not limited to (3) If the expenses in a cost grouping are
the following: more general in nature, the distribution may
(1) If certain items or categories of expense be based on a cost analysis study which re-
relate solely to one of the major functions of sults in an equitable distribution of the
rmajette on LAPJN3WLY3PROD with CFR
the institution or to less than all functions, costs. Such cost analysis studies may take
such expenses should be set aside as a sepa- into consideration weighting factors, popu-
rate cost grouping for direct assignment or lation, or space occupied if appropriate. Cost
211
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00223 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
Pt. 200, App. III 2 CFR Ch. II (1–1–26 Edition)
analysis studies, however, must (a) be appro- B. IDENTIFICATION AND ASSIGNMENT OF
priately documented in sufficient detail for INDIRECT (F&A) COSTS
subsequent review by the cognizant agency
for indirect costs, (b) distribute the costs to 1. Definition of Facilities and Administration
the related cost objectives in accordance See § 200.414 which provides the basis for
with the relative benefits derived, (c) be sta- these indirect cost requirements.
tistically sound, (d) be performed specifically
at the institution at which the results are to 2. Depreciation
be used, and (e) be reviewed periodically, but a. The expenses under this heading are the
not less frequently than rate negotiations, portion of the costs of the institution’s
updated if necessary, and used consistently. buildings, capital improvements to land and
Any assumptions made in the study must be buildings, and equipment which are com-
stated and explained. The use of cost anal- puted in accordance with § 200.436.
ysis studies and periodic changes in the b. In the absence of the alternatives pro-
method of cost distribution must be fully vided for in Section A.2.d, the expenses in-
justified. cluded in this category must be allocated in
(4) If a cost analysis study is not per- the following manner:
formed, or if the study does not result in an (1) Depreciation on buildings used exclu-
equitable distribution of the costs, the dis- sively in the conduct of a single function,
and on capital improvements and equipment
tribution must be made in accordance with
used in such buildings, must be assigned to
the appropriate base cited in Section B, un-
that function.
less one of the following conditions is met:
(2) Depreciation on buildings used for more
(a) It can be demonstrated that the use of than one function, and on capital improve-
a different base would result in a more equi- ments and equipment used in such buildings,
table allocation of the costs, or that a more must be allocated to the individual functions
readily available base would not increase the performed in each building on the basis of
costs charged to Federal awards, or usable square feet of space, excluding com-
(b) The institution qualifies for, and elects mon areas such as hallways, stairwells, and
to use, the simplified method for computing rest rooms.
indirect (F&A) cost rates described in Sec- (3) Depreciation on buildings, capital im-
tion D. provements and equipment related to space
(5) Notwithstanding subsection (3), effec- (e.g., individual rooms, laboratories) used
tive July 1, 1998, a cost analysis or base other jointly by more than one function (as deter-
than that in Section B must not be used to mined by the users of the space) must be
distribute utility or student services costs. treated as follows. The cost of each jointly
Instead, subsection B.4.c, may be used in the used unit of space must be allocated to bene-
recovery of utility costs. fitting functions on the basis of:
e. Order of distribution. (a) The employee full-time equivalents
(1) Indirect (F&A) costs are the broad cat- (FTEs) or salaries and wages of those indi-
egories of costs discussed in Section B.1. vidual functions benefitting from the use of
that space; or
(2) Depreciation, interest expenses, oper-
(b) Institution-wide employee FTEs or sal-
ation and maintenance expenses, and general
aries and wages applicable to the benefitting
administrative and general expenses should major functions (see Section A.1) of the in-
be allocated in that order to the remaining stitution.
indirect (F&A) cost categories as well as to (4) Depreciation on certain capital im-
the major functions and specialized service provements to land, such as paved parking
facilities of the institution. Other cost cat- areas, fences, sidewalks, and the like, not in-
egories may be allocated in the order deter- cluded in the cost of buildings, must be allo-
mined to be most appropriate by the institu- cated to user categories of students and em-
tions. When cross allocation of costs is made ployees on a full-time equivalent basis. The
as provided in subsection (3), this order of al- amount allocated to the student category
location does not apply. must be assigned to the instruction function
(3) Normally an indirect (F&A) cost cat- of the institution. The amount allocated to
egory will be considered closed once it has the employee category must be further allo-
been allocated to other cost objectives, and cated to the major functions of the institu-
costs may not be subsequently allocated to tion in proportion to the salaries and wages
it. However, a cross allocation of costs be- of all employees applicable to those func-
tween two or more indirect (F&A) cost cat- tions.
egories may be used if such allocation will
result in a more equitable allocation of 3. Interest
costs. If a cross allocation is used, an appro- Interest on debt associated with certain
rmajette on LAPJN3WLY3PROD with CFR
priate modification to the composition of buildings, equipment and capital improve-
the indirect (F&A) cost categories described ments, as defined in § 200.449, must be classi-
in Section B is required. fied as an expenditure under the category
212
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00224 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
OMB Guidance Pt. 200, App. III
Facilities. These costs must be allocated in Berkeley Laboratory ‘‘Labs for the 21st Cen-
the same manner as the depreciation on the tury’’ benchmarking tool and the US Depart-
buildings, equipment and capital improve- ment of Energy ‘‘Buildings Energy
ments to which the interest relates. Databook’’ and were 310 kBtu/sq ft-yr. and
155 kBtu/sq ft-yr., so that the adjustment
4. Operation and Maintenance Expenses
ratio is 2.0 by this methodology. To retain
a. The expenses under this heading are currency, OMB will adjust the EUI numbers
those that have been incurred for the admin- from time to time (no more often than annu-
istration, supervision, operation, mainte- ally nor less often than every 5 years), using
nance, preservation, and protection of the in- reliable and publicly disclosed data. Current
stitution’s physical plant. They include ex- values of both the EUIs and the REUI will be
penses normally incurred for such items as
posted on the OMB website.
janitorial and utility services; repairs and
ordinary or normal alterations of buildings, 5. General Administration and General Expenses
furniture and equipment; care of grounds;
maintenance and operation of buildings and a. The expenses under this heading are
other plant facilities; security; earthquake those that have been incurred for the general
and disaster preparedness; environmental executive and administrative offices of edu-
safety; hazardous waste disposal; property, cational institutions and other expenses of a
liability and all other insurance relating to general character which do not relate solely
property; space and capital leasing; facility to any major function of the institution; i.e.,
planning and management; and central re- solely to (1) instruction, (2) organized re-
ceiving. The operation and maintenance ex- search, (3) other sponsored activities, or (4)
pense category should also include its allo-
other institutional activities. The general
cable share of fringe benefit costs, deprecia-
administration and general expense category
tion, and interest costs.
b. In the absence of the alternatives pro- should also include its allocable share of
vided for in Section A.2.d, the expenses in- fringe benefit costs, operation and mainte-
cluded in this category must be allocated in nance expense, depreciation, and interest
the same manner as described in subsection costs. Examples of general administration
2.b for depreciation. and general expenses include: Those expenses
c. A utility cost adjustment of up to 1.3 incurred by administrative offices that serve
percentage points may be included in the ne- the entire university system of which the in-
gotiated indirect cost rate of the IHE for or- stitution is a part; central offices of the in-
ganized research, per the computation alter- stitution such as the President’s or
natives in paragraphs (c)(1) and (2) of this Chancellor’s office, the offices for institu-
section: tion-wide financial management, business
(1) Where space is devoted to a single func- services, budget and planning, personnel
tion and metering allows unambiguous meas- management, and safety and risk manage-
urement of usage related to that space, costs
ment; the office of the General Counsel; and
must be assigned to the function located in
the operations of the central administrative
that space.
(2) Where space is allocated to different management information systems. General
functions and metering does not allow unam- administration and general expenses must
biguous measurement of usage by function, not include expenses incurred within non-
costs must be allocated as follows: university-wide deans’ offices, academic de-
(i) Utilities costs should be apportioned to partments, organized research units, or simi-
functions in the same manner as deprecia- lar organizational units. (See subsection 6.)
tion, based on the calculated difference be- b. In the absence of the alternatives pro-
tween the site or building actual square foot- vided for in Section A.2.d, the expenses in-
age for monitored research laboratory space cluded in this category must be grouped first
(site, building, floor, or room), and a sepa- according to common major functions of the
rate calculation prepared by the IHE using institution to which they render services or
the ‘‘effective square footage’’ described in provide benefits. The aggregate expenses of
subsection (c)(2)(ii) of this section. each group must then be allocated to serv-
(ii) ‘‘Effective square footage’’ allocated to
iced or benefitted functions on the modified
research laboratory space must be calculated
total cost basis. Modified total costs consist
as the actual square footage times the rel-
ative energy utilization index (REUI) posted of the same elements as those in Section C.2.
on the OMB Web site at the time of a rate When an activity included in this indirect
determination. (F&A) cost category provides a service or
A. This index is the ratio of a laboratory product to another institution or organiza-
energy use index (lab EUI) to the cor- tion, an appropriate adjustment must be
responding index for overall average college made to either the expenses or the basis of
rmajette on LAPJN3WLY3PROD with CFR
or university space (college EUI). allocation or both, to assure a proper alloca-
B. In July 2012, values for these two indices tion of costs.
(taken respectively from the Lawrence
213
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00225 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
Pt. 200, App. III 2 CFR Ch. II (1–1–26 Edition)
6. Departmental Administration Expenses treated as direct costs wherever identifiable
to a particular cost objective. Direct charg-
a. The expenses under this heading are
those that have been incurred for adminis- ing of these costs may be accomplished
trative and supporting services that benefit through specific identification of individual
common or joint departmental activities or costs to benefitting cost objectives, or
objectives in academic deans’ offices, aca- through recharge centers or specialized serv-
demic departments and divisions, and orga- ice facilities, as appropriate under the cir-
nized research units. Organized research cumstances. See §§ 200.413(c) and 200.468.
units include such units as institutes, study (2) Items such as office supplies, postage,
centers, and research centers. Departmental local telephone costs, and memberships must
administration expenses are subject to the normally be treated as indirect (F&A) costs.
following limitations. c. In the absence of the alternatives pro-
(1) Academic deans’ offices. Salaries and vided for in Section A.2.d, the expenses in-
operating expenses are limited to those at- cluded in this category must be allocated as
tributable to administrative functions. follows:
(2) Academic departments: (1) The administrative expenses of the
(a) Salaries and fringe benefits attrib- dean’s office of each college and school must
utable to the administrative work (including be allocated to the academic departments
bid and proposal preparation) of faculty (in- within that college or school on the modified
cluding department heads) and other profes- total cost basis.
sional personnel conducting research and/or (2) The administrative expenses of each
instruction, must be allowed at a rate of 3.6 academic department, and the department’s
percent of modified total direct costs. This share of the expenses allocated in subsection
category does not include professional busi-
(1) must be allocated to the appropriate func-
ness or professional administrative officers.
tions of the department on the modified
This allowance must be added to the com-
total cost basis.
putation of the indirect (F&A) cost rate for
major functions in Section C; the expenses 7. Sponsored Projects Administration
covered by the allowance must be excluded
from the departmental administration cost a. The expenses under this heading are lim-
pool. No documentation is required to sup- ited to those incurred by a separate organi-
port this allowance. zation(s) established primarily to administer
(b) Other administrative and supporting sponsored projects, including such functions
expenses incurred within academic depart- as grant and contract administration (Fed-
ments are allowable provided they are treat- eral and non-Federal), special security, pur-
ed consistently in like circumstances. This chasing, personnel, administration, and edit-
would include expenses such as the salaries ing and publishing of research and other re-
of secretarial and clerical staffs, the salaries ports. They include the salaries and expenses
of administrative officers and assistants, of the head of such organization, assistants,
travel, office supplies, stockrooms, and the and immediate staff, together with the sala-
like. ries and expenses of personnel engaged in
(3) Other fringe benefit costs applicable to supporting activities maintained by the or-
the salaries and wages included in sub- ganization, such as stock rooms, print shops,
sections (1) and (2) are allowable, as well as and the like. This category also includes an
an appropriate share of general administra- allocable share of fringe benefit costs, gen-
tion and general expenses, operation and eral administration and general expenses,
maintenance expenses, and depreciation. operation and maintenance expenses, and de-
(4) Federal agencies may authorize reim- preciation. Appropriate adjustments will be
bursement of additional costs for department
made for services provided to other functions
heads and faculty only in exceptional cases
or organizations.
where an institution can demonstrate undue
hardship or detriment to project perform- b. In the absence of the alternatives pro-
ance. vided for in Section A.2.d, the expenses in-
b. The following guidelines apply to the de- cluded in this category must be allocated to
termination of departmental administrative the major functions of the institution under
costs as direct or indirect (F&A) costs. which the sponsored projects are conducted
(1) In developing the departmental admin- on the basis of the modified total cost of
istration cost pool, special care should be ex- sponsored projects.
ercised to ensure that costs incurred for the c. An appropriate adjustment must be
same purpose in like circumstances are made to eliminate any duplicate charges to
treated consistently as either direct or indi- Federal awards when this category includes
rect (F&A) costs. For example, salaries of similar or identical activities as those in-
technical staff, laboratory supplies (e.g., cluded in the general administration and
rmajette on LAPJN3WLY3PROD with CFR
chemicals), telephone toll charges, animals, general expense category or other indirect
animal care costs, computer costs, travel (F&A) cost items, such as accounting, pro-
costs, and specialized shop costs must be curement, or personnel administration.
214
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00226 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
OMB Guidance Pt. 200, App. III
8. Library Expenses determined in accordance with subpart E of
this Part. This expense category also in-
a. The expenses under this heading are
cludes the fringe benefit costs applicable to
those that have been incurred for the oper-
the salaries and wages included therein, an
ation of the library, including the cost of
appropriate share of general administration
books and library materials purchased for
and general expenses, operation and mainte-
the library, less any items of library income
nance, interest expense, and depreciation.
that qualify as applicable credits under
b. In the absence of the alternatives pro-
§ 200.406. The library expense category should
vided for in Section A.2.d, the expenses in
also include the fringe benefits applicable to
this category must be allocated to the in-
the salaries and wages included therein, an
struction function, and subsequently to Fed-
appropriate share of general administration
eral awards in that function.
and general expense, operation and mainte-
nance expense, and depreciation. Costs in- 10. Offset for Indirect (F&A) Expenses Other-
curred in the purchases of rare books (mu- wise Provided for by the Federal Govern-
seum-type books) with no value to Federal ment
awards should not be allocated to them.
b. In the absence of the alternatives pro- a. The items to be accumulated under this
vided for in Section A.2.d, the expenses in- heading are the reimbursements and other
cluded in this category must be allocated payments from the Federal Government
first on the basis of primary categories of which are made to the institution to support
users, including students, professional em- solely, specifically, and directly, in whole or
ployees, and other users. in part, any of the administrative or service
(1) The student category must consist of activities described in subsections 2 through
full-time equivalent students enrolled at the 9.
institution, regardless of whether they earn b. The items in this group must be treated
credits toward a degree or certificate. as a credit to the affected individual indirect
(2) The professional employee category (F&A) cost category before that category is
must consist of all faculty members and allocated to benefitting functions.
other professional employees of the institu- C. DETERMINATION AND APPLICATION OF
tion, on a full-time equivalent basis. This INDIRECT (F&A) COST RATE OR RATES
category may also include post-doctorate
fellows and graduate students. 1. Indirect (F&A) Cost Pools
(3) The other users category must consist
a. (1) Subject to subsection b, the separate
of a reasonable factor as determined by insti-
categories of indirect (F&A) costs allocated
tutional records to account for all other
to each major function of the institution as
users of library facilities.
prescribed in Section B, must be aggregated
c. Amount allocated in paragraph b of this
and treated as a common pool for that func-
section must be assigned further as follows:
tion. The amount in each pool must be di-
(1) The amount in the student category
vided by the distribution base described in
must be assigned to the instruction function
subsection 2 to arrive at a single indirect
of the institution.
(F&A) cost rate for each function.
(2) The amount in the professional em-
(2) The rate for each function is used to
ployee category must be assigned to the
distribute indirect (F&A) costs to individual
major functions of the institution in propor- Federal awards of that function. Since a
tion to the salaries and wages of all faculty common pool is established for each major
members and other professional employees function of the institution, a separate indi-
applicable to those functions. rect (F&A) cost rate would be established for
(3) The amount in the other users category each of the major functions described in Sec-
must be assigned to the other institutional tion A.1 under which Federal awards are car-
activities function of the institution. ried out.
9. Student Administration and Services (3) Each institution’s indirect (F&A) cost
rate process must be appropriately designed
a. The expenses under this heading are to ensure that Federal sponsors do not in
those that have been incurred for the admin- any way subsidize the indirect (F&A) costs of
istration of student affairs and for services other sponsors, specifically activities spon-
to students, including expenses of such ac- sored by industry and foreign governments.
tivities as deans of students, admissions, reg- Accordingly, each allocation method used to
istrar, counseling and placement services, identify and allocate the indirect (F&A) cost
student advisers, student health and infir- pools, as described in Sections A.2 and B.2
mary services, catalogs, and commence- through B.9, must contain the full amount of
ments and convocations. The salaries of the institution’s modified total costs or
members of the academic staff whose respon- other appropriate units of measurement used
sibilities to the institution require adminis- to make the computations. In addition, the
rmajette on LAPJN3WLY3PROD with CFR
trative work that benefits sponsored projects final rate distribution base (as defined in
may also be included to the extent that the subsection 2) for each major function (orga-
portion charged to student administration is nized research, instruction, etc., as described
215
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00227 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
Pt. 200, App. III 2 CFR Ch. II (1–1–26 Edition)
in Section A.1 functions of an institution) parties involved to reach an informed judg-
must contain all the programs or activities ment as to the probable level of indirect
which utilize the indirect (F&A) costs allo- (F&A) costs during the ensuing accounting
cated to that major function. At the time an periods.
indirect (F&A) cost proposal is submitted to
a cognizant agency for indirect costs, each 5. Negotiated Fixed Rates and Carry-Forward
institution must describe the process it uses Provisions
to ensure that Federal funds are not used to When a fixed rate is negotiated in advance
subsidize industry and foreign government for a fiscal year (or other time period), the
funded programs. over- or under-recovery for that year may be
2. The Distribution Basis included as an adjustment to the indirect
(F&A) cost for the next rate negotiation.
Indirect (F&A) costs must be distributed to When the rate is negotiated before the carry-
applicable Federal awards and other benefit- forward adjustment is determined, the carry-
ting activities within each major function forward amount may be applied to the next
(see section A.1) on the basis of modified subsequent rate negotiation. When such ad-
total direct costs (MTDC), consisting of all justments are to be made, each fixed rate ne-
salaries and wages, fringe benefits, materials gotiated in advance for a given period will be
and supplies, services, travel, and up to the computed by applying the expected indirect
first $50,000 of each subaward (regardless of (F&A) costs allocable to Federal awards for
the period covered by the subaward). MTDC the forecast period plus or minus the carry-
is defined in § 200.1. For this purpose, an indi- forward adjustment (over- or under-recovery)
rect (F&A) cost rate should be determined from the prior period, to the forecast dis-
for each of the separate indirect (F&A) cost tribution base. Unrecovered amounts under
pools developed pursuant to subsection 1. lump-sum agreements or cost-sharing provi-
The rate in each case should be stated as the sions of prior years must not be carried for-
percentage which the amount of the par- ward for consideration in the new rate nego-
ticular indirect (F&A) cost pool is of the tiation. There must, however, be an advance
modified total direct costs identified with understanding in each case between the in-
such pool. stitution and the cognizant agency for indi-
rect costs as to whether these differences
3. Negotiated Lump Sum for Indirect (F&A)
will be considered in the rate negotiation
Costs
rather than making the determination after
A negotiated fixed amount in lieu of indi- the differences are known. Further, institu-
rect (F&A) costs may be appropriate for self- tions electing to use this carry-forward pro-
contained, off-campus, or primarily subcon- vision may not subsequently change without
tracted activities where the benefits derived prior approval of the cognizant agency for
from an institution’s indirect (F&A) services indirect costs. In the event that an institu-
cannot be readily determined. Such nego- tion returns to a post-determined rate, any
tiated indirect (F&A) costs will be treated as over- or under-recovery during the period in
an offset before allocation to instruction, or- which negotiated fixed rates and carry-for-
ganized research, other sponsored activities, ward provisions were followed will be in-
and other institutional activities. The base cluded in the subsequent post-determined
on which such remaining expenses are allo- rates. Where multiple rates are used, the
cated should be appropriately adjusted. same procedure will be applicable for deter-
mining each rate.
4. Predetermined Rates for Indirect (F&A) Costs
6. Provisional and Final Rates for Indirect
Public Law 87–638 (76 Stat. 437) as amended
(F&A) Costs
(41 U.S.C. 4708) authorizes the use of pre-
determined rates in determining the ‘‘indi- Where the cognizant agency for indirect
rect costs’’ (indirect (F&A) costs) applicable costs determines that cost experience and
under research agreements with educational other pertinent facts do not justify the use
institutions. The stated objectives of the law of predetermined rates, or a fixed rate with
are to simplify the administration of cost- a carry-forward, or if the parties cannot
type research and development contracts (in- agree on an equitable rate, a provisional rate
cluding grants) with educational institu- must be established. To prevent substantial
tions, to facilitate the preparation of their overpayment or underpayment, the provi-
budgets, and to permit more expeditious sional rate may be adjusted by the cognizant
closeout of such contracts when the work is agency for indirect costs during the institu-
completed. In view of the potential advan- tion’s fiscal year. Predetermined or fixed
tages offered by this procedure, negotiation rates may replace provisional rates at any
of predetermined rates for indirect (F&A) time prior to the close of the institution’s
costs for a period of two to four years should fiscal year. If a provisional rate is not re-
rmajette on LAPJN3WLY3PROD with CFR
be the norm in those situations where the placed by a predetermined or fixed rate prior
cost experience and other pertinent facts to the end of the institution’s fiscal year, a
available are deemed sufficient to enable the final rate will be established and upward or
216
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00228 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
OMB Guidance Pt. 200, App. III
downward adjustments will be made based on pools or fringe benefits. Cognizant agencies
the actual allowable costs incurred for the for indirect cost are authorized to allow
period involved. changes where an institution’s charging
practices are at variance with acceptable
7. Fixed Rates for the Life of the Sponsored practices followed by a substantial majority
Agreement of other institutions.
a. Except as provided in paragraph (c)(1) of
9. Alternative Method for Administrative Costs
§ 200.414, Federal agencies must use the nego-
tiated rates in effect at the time of the ini- a. Notwithstanding the provisions of sub-
tial award throughout the life of the Federal section C.1.a, an institution may elect to
award. Award levels for Federal awards may claim a fixed allowance for the ‘‘Adminis-
not be adjusted in future years as a result of tration’’ portion of indirect (F&A) costs. The
changes in negotiated rates. ‘‘Negotiated allowance could be either 24% of modified
rates’’ per the rate agreement include final, total direct costs or a percentage equal to
fixed, and predetermined rates and exclude 95% of the most recently negotiated fixed or
provisional rates. ‘‘Life’’ for the purpose of predetermined rate for the cost pools in-
this subsection means each competitive seg- cluded under ‘‘Administration’’ as defined in
ment of a project. A competitive segment is Section B.1, whichever is less. Under this al-
a period of years approved by the Federal ternative, no cost proposal need be prepared
awarding agency at the time of the Federal for the ‘‘Administration’’ portion of the indi-
award. If negotiated rate agreements do not rect (F&A) cost rate nor is further identifica-
extend through the life of the Federal award tion or documentation of these costs re-
at the time of the initial award, then the ne- quired (see subsection c). Where a negotiated
gotiated rate for the last year of the Federal indirect (F&A) cost agreement includes this
award must be extended through the end of alternative, an institution must make no
the life of the Federal award. further charges for the expenditure cat-
b. Except as provided in § 200.414, when an egories described in Section B.5, Section B.6,
educational institution does not have a nego- Section B.7, and Section B.9.
tiated rate with the Federal Government at b. In negotiations of rates for subsequent
the time of an award (because the edu- periods, an institution that has elected the
cational institution is a new recipient or the option of subsection a may continue to exer-
parties cannot reach agreement on a rate), cise it at the same rate without further iden-
the provisional rate used at the time of the tification or documentation of costs.
award must be adjusted once a rate is nego- c. If an institution elects to accept a
tiated and approved by the cognizant agency threshold rate as defined in subsection a of
for indirect costs. this section, it is not required to perform a
detailed analysis of its administrative costs.
8. Limitation on Reimbursement of However, in order to compute the facilities
Administrative Costs components of its indirect (F&A) cost rate,
a. Notwithstanding the provisions of sub- the institution must reconcile its indirect
section C.1.a, the administrative costs (F&A) cost proposal to its financial state-
charged to Federal awards awarded or ments and make appropriate adjustments
amended (including continuation and re- and reclassifications to identify the costs of
newal awards) with effective dates beginning each major function as defined in Section
on or after the start of the institution’s first A.1, as well as to identify and allocate the fa-
fiscal year which begins on or after October cilities components. Administrative costs
1, 1991, must be limited to 26% of modified that are not identified as such by the insti-
total direct costs (as defined in subsection 2) tution’s accounting system (such as those in-
for the total of General Administration and curred in academic departments) will be
General Expenses, Departmental Adminis- classified as instructional costs for purposes
tration, Sponsored Projects Administration, of reconciling indirect (F&A) cost proposals
and Student Administration and Services to financial statements and allocating facili-
(including their allocable share of deprecia- ties costs.
tion, interest costs, operation and mainte- 10. Individual Rate Components
nance expenses, and fringe benefits costs, as
provided by Section B, and all other types of In order to provide mutually agreed-upon
expenditures not listed specifically under information for management purposes, each
one of the subcategories of facilities in Sec- indirect (F&A) cost rate negotiation or de-
tion B. termination must include development of a
b. Institutions should not change their ac- rate for each indirect (F&A) cost pool as well
counting or cost allocation methods if the ef- as the overall indirect (F&A) cost rate.
fect is to change the charging of a particular
11. Negotiation and Approval of Indirect (F&A)
type of cost from F&A to direct, or to reclas-
rmajette on LAPJN3WLY3PROD with CFR
Rate
sify costs, or increase allocations from the
administrative pools identified in paragraph a. Cognizant agency for indirect costs is
B.1 of this Appendix to the other F&A cost defined in Subpart A.
217
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00229 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
Pt. 200, App. III 2 CFR Ch. II (1–1–26 Edition)
(1) Cost negotiation cognizance is assigned costs must then arrange a negotiation con-
to the Department of Health and Human ference with the educational institution.
Services (HHS) or the Department of De- (2) Other than formal negotiation. The cog-
fense’s Office of Naval Research (DOD), nor- nizant agency for indirect costs and edu-
mally depending on which of the two agen- cational institution may reach an agreement
cies (HHS or DOD) provides more funds di- on rates without a formal negotiation con-
rectly to the educational institution for the ference; for example, through correspond-
most recent three years. Information on ence or use of the simplified method de-
funding must be derived from relevant data scribed in this section D of this Appendix.
gathered by the National Science Founda- g. Formalizing determinations and agree-
tion. In cases where neither HHS nor DOD ments. The cognizant agency for indirect
provides Federal funding directly to an edu- costs must formalize all determinations or
cational institution, the cognizant agency agreements reached with an educational in-
for indirect costs assignment must default to stitution and provide copies to other agen-
HHS. Notwithstanding the method for cog- cies having an interest. Determinations
nizance determination described in this sec- should include a description of any adjust-
tion, other arrangements for cognizance of a ments, the actual amount, both dollar and
particular educational institution may also percentage adjusted, and the reason for mak-
be based in part on the types of research per- ing adjustments.
formed at the educational institution and h. Disputes and disagreements. Where the
must be decided based on mutual agreement cognizant agency for indirect costs is unable
between HHS and DOD. Where a non-Federal to reach agreement with an educational in-
entity only receives funds as a subrecipient, stitution with regard to rates or audit reso-
see § 200.332. lution, the appeal system of the cognizant
(2) After cognizance is established, it must agency for indirect costs must be followed
continue for a five-year period. for resolution of the disagreement.
b. Acceptance of rates. See § 200.414.
c. Correcting deficiencies. The cognizant 12. Standard Format for Submission
agency for indirect costs must negotiate For facilities and administrative (indirect
changes needed to correct systems defi- (F&A)) rate proposals, educational institu-
ciencies relating to accountability for Fed- tions must use the standard format, shown
eral awards. Cognizant agencies for indirect in section E of this appendix, to submit their
costs must address the concerns of other af- indirect (F&A) rate proposal to the cog-
fected agencies, as appropriate, and must ne- nizant agency for indirect costs. The cog-
gotiate special rates for Federal agencies nizant agency for indirect costs may, on an
that are required to limit recovery of indi- institution-by-institution basis, grant excep-
rect costs by statute. tions from all or portions of Part II of the
d. Resolving questioned costs. The cog- standard format requirement. This require-
nizant agency for indirect costs must con- ment does not apply to educational institu-
duct any necessary negotiations with an edu- tions that use the simplified method for cal-
cational institution regarding amounts ques- culating indirect (F&A) rates, as described in
tioned by audit that are due the Federal Section D of this Appendix.
Government related to costs covered by a ne- As provided in section C.10 of this appen-
gotiated agreement. dix, each F&A cost rate negotiation or deter-
e. Reimbursement. Reimbursement to cog- mination must include development of a rate
nizant agencies for indirect costs for work for each F&A cost pool as well as the overall
performed under this Part may be made by F&A rate.
reimbursement billing under the Economy
Act, 31 U.S.C. 1535. D. SIMPLIFIED METHOD FOR SMALL
f. Procedure for establishing facilities and INSTITUTIONS
administrative rates must be established by
one of the following methods: 1. General
(1) Formal negotiation. The cognizant a. Where the total direct cost of work cov-
agency for indirect costs is responsible for ered by this Part at an institution does not
negotiating and approving rates for an edu- exceed $10 million in a fiscal year, the sim-
cational institution on behalf of all Federal plified procedure described in subsections 2
agencies. Federal awarding agencies that do or 3 may be used in determining allowable
not have cognizance for indirect costs must indirect (F&A) costs. Under this simplified
notify the cognizant agency for indirect procedure, the institution’s most recent an-
costs of specific concerns (i.e., a need to es- nual financial report and immediately avail-
tablish special cost rates) which could affect able supporting information must be utilized
the negotiation process. The cognizant agen- as a basis for determining the indirect (F&A)
cy for indirect costs must address the con- cost rate applicable to all Federal awards.
cerns of all interested agencies, as appro- The institution may use either the salaries
rmajette on LAPJN3WLY3PROD with CFR
priate. A pre-negotiation conference may be and wages (see subsection 2) or modified
scheduled among all interested agencies, if total direct costs (see subsection 3) as the
necessary. The cognizant agency for indirect distribution basis.
218
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00230 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
OMB Guidance Pt. 200, App. III
b. The simplified procedure should not be tration and services, student activities, stu-
used where it produces results which appear dent aid, and scholarships).
inequitable to the Federal Government or (2) Operation and maintenance of physical
the institution. In any such case, indirect plant and depreciation (after appropriate ad-
(F&A) costs should be determined through justment for costs applicable to other insti-
use of the regular procedure. tutional activities).
2. Simplified Procedure—Salaries and Wages (3) Library.
Base (4) Department administration expenses,
which will be computed as 20 percent of the
a. Establish the total amount of salaries salaries and expenses of deans and heads of
and wages paid to all employees of the insti- departments. In those cases where expendi-
tution. tures classified under subsection (1) have
b. Establish an indirect (F&A) cost pool previously been allocated to other institu-
consisting of the expenditures (exclusive of tional activities, they may be included in the
capital items and other costs specifically indirect (F&A) cost pool. The modified total
identified as unallowable) which customarily
direct costs amount included in the indirect
are classified under the following titles or
(F&A) cost pool must be separately identi-
their equivalents:
fied.
(1) General administration and general ex-
penses (exclusive of costs of student adminis- c. Establish a modified total direct cost
tration and services, student activities, stu- distribution base, as defined in Section C.2,
dent aid, and scholarships). The distribution basis, that consists of all
(2) Operation and maintenance of physical institution’s direct functions.
plant and depreciation (after appropriate ad- d. Establish the indirect (F&A) cost rate,
justment for costs applicable to other insti- determined by dividing the amount in the in-
tutional activities). direct (F&A) cost pool, subsection b, by the
(3) Library. amount of the distribution base, subsection
(4) Department administration expenses, c.
which will be computed as 20 percent of the e. Apply the indirect (F&A) cost rate to
salaries and expenses of deans and heads of the modified total direct costs for individual
departments. agreements to determine the amount of indi-
In those cases where expenditures classi- rect (F&A) costs allocable to such agree-
fied under subsection (1) have previously ments.
been allocated to other institutional activi-
ties, they may be included in the indirect E. DOCUMENTATION REQUIREMENTS
(F&A) cost pool. The total amount of sala-
The standard format for documentation re-
ries and wages included in the indirect (F&A)
quirements for indirect (indirect (F&A)) rate
cost pool must be separately identified.
proposals for claiming costs under the reg-
c. Establish a salary and wage distribution
ular method is available on the OMB
base, determined by deducting from the total
website.
of salaries and wages as established in sub-
section a from the amount of salaries and F. CERTIFICATION
wages included under subsection b.
d. Establish the indirect (F&A) cost rate, 1. Certification of Charges
determined by dividing the amount in the in-
direct (F&A) cost pool, subsection b, by the To assure that expenditures for Federal
amount of the distribution base, subsection awards are proper and in accordance with
c. the agreement documents and approved
e. Apply the indirect (F&A) cost rate to di- project budgets, the annual and/or final fis-
rect salaries and wages for individual agree- cal reports or vouchers requesting payment
ments to determine the amount of indirect under the agreements will include a certifi-
(F&A) costs allocable to such agreements. cation, signed by an authorized official of
the university, which reads ‘‘By signing this
3. Simplified Procedure—Modified Total Direct report, I certify to the best of my knowledge
Cost Base and belief that the report is true, complete,
a. Establish the total costs incurred by the and accurate, and the expenditures, disburse-
institution for the base period. ments and cash receipts are for the purposes
b. Establish an indirect (F&A) cost pool and intent set forth in the award documents.
consisting of the expenditures (exclusive of I am aware that any false, fictitious, or
capital items and other costs specifically fraudulent information, or the omission of
identified as unallowable) which customarily any material fact, may subject me to crimi-
are classified under the following titles or nal, civil or administrative penalties for
rmajette on LAPJN3WLY3PROD with CFR
their equivalents: fraud, false statements, false claims or oth-
(1) General administration and general ex- erwise. (U.S. Code, Title 18, Section 1001 and
penses (exclusive of costs of student adminis- Title 31, Sections 3729–3733 and 3801–3812)’’.
219
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00231 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
Pt. 200, App. IV 2 CFR Ch. II (1–1–26 Edition)
2. Certification of Indirect (F&A) Costs Institution of Higher Education:
Signature: llllllllllllllllll
a. Policy. Cognizant agencies must not ac-
Name of Official: llllllllllllll
cept a proposed indirect cost rate unless
Title: llllllllllllllllllll
such costs have been certified by the edu-
Date of Execution: lllllllllllll
cational institution using the Certificate of
indirect (F&A) Costs set forth in subsection [78 FR 78608, Dec. 26, 2013, as amended at 79
F.2.c FR 75888, Dec. 19, 2014; 80 FR 54409, Sept. 10,
b. The certificate must be signed on behalf 2015; 85 FR 49577, Aug. 13, 2020; 89 FR 30206,
of the institution by the chief financial offi- Apr. 22, 2024]
cer or an individual designated by an indi-
vidual at a level no lower than vice president APPENDIX IV TO PART 200—INDIRECT
or chief financial officer. (F&A) COSTS IDENTIFICATION AND
An indirect (F&A) cost rate is not binding ASSIGNMENT, AND RATE DETERMINA-
upon the Federal Government if the most re- TION FOR NONPROFIT ORGANIZA-
cent required proposal from the institution TIONS
has not been certified. Where it is necessary
to establish indirect (F&A) cost rates, and A. GENERAL
the institution has not submitted a certified
proposal for establishing such rates in ac- 1. Indirect costs are those that have been
cordance with the requirements of this sec- incurred for common or joint objectives and
tion, the Federal Government must unilater- cannot be readily identified with a par-
ally establish such rates. Such rates may be ticular final cost objective. Direct cost of
based upon audited historical data or such minor amounts may be treated as indirect
other data that have been furnished to the costs under the conditions described in
§ 200.413(d). After direct costs have been de-
cognizant agency for indirect costs and for
termined and assigned directly to awards or
which it can be demonstrated that all unal-
other work as appropriate, indirect costs are
lowable costs have been excluded. When indi-
those remaining to be allocated to benefit-
rect (F&A) cost rates are unilaterally estab-
ting cost objectives. A cost may not be allo-
lished by the Federal Government because of
cated to a Federal award as an indirect cost
failure of the institution to submit a cer-
if any other cost incurred for the same pur-
tified proposal for establishing such rates in
pose, in like circumstances, has been as-
accordance with this section, the rates es-
signed to a Federal award as a direct cost.
tablished will be set at a level low enough to 2. ‘‘Major nonprofit organizations’’ are de-
ensure that potentially unallowable costs fined in paragraph (a) of § 200.414. See indi-
will not be reimbursed. rect cost rate reporting requirements in sec-
c. Certificate. The certificate required by tions B.2.e and B.3.g of this Appendix.
this section must be in the following form:
B. ALLOCATION OF INDIRECT COSTS AND
Certificate of Indirect (F&A) Costs DETERMINATION OF INDIRECT COST RATES
This is to certify that to the best of my
knowledge and belief: 1. General
(1) I have reviewed the indirect (F&A) cost a. If a nonprofit organization has only one
proposal submitted herewith; major function, or where all its major func-
(2) All costs included in this proposal [iden- tions benefit from its indirect costs to ap-
tify date] to establish billing or final indi- proximately the same degree, the allocation
rect (F&A) costs rate for [identify period of indirect costs and the computation of an
covered by rate] are allowable in accordance indirect cost rate may be accomplished
with the requirements of the Federal agree- through simplified allocation procedures, as
ment(s) to which they apply and with the described in section B.2 of this Appendix.
cost principles applicable to those agree- b. If an organization has several major
ments. functions which benefit from its indirect
(3) This proposal does not include any costs costs in varying degrees, allocation of indi-
which are unallowable under subpart E of rect costs may require the accumulation of
this part such as (without limitation): Public such costs into separate cost groupings
relations costs, contributions and donations, which then are allocated individually to ben-
entertainment costs, fines and penalties, lob- efitting functions by means of a base which
bying costs, and defense of fraud pro- best measures the relative degree of benefit.
ceedings; and The indirect costs allocated to each function
(4) All costs included in this proposal are are then distributed to individual Federal
properly allocable to Federal agreements on awards and other activities included in that
the basis of a beneficial or causal relation- function by means of an indirect cost rate(s).
ship between the expenses incurred and the c. The determination of what constitutes
agreements to which they are allocated in an organization’s major functions will de-
rmajette on LAPJN3WLY3PROD with CFR
accordance with applicable requirements. pend on its purpose in being; the types of
I declare that the foregoing is true and cor- services it renders to the public, its clients,
rect. and its members; and the amount of effort it
220
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00232 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
OMB Guidance Pt. 200, App. IV
devotes to such activities as fundraising, which the amount of the particular indirect
public information and membership activi- cost category (i.e., Facilities or Administra-
ties. tion) is of the distribution base identified
d. Specific methods for allocating indirect with that category.
costs and computing indirect cost rates
along with the conditions under which each 3. Multiple Allocation Base Method
method should be used are described in sec- a. General. Where an organization’s indi-
tion B.2 through B.5 of this Appendix. rect costs benefit its major functions in
e. The base period for the allocation of in- varying degrees, indirect costs must be accu-
direct costs is the period in which such costs mulated into separate cost groupings, as de-
are incurred and accumulated for allocation scribed in subparagraph b. Each grouping
to work performed in that period. The base must then be allocated individually to bene-
period normally should coincide with the or- fitting functions by means of a base which
ganization’s fiscal year but, in any event, best measures the relative benefits. The de-
must be so selected as to avoid inequities in fault allocation bases by cost pool are de-
the allocation of the costs. scribed in section B.3.c of this Appendix.
b. Identification of indirect costs. Cost
2. Simplified Allocation Method
groupings must be established so as to per-
a. Where an organization’s major functions mit the allocation of each grouping on the
benefit from its indirect costs to approxi- basis of benefits provided to the major func-
mately the same degree, the allocation of in- tions. Each grouping must constitute a pool
direct costs may be accomplished by (i) sepa- of expenses that are of like character in
rating the organization’s total costs for the terms of functions they benefit and in terms
base period as either direct or indirect, and of the allocation base which best measures
(ii) dividing the total allowable indirect the relative benefits provided to each func-
costs (net of applicable credits) by an equi- tion. The groupings are classified within the
table distribution base. The result of this two broad categories: ‘‘Facilities’’ and ‘‘Ad-
process is an indirect cost rate which is used ministration,’’ as described in section A.3 of
to distribute indirect costs to individual this Appendix. The indirect cost pools are de-
Federal awards. The rate should be expressed fined as follows:
as the percentage which the total amount of (1) Depreciation. The expenses under this
allowable indirect costs bears to the base se- heading are the portion of the costs of the
lected. This method should also be used organization’s buildings, capital improve-
where an organization has only one major ments to land and buildings, and equipment
function encompassing a number of indi- which are computed in accordance with
vidual projects or activities, and may be § 200.436.
used where the level of Federal awards to an (2) Interest. Interest on debt associated
organization is relatively small. with certain buildings, equipment and cap-
b. Both the direct costs and the indirect ital improvements are computed in accord-
costs must exclude capital expenditures and ance with § 200.449.
unallowable costs. However, unallowable (3) Operation and maintenance expenses.
costs which represent activities must be in- The expenses under this heading are those
cluded in the direct costs under the condi- that have been incurred for the administra-
tions described in § 200.413(e). tion, operation, maintenance, preservation,
c. The distribution base may be total di- and protection of the organization’s physical
rect costs (excluding capital expenditures plant. They include expenses normally in-
and other distorting items, such as sub- curred for such items as: janitorial and util-
awards for $50,000 or more), direct salaries ity services; repairs and ordinary or normal
and wages, or other base which results in an alterations of buildings, furniture and equip-
equitable distribution. The distribution base ment; care of grounds; maintenance and op-
must exclude participant support costs as de- eration of buildings and other plant facili-
fined in § 200.1. ties; security; earthquake and disaster pre-
d. Except where a special rate(s) is re- paredness; environmental safety; hazardous
quired in accordance with section B.5 of this waste disposal; property, liability and other
Appendix, the indirect cost rate developed insurance relating to property; space and
under the above principles is applicable to capital leasing; facility planning and man-
all Federal awards of the organization. If a agement; and central receiving. The oper-
special rate(s) is required, appropriate modi- ation and maintenance expenses category
fications must be made in order to develop must also include its allocable share of
the special rate(s). fringe benefit costs, depreciation, and inter-
e. For an organization that receives more est costs.
than $10 million in direct Federal funding in (4) General administration and general ex-
a fiscal year, a breakout of the indirect cost penses. The expenses under this heading are
component into two broad categories, Facili- those that have been incurred for the overall
rmajette on LAPJN3WLY3PROD with CFR
ties and Administration as defined in para- general executive and administrative offices
graph (a) of § 200.414, is required. The rate in of the organization and other expenses of a
each case must be stated as the percentage general nature which do not relate solely to
221
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00233 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
Pt. 200, App. IV 2 CFR Ch. II (1–1–26 Edition)
any major function of the organization. This (b) Depreciation on buildings used for more
category must also include its allocable than one function, and on capital improve-
share of fringe benefit costs, operation and ments and equipment used in such buildings,
maintenance expense, depreciation, and in- must be allocated to the individual functions
terest costs. Examples of this category in- performed in each building on the basis of
clude central offices, such as the director’s usable square feet of space, excluding com-
office, the office of finance, business serv- mon areas, such as hallways, stairwells, and
ices, budget and planning, personnel, safety restrooms.
and risk management, general counsel, man- (c) Depreciation on buildings, capital im-
agement information systems, and library provements and equipment related space
costs. (e.g., individual rooms, and laboratories)
In developing this cost pool, special care used jointly by more than one function (as
should be exercised to ensure that costs in- determined by the users of the space) must
curred for the same purpose in like cir- be treated as follows. The cost of each joint-
cumstances are treated consistently as ei- ly used unit of space must be allocated to
ther direct or indirect costs. For example, the benefitting functions on the basis of:
salaries of technical staff, project supplies, (i) the employees and other users on a full-
project publication, telephone toll charges, time equivalent (FTE) basis or salaries and
computer costs, travel costs, and specialized wages of those individual functions benefit-
services costs must be treated as direct costs ting from the use of that space; or
wherever identifiable to a particular pro- (ii) organization-wide employee FTEs or
gram. The salaries and wages of administra- salaries and wages applicable to the benefit-
tive and pooled clerical staff should nor-
ting functions of the organization.
mally be treated as indirect costs. Direct
(d) Depreciation on certain capital im-
charging of these costs may be appropriate
provements to land, such as paved parking
as described in § 200.413. Items such as office
supplies, postage, local telephone costs, peri- areas, fences, sidewalks, and the like, not in-
odicals and memberships should normally be cluded in the cost of buildings, must be allo-
treated as indirect costs. cated to user categories on a FTE basis and
distributed to major functions in proportion
c. Allocation bases. Actual conditions
to the salaries and wages of all employees
must be taken into account in selecting the
applicable to the functions.
base to be used in allocating the expenses in
each grouping to benefitting functions. The (2) Interest. Interest costs must be allo-
essential consideration in selecting a method cated in the same manner as the deprecia-
or a base is that it is the one best suited for tion on the buildings, equipment and capital
assigning the pool of costs to cost objectives equipment to which the interest relates.
in accordance with benefits derived; a trace- (3) Operation and maintenance expenses.
able cause and effect relationship; or logic Operation and maintenance expenses must
and reason, where neither the cause nor the be allocated in the same manner as the de-
effect of the relationship is determinable. preciation.
When an allocation can be made by assign- (4) General administration and general ex-
ment of a cost grouping directly to the func- penses. General administration and general
tion benefitted, the allocation must be made expenses must be allocated to benefitting
in that manner. When the expenses in a cost functions based on modified total costs
grouping are more general in nature, the al- (MTC). The MTC is the modified total direct
location must be made through the use of a costs (MTDC), as described in § 200.1, plus the
selected base which produces results that are allocated indirect cost proportion. The ex-
equitable to both the Federal Government penses included in this category could be
and the organization. The distribution must grouped first according to major functions of
be made in accordance with the bases de- the organization to which they render serv-
scribed herein unless it can be demonstrated ices or provide benefits. The aggregate ex-
that the use of a different base would result penses of each group must then be allocated
in a more equitable allocation of the costs, to benefitting functions based on MTC.
or that a more readily available base would d. Order of distribution.
not increase the costs charged to Federal (1) Indirect cost categories consisting of
awards. The results of special cost studies depreciation, interest, operation and mainte-
(such as an engineering utility study) must nance, and general administration and gen-
not be used to determine and allocate the in- eral expenses must be allocated in that order
direct costs to Federal awards. to the remaining indirect cost categories as
(1) Depreciation. Depreciation expenses well as to the major functions of the organi-
must be allocated in the following manner: zation. Other cost categories should be allo-
(a) Depreciation on buildings used exclu- cated in the order determined to be most ap-
sively in the conduct of a single function, propriate by the organization. This order of
rmajette on LAPJN3WLY3PROD with CFR
and on capital improvements and equipment allocation does not apply if cross allocation
used in such buildings, must be assigned to of costs is made as provided in section B.3.d.2
that function. of this Appendix.
222
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00234 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
OMB Guidance Pt. 200, App. IV
(2) Normally, an indirect cost category will Organizations issued jointly by the National
be considered closed once it has been allo- Health Council, Inc., the National Assembly
cated to other cost objectives, and costs of Voluntary Health and Social Welfare Or-
must not be subsequently allocated to it. ganizations, and the United Way of America.
However, a cross allocation of costs between c. Under this method, indirect costs con-
two or more indirect costs categories could sist exclusively of general administration
be used if such allocation will result in a and general expenses. In all other respects,
more equitable allocation of costs. If a cross the organization’s indirect cost rates must
allocation is used, an appropriate modifica- be computed in the same manner as that de-
tion to the composition of the indirect cost scribed in section B.2 of this Appendix.
categories is required.
e. Application of indirect cost rate or 5. Special Indirect Cost Rates
rates. Except where a special indirect cost In some instances, a single indirect cost
rate(s) is required in accordance with section rate for all activities of an organization or
B.5 of this Appendix, the separate groupings for each major function of the organization
of indirect costs allocated to each major may not be appropriate, since it would not
function must be aggregated and treated as a take into account those different factors
common pool for that function. The costs in which may substantially affect the indirect
the common pool must then be distributed to costs applicable to a particular segment of
individual Federal awards included in that work. For this purpose, a particular segment
function by use of a single indirect cost rate. of work may be that performed under a sin-
f. Distribution basis. Indirect costs must gle Federal award or it may consist of work
be distributed to applicable Federal awards under a group of Federal awards performed
and other benefitting activities within each in a common environment. These factors
major function on the basis of MTDC (see may include the physical location of the
definition in § 200.1). work, the level of administrative support re-
g. Individual Rate Components. An indi- quired, the nature of the facilities or other
rect cost rate must be determined for each resources employed, the scientific disciplines
separate indirect cost pool developed. The or technical skills involved, the organiza-
rate in each case must be stated as the per- tional arrangements used, or any combina-
centage which the amount of the particular tion thereof. When a particular segment of
indirect cost pool is of the distribution base work is performed in an environment which
identified with that pool. Each indirect cost appears to generate a significantly different
rate negotiation or determination agreement level of indirect costs, provisions should be
must include development of the rate for made for a separate indirect cost pool appli-
each indirect cost pool as well as the overall cable to such work. The separate indirect
indirect cost rate. The indirect cost pools cost pool should be developed during the
must be classified within two broad cat- course of the regular allocation process, and
egories: ‘‘Facilities’’ and ‘‘Administration,’’ the separate indirect cost rate resulting
as described in § 200.414(a). therefrom should be used, provided it is de-
termined that (i) the rate differs signifi-
4. Direct Allocation Method
cantly from that which would have been ob-
a. Some nonprofit organizations treat all tained under sections B.2, B.3, and B.4 of this
costs as direct costs except general adminis- Appendix, and (ii) the volume of work to
tration and general expenses. These organi- which the rate would apply is material.
zations generally separate their costs into
three basic categories: (i) General adminis- C. NEGOTIATION AND APPROVAL OF INDIRECT
tration and general expenses, (ii) fund- COST RATES
raising, and (iii) other direct functions (in-
1. Definitions
cluding projects performed under Federal
awards). Joint costs, such as depreciation, As used in this section, the following terms
rental costs, operation and maintenance of have the meanings set forth in this section:
facilities, telephone expenses, information a. Cognizant agency for indirect costs means
technology, and the like are prorated indi- the Federal agency responsible for negoti-
vidually as direct costs to each category and ating and approving indirect cost rates for a
to each Federal award or other activity nonprofit organization on behalf of all Fed-
using a base most appropriate to the par- eral agencies.
ticular cost being prorated. b. Predetermined rate means an indirect cost
b. This method is acceptable, provided each rate, applicable to a specified current or fu-
joint cost is prorated using a base which ac- ture period, usually the organization’s fiscal
curately measures the benefits provided to year. The rate is based on an estimate of the
each Federal award or other activity. The costs to be incurred during the period. A pre-
bases must be established in accordance with determined rate is not subject to adjust-
reasonable criteria and be supported by cur- ment.
rmajette on LAPJN3WLY3PROD with CFR
rent data. This method is compatible with c. Fixed rate means an indirect cost rate
the Standards of Accounting and Financial which has the same characteristics as a pre-
Reporting for Voluntary Health and Welfare determined rate, except that the difference
223
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00235 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
Pt. 200, App. IV 2 CFR Ch. II (1–1–26 Edition)
between the estimated costs and the actual later than three months after the effective
costs of the period covered by the rate is car- date of the Federal award.
ried forward as an adjustment to the rate c. Unless approved by the cognizant agency
computation of a subsequent period. for indirect costs in accordance with
d. Final rate means an indirect cost rate § 200.414(g), organizations that have pre-
applicable to a specified past period which is viously established indirect cost rates must
based on the actual costs of the period. A submit a new indirect cost proposal to the
final rate is not subject to adjustment. cognizant agency for indirect costs within
e. Provisional rate or billing rate means a six months after the close of each fiscal year.
temporary indirect cost rate applicable to a d. A predetermined rate may be negotiated
specified period which is used for funding, in- for use on Federal awards where there is rea-
terim reimbursement, and reporting indirect sonable assurance, based on past experience
costs on Federal awards pending the estab- and reliable projection of the organization’s
lishment of a final rate for the period. costs, that the rate is not likely to exceed a
f. Indirect cost proposal means the docu- rate based on the organization’s actual costs.
mentation prepared by an organization to e. Fixed rates may be negotiated where
substantiate its claim for the reimbursement predetermined rates are not considered ap-
of indirect costs. This proposal provides the propriate. A fixed rate, however, must not be
basis for the review and negotiation leading negotiated if (i) all or a substantial portion
to the establishment of an organization’s in- of the organization’s Federal awards are ex-
direct cost rate. pected to expire before the carry-forward ad-
g. Cost objective means a function, organiza- justment can be made; (ii) the mix of Federal
tional subdivision, contract, Federal award, and non-Federal work at the organization is
or other work unit for which cost data are too erratic to permit an equitable carry-for-
desired and for which provision is made to ward adjustment; or (iii) the organization’s
accumulate and measure the cost of proc- operations fluctuate significantly from year
esses, projects, jobs and capitalized projects. to year.
f. Provisional and final rates must be nego-
2. Negotiation and Approval of Rates tiated where neither predetermined nor fixed
a. Unless different arrangements are rates are appropriate. Predetermined or
agreed to by the Federal agencies concerned, fixed rates may replace provisional rates at
the Federal agency with the largest dollar any time prior to the close of the organiza-
value of Federal awards directly funded to an tion’s fiscal year. If that event does not
organization will be designated as the cog- occur, a final rate will be established and up-
nizant agency for indirect costs for the nego- ward or downward adjustments will be made
tiation and approval of the indirect cost based on the actual allowable costs incurred
rates and, where necessary, other rates such for the period involved.
as fringe benefit and computer charge-out g. The results of each negotiation must be
rates. Once an agency is assigned cognizance formalized in a written agreement between
for a particular nonprofit organization, the the cognizant agency for indirect costs and
assignment will not be changed unless there the nonprofit organization. The cognizant
is a shift in the dollar volume of the Federal agency for indirect costs must make avail-
awards directly funded to the organization able copies of the agreement to all concerned
for at least three years. All concerned Fed- Federal agencies.
eral agencies must be given the opportunity h. If a dispute arises in a negotiation of an
to participate in the negotiation process but, indirect cost rate between the cognizant
after a rate has been agreed upon, it will be agency for indirect costs and the nonprofit
accepted by all Federal agencies. When a organization, the dispute must be resolved in
Federal agency has reason to believe that accordance with the appeals procedures of
special operating factors affecting its Fed- the cognizant agency for indirect costs.
eral awards necessitate special indirect cost i. To the extent that problems are encoun-
rates in accordance with section B.5 of this tered among the Federal agencies in connec-
Appendix, it will, prior to the time the rates tion with the negotiation and approval proc-
are negotiated, notify the cognizant agency ess, OMB will lend assistance as required to
for indirect costs. (See also § 200.414.) If the resolve such problems in a timely manner.
nonprofit does not receive any funding from
D. Certification of Indirect (F&A) Costs
any Federal agency, the pass-through entity
is responsible for the negotiation of the indi- (1) Required Certification. No proposal to
rect cost rates in accordance with establish indirect (F&A) cost rates must be
§ 200.332(a)(4). acceptable unless such costs have been cer-
b. Except as otherwise provided in tified by the nonprofit organization using
§ 200.414(f), a nonprofit organization which the Certificate of Indirect (F&A) Costs set
has not previously established an indirect forth in section j. of this appendix. The cer-
cost rate with a Federal agency must submit tificate must be signed on behalf of the orga-
rmajette on LAPJN3WLY3PROD with CFR
its initial indirect cost proposal immediately nization by an individual at a level no lower
after the organization is advised that a Fed- than vice president or chief financial officer
eral award will be made and, in no event, for the organization.
224
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00236 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
OMB Guidance Pt. 200, App. V
(2) Each indirect cost rate proposal must Guide for State, Local and Indian Tribal Gov-
be accompanied by a certification in the fol- ernments: Cost Principles and Procedures for
lowing form: Developing Cost Allocation Plans and Indirect
Cost Rates for Agreements with the Federal
Certificate of Indirect (F&A) Costs Government.’’ A copy of this brochure may be
This is to certify that to the best of my obtained from the HHS Cost Allocation Serv-
knowledge and belief: ices or at their website.
(1) I have reviewed the indirect (F&A) cost
proposal submitted herewith; B. DEFINITIONS
(2) All costs included in this proposal [iden- 1. Agency or operating agency means an or-
tify date] to establish billing or final indi- ganizational unit or sub-division within a
rect (F&A) costs rate for [identify period governmental unit that is responsible for the
covered by rate] are allowable in accordance performance or administration of Federal
with the requirements of the Federal awards awards or activities of the governmental
to which they apply and with subpart E of unit.
this part. 2. Allocated central services means central
(3) This proposal does not include any costs services that benefit operating agencies but
which are unallowable under subpart E of are not billed to the agencies on a fee-for-
this part such as (without limitation): Public service or similar basis. These costs are allo-
relations costs, contributions and donations, cated to benefitted agencies on some reason-
entertainment costs, fines and penalties, lob- able basis. Examples of such services might
bying costs, and defense of fraud pro- include general accounting, personnel ad-
ceedings; and ministration, purchasing, etc.
(4) All costs included in this proposal are 3. Billed central services means central serv-
properly allocable to Federal awards on the ices that are billed to benefitted agencies or
basis of a beneficial or causal relationship programs on an individual fee-for-service or
between the expenses incurred and the Fed- similar basis. Typical examples of billed cen-
eral awards to which they are allocated in tral services include computer services,
accordance with applicable requirements. transportation services, insurance, and
I declare that the foregoing is true and cor- fringe benefits.
rect. 4. Cognizant agency for indirect costs is de-
Nonprofit Organization: lllllllllll fined in § 200.1. The determination of cog-
Signature: llllllllllllllllll nizant agency for indirect costs for states
Name of Official: llllllllllllll and local governments is described in section
Title: llllllllllllllllllll F.1.
Date of Execution: lllllllllllll 5. Major local government means local gov-
[78 FR 78608, Dec. 26, 2013, as amended at 80 ernment that receives more than $100 million
FR 54410, Sept. 10, 2015; 85 FR 49579, Aug. 13, in direct Federal awards subject to this Part.
2020; 89 FR 30206, Apr. 22, 2024]
C. SCOPE OF THE CENTRAL SERVICE COST
ALLOCATION PLANS
APPENDIX V TO PART 200—STATE/LOCAL
GOVERNMENTWIDE CENTRAL SERVICE The central service cost allocation plan
COST ALLOCATION PLANS will include all central service costs that
will be claimed (either as a billed or an allo-
A. GENERAL cated cost) under Federal awards and will be
1. Most governmental units provide certain documented as described in section E. omit-
services, such as motor pools, computer cen- ted from the plan will not be reimbursed.
ters, purchasing, accounting, etc., to oper- D. SUBMISSION REQUIREMENTS
ating agencies on a centralized basis. Since
federally-supported awards are performed 1. Each state will submit a plan to the De-
within the individual operating agencies, partment of Health and Human Services for
there needs to be a process whereby these each year in which it claims central service
central service costs can be identified and costs under Federal awards. The plan should
assigned to benefitted activities on a reason- include (a) a projection of the next year’s al-
able and consistent basis. The central service located central service cost (based either on
cost allocation plan provides that process. actual costs for the most recently completed
All costs and other data used to distribute year or the budget projection for the coming
the costs included in the plan should be sup- year), and (b) a reconciliation of actual allo-
ported by formal accounting and other cated central service costs to the estimated
records that will support the propriety of the costs used for either the most recently com-
costs assigned to Federal awards. pleted year or the year immediately pre-
2. Guidelines and illustrations of central ceding the most recently completed year.
rmajette on LAPJN3WLY3PROD with CFR
service cost allocation plans are provided in 2. Each major local government is also re-
a brochure published by the Department of quired to submit a plan to its cognizant
Health and Human Services entitled ‘‘A agency for indirect costs annually.
225
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00237 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
Pt. 200, App. V 2 CFR Ch. II (1–1–26 Edition)
3. All other local governments claiming items of expense included in the cost of the
central service costs must develop a plan in service, the method used to distribute the
accordance with the requirements described cost of the service to benefitted agencies,
in this Part and maintain the plan and re- and a summary schedule showing the alloca-
lated supporting documentation for audit. tion of each service to the specific benefitted
These local governments are not required to agencies. If any self-insurance funds or
submit their plans for Federal approval un- fringe benefits costs are treated as allocated
less they are specifically requested to do so (rather than billed) central services, docu-
by the cognizant agency for indirect costs. mentation discussed in subsections 3.b. and
Where a local government only receives c. must also be included.
funds as a subrecipient, the pass-through en-
tity will be responsible for monitoring the 3. Billed Services
subrecipient’s plan.
a. General. The information described in
4. All central service cost allocation plans
this section must be provided for all billed
will be prepared and, when required, sub-
central services, including internal service
mitted within six months prior to the begin-
funds, self-insurance funds, and fringe ben-
ning of each of the governmental unit’s fis-
efit funds.
cal years in which it proposes to claim cen-
b. Internal service funds.
tral service costs. Extensions may be grant-
ed by the cognizant agency for indirect costs (1) For each internal service fund or simi-
on a case-by-case basis. lar activity with an operating budget of $5
million or more, the plan must include: A
E. DOCUMENTATION REQUIREMENTS FOR brief description of each service; a balance
SUBMITTED PLANS sheet for each fund based on individual ac-
counts contained in the governmental unit’s
The documentation requirements described accounting system; a revenue/expenses state-
in this section may be modified, expanded, or ment, with revenues broken out by source,
reduced by the cognizant agency for indirect e.g., regular billings, interest earned, etc.; a
costs on a case-by-case basis. For example, listing of all non-operating transfers (as de-
the requirements may be reduced for those fined by GAAP) into and out of the fund; a
central services which have little or no im- description of the procedures (methodology)
pact on Federal awards. Conversely, if a re- used to charge the costs of each service to
view of a plan indicates that certain addi- users, including how billing rates are deter-
tional information is needed, and will likely mined; a schedule of current rates; and, a
be needed in future years, it may be rou- schedule comparing total revenues (includ-
tinely requested in future plan submissions. ing imputed revenues) generated by the serv-
Items marked with an asterisk (*) should be ice to the allowable costs of the service, as
submitted only once; subsequent plans determined under this part, with an expla-
should merely indicate any changes since the nation of how variances will be handled.
last plan. (2) Revenues must consist of all revenues
1. General generated by the service, including unbilled
and uncollected revenues. If some users were
All proposed plans must be accompanied by not billed for the services (or were not billed
the following: an organization chart suffi- at the full rate for that class of users), a
ciently detailed to show operations including schedule showing the full imputed revenues
the central service activities of the state/ associated with these users must be pro-
local government whether or not they are vided. Expenses must be broken out by ob-
shown as benefitting from central service ject cost categories (e.g., salaries, supplies,
functions; a copy of the Comprehensive An- etc.).
nual Financial Report (or a copy of the Exec- c. Self-insurance funds. For each self-insur-
utive Budget if budgeted costs are being pro- ance fund, the plan must include: the fund
posed) to support the allowable costs of each balance sheet; a statement of revenue and
central service activity included in the plan; expenses including a summary of billings
and, a certification (see subsection 4.) that and claims paid by agency; a listing of all
the plan was prepared in accordance with non-operating transfers into and out of the
this Part, contains only allowable costs, and fund; the type(s) of risk(s) covered by the
was prepared in a manner that treated simi- fund (e.g., automobile liability, workers’
lar costs consistently among the various compensation, etc.); an explanation of how
Federal awards and between Federal and the level of fund contributions are deter-
non-Federal awards/activities. mined, including a copy of the current actu-
arial report (with the actuarial assumptions
2. Allocated Central Services
used) if the contributions are determined on
For each allocated central service*, the an actuarial basis; and, a description of the
plan must also include the following: a brief procedures used to charge or allocate fund
rmajette on LAPJN3WLY3PROD with CFR
description of the service, an identification contributions to benefitted activities. Re-
of the unit rendering the service and the op- serve levels in excess of claims (1) submitted
erating agencies receiving the service, the and adjudicated but not paid, (2) submitted
226
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00238 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
OMB Guidance Pt. 200, App. V
but not adjudicated, and (3) incurred but not cies, for central service cost allocation
submitted must be identified and explained. plans, the cognizant agency responsible for
d. Fringe benefits. For fringe benefit costs, review and approval is the Federal agency
the plan must include: a listing of fringe ben- with the largest dollar value of total Federal
efits provided to covered employees, and the awards with a governmental unit. For indi-
overall annual cost of each type of benefit; rect cost rates and departmental indirect
current fringe benefit policies; and proce- cost allocation plans, the cognizant agency
dures used to charge or allocate the costs of is the Federal agency with the largest dollar
the benefits to benefitted activities. In addi- value of direct Federal awards with a govern-
tion, for pension and post-retirement health mental unit or component, as appropriate.
insurance plans, the following information Once designated as the cognizant agency for
must be provided: the governmental unit’s indirect costs, the Federal agency must re-
funding policies, e.g., legislative bills, trust main so for a period of five years. In addi-
agreements, or state-mandated contribution tion, the following Federal agencies continue
rules, if different from actuarially deter- to be responsible for the indicated govern-
mined rates; the pension plan’s costs accrued mental entities:
for the year; the amount funded, and date(s) Department of Health and Human Services—
of funding; a copy of the current actuarial Public assistance and state-wide cost alloca-
report (including the actuarial assumptions); tion plans for all states (including the Dis-
the plan trustee’s report; and, a schedule trict of Columbia and Puerto Rico), state
from the activity showing the value of the and local hospitals, libraries and health dis-
interest cost associated with late funding. tricts.
Department of the Interior—Indian tribal
4. Required Certification
governments, territorial governments, and
Each central service cost allocation plan state and local park and recreational dis-
will be accompanied by a certification in the tricts.
following form: Department of Labor—State and local labor
departments.
CERTIFICATE OF COST ALLOCATION Department of Education—School districts
PLAN and state and local education agencies.
This is to certify that I have reviewed the Department of Agriculture—State and local
cost allocation plan submitted herewith and agriculture departments.
to the best of my knowledge and belief: Department of Transportation—State and
(1) All costs included in this proposal [iden- local airport and port authorities and transit
tify date] to establish cost allocations or bil- districts.
lings for [identify period covered by plan] are Department of Commerce—State and local
allowable in accordance with the require- economic development districts.
ments of this Part and the Federal award(s) Department of Housing and Urban Develop-
to which they apply. Unallowable costs have ment—State and local housing and develop-
been adjusted for in allocating costs as indi- ment districts.
cated in the cost allocation plan. Environmental Protection Agency—State and
(2) All costs included in this proposal are local water and sewer districts.
properly allocable to Federal awards on the
basis of a beneficial or causal relationship 2. Review
between the expenses incurred and the Fed- All proposed central service cost allocation
eral awards to which they are allocated in plans that are required to be submitted will
accordance with applicable requirements. be reviewed, negotiated, and approved by the
Further, the same costs that have been cognizant agency for indirect costs on a
treated as indirect costs have not been timely basis. The cognizant agency for indi-
claimed as direct costs. Similar types of rect costs will review the proposal within six
costs have been accounted for consistently. months of receipt of the proposal and either
I declare that the foregoing is true and cor- negotiate/approve the proposal or advise the
rect. governmental unit of the additional docu-
Governmental Unit: lllllllllllll mentation needed to support/evaluate the
Signature: llllllllllllllllll proposed plan or the changes required to
Name of Official: llllllllllllll make the proposal acceptable. Once an
Title: llllllllllllllllllll agreement with the governmental unit has
Date of Execution: lllllllllllll been reached, the agreement will be accepted
and used by all Federal agencies, unless pro-
F. NEGOTIATION AND APPROVAL OF CENTRAL hibited or limited by statute. Where a Fed-
SERVICE PLANS eral awarding agency has reason to believe
that special operating factors affecting its
1. Federal Cognizant Agency for Indirect Costs
Federal awards necessitate special consider-
rmajette on LAPJN3WLY3PROD with CFR
Assignments for Cost Negotiation
ation, the funding agency will, prior to the
In general, unless different arrangements time the plans are negotiated, notify the
are agreed to by the concerned Federal agen- cognizant agency for indirect costs.
227
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00239 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
Pt. 200, App. V 2 CFR Ch. II (1–1–26 Edition)
3. Agreement 3. Carry-Forward Adjustments of Allocated
Central Service Costs
The results of each negotiation must be
formalized in a written agreement between Allocated central service costs are usually
the cognizant agency for indirect costs and negotiated and approved for a future fiscal
the governmental unit. This agreement will year on a ‘‘fixed with carry-forward’’ basis.
be subject to re-opening if the agreement is Under this procedure, the fixed amounts for
subsequently found to violate a statute or the future year covered by agreement are
the information upon which the plan was ne- not subject to adjustment for that year.
gotiated is later found to be materially in- However, when the actual costs of the year
complete or inaccurate. The results of the involved become known, the differences be-
negotiation must be made available to all tween the fixed amounts previously approved
Federal agencies for their use. and the actual costs will be carried forward
and used as an adjustment to the fixed
4. Adjustments
amounts established for a later year. This
Negotiated cost allocation plans based on a ‘‘carry-forward’’ procedure applies to all cen-
proposal later found to have included costs tral services whose costs were fixed in the
that: (a) are unallowable (i) as specified by approved plan. However, a carry-forward ad-
law or regulation, (ii) as identified in subpart justment is not permitted, for a central serv-
F, General Provisions for selected Items of ice activity that was not included in the ap-
Cost of this Part, or (iii) by the terms and proved plan, or for unallowable costs that
conditions of Federal awards, or (b) are unal- must be reimbursed immediately.
lowable because they are clearly not allo-
cable to Federal awards, must be adjusted, or 4. Adjustments of Billed Central Services
a refund must be made at the option of the
Billing rates used to charge Federal awards
cognizant agency for indirect costs, includ-
ing earned or imputed interest from the date must be based on the estimated costs of pro-
of transfer and debt interest, if applicable, viding the services, including an estimate of
chargeable in accordance with applicable the allocable central service costs. A com-
Federal cognizant agency for indirect costs parison of the revenue generated by each
regulations. Adjustments or cash refunds billed service (including total revenues
may include, at the option of the cognizant whether or not billed or collected) to the ac-
agency for indirect costs, earned or imputed tual allowable costs of the service will be
interest from the date of expenditure and de- made at least annually, and an adjustment
linquent debt interest, if applicable, charge- will be made for the difference between the
able in accordance with applicable cognizant revenue and the allowable costs. These ad-
agency claims collection regulations. These justments will be made through one of the
adjustments or refunds are designed to cor- following adjustment methods: (a) a cash re-
rect the plans and do not constitute a re- fund including earned or imputed interest
opening of the negotiation. from the date of transfer and debt interest, if
applicable, chargeable in accordance with
G. OTHER POLICIES applicable Federal cognizant agency for indi-
rect costs regulations to the Federal Govern-
1. Billed Central Service Activities ment for the Federal share of the adjust-
Each billed central service activity must ment, (b) credits to the amounts charged to
separately account for all revenues (includ- the individual programs, (c) adjustments to
ing imputed revenues) generated by the serv- future billing rates, or (d) adjustments to al-
ice, expenses incurred to furnish the service, located central service costs. Adjustments to
and profit/loss. allocated central services will not be per-
mitted where the total amount of the adjust-
2. Working Capital Reserves ment for a particular service (Federal share
and non-Federal) share exceeds $500,000. Ad-
Internal service funds are dependent upon justment methods may include, at the option
a reasonable level of working capital reserve of the cognizant agency, earned or imputed
to operate from one billing cycle to the next.
interest from the date of expenditure and de-
Charges by an internal service activity to
linquent debt interest, if applicable, charge-
provide for the establishment and mainte-
able in accordance with applicable cognizant
nance of a reasonable level of working cap-
agency claims collection regulations.
ital reserve, in addition to the full recovery
of costs, are allowable. A working capital re- 5. Records Retention
serve as part of retained earnings of up to 60
calendar days cash expenses for normal oper- All central service cost allocation plans
ating purposes is considered reasonable. A and related documentation used as a basis
working capital reserve exceeding 60 cal- for claiming costs under Federal awards
rmajette on LAPJN3WLY3PROD with CFR
endar days may be approved by the cog- must be retained for audit in accordance
nizant agency for indirect costs in excep- with the records retention requirements con-
tional cases. tained in subpart D of this part.
228
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00240 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
OMB Guidance Pt. 200, App. VI
6. Appeals C. POLICY
If a dispute arises in the negotiation of a State public assistance agencies will de-
plan between the cognizant agency for indi- velop, document and implement, and the
rect costs and the governmental unit, the Federal Government will review, negotiate,
dispute must be resolved in accordance with and approve, public assistance cost alloca-
the appeals procedures of the cognizant tion plans in accordance with Subpart E of 45
agency for indirect costs. CFR Part 95. The plan will include all pro-
grams administered by the state public as-
7. OMB Assistance sistance agency. Where a letter of approval
or disapproval is transmitted to a state pub-
To the extent that problems are encoun-
lic assistance agency in accordance with
tered among the Federal agencies or govern- Subpart E, the letter will apply to all Fed-
mental units in connection with the negotia- eral agencies and programs. The remaining
tion and approval process, OMB will lend as- sections of this Appendix (except for the re-
sistance, as required, to resolve such prob- quirement for certification) summarize the
lems in a timely manner. provisions of Subpart E of 45 CFR Part 95.
[78 FR 78608, Dec. 26, 2013, as amended at 80
FR 54410, Sept. 10, 2015; 85 FR 49581, Aug. 13, D. SUBMISSION, DOCUMENTATION, AND AP-
PROVAL OF PUBLIC ASSISTANCE COST ALLO-
2020]
CATION PLANS
APPENDIX VI TO PART 200—PUBLIC 1. State public assistance agencies are re-
ASSISTANCE COST ALLOCATION PLANS quired to promptly submit amendments to
the cost allocation plan to HHS for review
A. GENERAL and approval.
2. Under the coordination process outlined
Federally-financed programs administered
in section E, affected Federal agencies will
by state public assistance agencies are fund-
review all new plans and plan amendments
ed predominately by the Department of
and provide comments, as appropriate, to
Health and Human Services (HHS). In sup- HHS. The effective date of the plan or plan
port of its stewardship requirements, HHS amendment will be the first day of the cal-
has published requirements for the develop- endar quarter following the event that re-
ment, documentation, submission, negotia- quired the amendment, unless another date
tion, and approval of public assistance cost is specifically approved by HHS. HHS, as the
allocation plans in Subpart E of 45 CFR Part cognizant agency for indirect costs acting on
95. All administrative costs (direct and indi- behalf of all affected Federal agencies, will,
rect) are normally charged to Federal awards as necessary, conduct negotiations with the
by implementing the public assistance cost state public assistance agency and will in-
allocation plan. This Appendix extends these form the state agency of the action taken on
requirements to all Federal awarding agen- the plan or plan amendment.
cies whose programs are administered by a
state public assistance agency. Major feder- E. REVIEW OF IMPLEMENTATION OF APPROVED
ally-financed programs typically adminis- PLANS
tered by state public assistance agencies in-
clude: Temporary Aid to Needy Families 1. Since public assistance cost allocation
(TANF), Medicaid, Food Stamps, Child Sup- plans are of a narrative nature, the review
port Enforcement, Adoption Assistance and during the plan approval process consists of
evaluating the appropriateness of the pro-
Foster Care, and Social Services Block
posed groupings of costs (cost centers) and
Grant.
the related allocation bases. As such, the
B. DEFINITIONS Federal Government needs some assurance
that the cost allocation plan has been imple-
1. State public assistance agency means a mented as approved. This is accomplished by
state agency administering or supervising reviews by the Federal awarding agencies,
the administration of one or more public as- single audits, or audits conducted by the
sistance programs operated by the state as cognizant agency for indirect costs.
identified in Subpart E of 45 CFR Part 95. 2. Where inappropriate charges affecting
For the purpose of this Appendix, these pro- more than one Federal awarding agency are
grams include all programs administered by identified, the cognizant HHS cost negotia-
the state public assistance agency. tion office will be advised and will take the
2. State public assistance agency costs means lead in resolving the issue(s) as provided for
all costs incurred by, or allocable to, the in Subpart E of 45 CFR Part 95.
state public assistance agency, except ex- 3. If a dispute arises in the negotiation of
penditures for financial assistance, medical a plan or from a disallowance involving two
rmajette on LAPJN3WLY3PROD with CFR
contractor payments, food stamps, and pay- or more Federal awarding agencies, the dis-
ments for services and goods provided di- pute must be resolved in accordance with the
rectly to program recipients. appeals procedures set out in 45 CFR Part 16.
229
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00241 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
Pt. 200, App. VII 2 CFR Ch. II (1–1–26 Edition)
Disputes involving only one Federal award- rect costs under Federal awards. Guidelines
ing agency will be resolved in accordance and illustrations of indirect cost proposals
with the Federal awarding agency’s appeal are provided in a brochure published by the
process. Department of Health and Human Services
4. To the extent that problems are encoun- entitled ‘‘A Guide for States and Local Govern-
tered among the Federal awarding agencies ment Agencies: Cost Principles and Procedures
or governmental units in connection with for Establishing Cost Allocation Plans and Indi-
the negotiation and approval process, the Of- rect Cost Rates for Grants and Contracts with
fice of Management and Budget will lend as- the Federal Government.’’ A copy of this bro-
sistance, as required, to resolve such prob- chure may be obtained from HHS Cost Allo-
lems in a timely manner. cation Services or at their website.
4. Because of the diverse characteristics
F. UNALLOWABLE COSTS
and accounting practices of governmental
Claims developed under approved cost allo- units, the types of costs which may be classi-
cation plans will be based on allowable costs fied as indirect costs cannot be specified in
as identified in this Part. Where unallowable all situations. However, typical examples of
costs have been claimed and reimbursed, indirect costs may include certain state/
they will be refunded to the program that re- local-wide central service costs, general ad-
imbursed the unallowable cost using one of ministration of the non-Federal entity ac-
the following methods: (a) a cash refund, (b) counting and personnel services performed
offset to a subsequent claim, or (c) credits to within the non-Federal entity, depreciation
the amounts charged to individual Federal on buildings and equipment, the costs of op-
awards. Cash refunds, offsets, and credits erating and maintaining facilities.
may include at the option of the cognizant 5. This Appendix does not apply to state
agency for indirect cost, earned or imputed public assistance agencies. These agencies
interest from the date of expenditure and de- should refer instead to Appendix VI to this
linquent debt interest, if applicable, charge- part.
able in accordance with applicable cognizant
agency for indirect cost claims collection B. DEFINITIONS
regulations.
1. Base means the accumulated direct costs
[78 FR 78608, Dec. 26, 2013, as amended at 85 (normally either total direct salaries and
FR 49581, Aug. 13, 2020] wages or total direct costs exclusive of any
extraordinary or distorting expenditures)
APPENDIX VII TO PART 200—STATES AND used to distribute indirect costs to indi-
LOCAL GOVERNMENT AND INDIAN vidual Federal awards. The direct cost base
TRIBE INDIRECT COST PROPOSALS selected should result in each Federal award
bearing a fair share of the indirect costs in
A. GENERAL reasonable relation to the benefits received
1. Indirect costs are those that have been from the costs.
incurred for common or joint purposes. 2. Base period for the allocation of indirect
These costs benefit more than one cost ob- costs is the period in which such costs are in-
jective and cannot be readily identified with curred and accumulated for allocation to ac-
a particular final cost objective without ef- tivities performed in that period. The base
fort disproportionate to the results achieved. period normally should coincide with the
After direct costs have been determined and governmental unit’s fiscal year, but in any
assigned directly to Federal awards and event, must be so selected as to avoid inequi-
other activities as appropriate, indirect costs ties in the allocation of costs.
are those remaining to be allocated to bene- 3. Cognizant agency for indirect costs means
fitted cost objectives. A cost may not be al- the Federal agency responsible for reviewing
located to a Federal award as an indirect and approving the governmental unit’s indi-
cost if any other cost incurred for the same rect cost rate(s) on the behalf of the Federal
purpose, in like circumstances, has been as- Government. The cognizant agency for indi-
signed to a Federal award as a direct cost. rect costs assignment is described in Appen-
2. Indirect costs include (a) the indirect dix V, section F.
costs originating in each department or 4. Final rate means an indirect cost rate ap-
agency of the governmental unit carrying plicable to a specified past period which is
out Federal awards and (b) the costs of cen- based on the actual allowable costs of the pe-
tral governmental services distributed riod. A final audited rate is not subject to
through the central service cost allocation adjustment.
plan (as described in Appendix V to this part) 5. Fixed rate means an indirect cost rate
and not otherwise treated as direct costs. which has the same characteristics as a pre-
3. Indirect costs are normally charged to determined rate, except that the difference
Federal awards by the use of an indirect cost between the estimated costs and the actual,
rmajette on LAPJN3WLY3PROD with CFR
rate. A separate indirect cost rate(s) is usu- allowable costs of the period covered by the
ally necessary for each department or agen- rate is carried forward as an adjustment to
cy of the governmental unit claiming indi- the rate computation of a subsequent period.
230
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00242 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
OMB Guidance Pt. 200, App. VII
6. Indirect cost pool is the accumulated then distributed to individual Federal
costs that jointly benefit two or more pro- awards and other activities included in that
grams or other cost objectives. function by means of an indirect cost rate(s).
7. Indirect cost rate is a device for deter- c. Specific methods for allocating indirect
mining in a reasonable manner the propor- costs and computing indirect cost rates
tion of indirect costs each program should along with the conditions under which each
bear. It is the ratio (expressed as a percent- method should be used are described in sub-
age) of the indirect costs to a direct cost sections 2, 3 and 4.
base.
8. Indirect cost rate proposal means the doc- 2. Simplified Method
umentation prepared by a governmental unit
or subdivision thereof to substantiate its re- a. Where a non-Federal entity’s major
quest for the establishment of an indirect functions benefit from its indirect costs to
cost rate. approximately the same degree, the alloca-
9. Predetermined rate means an indirect cost tion of indirect costs may be accomplished
rate, applicable to a specified current or fu- by (1) classifying the non-Federal entity’s
ture period, usually the governmental unit’s total costs for the base period as either di-
fiscal year. This rate is based on an estimate rect or indirect, and (2) dividing the total al-
of the costs to be incurred during the period. lowable indirect costs (net of applicable
Except under very unusual circumstances, a credits) by an equitable distribution base.
predetermined rate is not subject to adjust- The result of this process is an indirect cost
ment. (Because of legal constraints, pre- rate which is used to distribute indirect
determined rates are not permitted for Fed- costs to individual Federal awards. The rate
eral contracts; they may, however, be used should be expressed as the percentage which
for grants or cooperative agreements.) Pre- the total amount of allowable indirect costs
determined rates may not be used by govern- bears to the base selected. This method
mental units that have not submitted and should also be used where a governmental
negotiated the rate with the cognizant agen- unit’s department or agency has only one
cy for indirect costs. In view of the potential major function encompassing a number of in-
advantages offered by this procedure, nego- dividual projects or activities, and may be
tiation of predetermined rates for indirect used where the level of Federal awards to
costs for a period of two to four years should that department or agency is relatively
be the norm in those situations where the small.
cost experience and other pertinent facts b. Both the direct costs and the indirect
available are deemed sufficient to enable the costs must exclude capital expenditures and
parties involved to reach an informed judg- unallowable costs. However, unallowable
ment as to the probable level of indirect costs must be included in the direct costs if
costs during the ensuing accounting periods. they represent activities to which indirect
10. Provisional rate means a temporary indi- costs are properly allocable.
rect cost rate applicable to a specified period c. The distribution base may be (1) total di-
which is used for funding, interim reimburse- rect costs (excluding capital expenditures
ment, and reporting indirect costs on Fed- and other distorting items, such as pass-
eral awards pending the establishment of a through funds, subcontracts in excess of
‘‘final’’ rate for that period. $50,000, and participant support costs), (2) di-
C. ALLOCATION OF INDIRECT COSTS AND rect salaries and wages, or (3) another base
DETERMINATION OF INDIRECT COST RATES which results in an equitable distribution.
1. General 3. Multiple Allocation Base Method
a. Where a governmental unit’s depart- a. Where a non-Federal entity’s indirect
ment or agency has only one major function, costs benefit its major functions in varying
or where all its major functions benefit from degrees, such costs must be accumulated
the indirect costs to approximately the same into separate cost groupings. Each grouping
degree, the allocation of indirect costs and must then be allocated individually to bene-
the computation of an indirect cost rate may fitted functions by means of a base which
be accomplished through simplified alloca- best measures the relative benefits.
tion procedures as described in subsection 2. b. The cost groupings should be established
b. Where a governmental unit’s depart- so as to permit the allocation of each group-
ment or agency has several major functions ing on the basis of benefits provided to the
which benefit from its indirect costs in vary- major functions. Each grouping should con-
ing degrees, the allocation of indirect costs stitute a pool of expenses that are of like
may require the accumulation of such costs character in terms of the functions they ben-
into separate cost groupings which then are efit and in terms of the allocation base
allocated individually to benefitted func- which best measures the relative benefits
rmajette on LAPJN3WLY3PROD with CFR
tions by means of a base which best meas- provided to each function. The number of
ures the relative degree of benefit. The indi- separate groupings should be held within
rect costs allocated to each function are practical limits, taking into consideration
231
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00243 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
Pt. 200, App. VII 2 CFR Ch. II (1–1–26 Edition)
the materiality of the amounts involved and different level of indirect costs, provisions
the degree of precision needed. should be made for a separate indirect cost
c. Actual conditions must be taken into ac- pool applicable to that Federal award. The
count in selecting the base to be used in allo- separate indirect cost pool should be devel-
cating the expenses in each grouping to ben- oped during the course of the regular alloca-
efitted functions. When an allocation can be tion process, and the separate indirect cost
made by assignment of a cost grouping di- rate resulting therefrom should be used, pro-
rectly to the function benefitted, the alloca- vided that: (1) The rate differs significantly
tion must be made in that manner. When the from the rate which would have been devel-
expenses in a grouping are more general in oped under paragraphs (C)(2) and (C)(3) of
nature, the allocation should be made this Appendix, and (2) the Federal award to
through the use of a selected base which pro- which the rate would apply is material in
duces results that are equitable to both the amount.
Federal Government and the governmental b. Where Federal statutes restrict the re-
unit. In general, any cost element or related imbursement of certain indirect costs, it
factor associated with the governmental may be necessary to develop a special rate
unit’s activities is potentially adaptable for for the affected Federal award. Where a ‘‘re-
use as an allocation base provided that: (1) it stricted rate’’ is required, the same proce-
can readily be expressed in terms of dollars dure for developing a non-restricted rate will
or other quantitative measures (total direct be used except for the additional step of the
costs, direct salaries and wages, staff hours elimination from the indirect cost pool those
applied, square feet used, hours of usage, costs for which the law prohibits reimburse-
number of documents processed, population ment.
served, and the like), and (2) it is common to
the benefitted functions during the base pe- D. SUBMISSION AND DOCUMENTATION OF
riod. PROPOSALS
d. Except where a special indirect cost
1. Submission of Indirect Cost Rate Proposals
rate(s) is required in accordance with para-
graph (C)(4) of this Appendix, the separate a. All departments or agencies of the gov-
groupings of indirect costs allocated to each ernmental unit desiring to claim indirect
major function must be aggregated and costs under Federal awards must prepare an
treated as a common pool for that function. indirect cost rate proposal and related docu-
The costs in the common pool must then be mentation to support those costs. The pro-
distributed to individual Federal awards in- posal and related documentation must be re-
cluded in that function by use of a single in- tained for audit in accordance with the
direct cost rate. records retention requirements contained in
e. The distribution base used in computing § 200.334.
the indirect cost rate for each function may b. A governmental department or agency
be (1) total direct costs (excluding capital ex- (such as a state or local Department of
penditures and other distorting items such Health, Department of Transportation, or
as pass-through funds, subawards in excess of Department of Housing) that receives more
$50,000, and participant support costs), (2) di- than $35 million in direct Federal funding
rect salaries and wages, or (3) another base during its fiscal year must submit its indi-
which results in an equitable distribution. rect cost rate proposal to its cognizant agen-
An indirect cost rate should be developed for cy for indirect costs.
each separate indirect cost pool developed. c. If a governmental department or agency
The rate in each case should be stated as the (such as a state or local Department of
percentage relationship between the par- Health, Department of Transportation, or
ticular indirect cost pool and the distribu- Department of Housing) receives $35 million
tion base identified with that pool. or less in direct Federal funding during its
fiscal year, it must develop an indirect cost
4. Special Indirect Cost Rates proposal in accordance with the require-
a. In some instances, a single indirect cost ments of this part and maintain the proposal
rate for all activities of a non-Federal entity and related supporting documentation for
or for each major function of the agency may audit. This established rate must be accepted
not be appropriate. It may not take into ac- by any Federal agency to which the govern-
count those different factors which may sub- mental department or agency applies for
stantially affect the indirect costs applicable funding. Federal agencies must not compel
to a particular program or group of pro- the governmental department or agency to
grams. The factors may include the physical accept the de minimis rate or some other
location of the work, the level of administra- rate established by the Federal agency.
tive support required, the nature of the fa- These governmental departments or agencies
cilities or other resources employed, the or- are not required to submit their proposals
ganizational arrangements used, or any com- unless they are specifically requested to do
rmajette on LAPJN3WLY3PROD with CFR
bination thereof. When a particular Federal so by an awarding Federal agency. The Fed-
award is carried out in an environment eral agency’s review should be limited to en-
which appears to generate a significantly suring the proposal is consistent with the
232
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00244 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
OMB Guidance Pt. 200, App. VII
principles of this part. Where a non-Federal 3. Required certification.
entity only receives funds as a subrecipient, Each indirect cost rate proposal must be
the pass-through entity will be responsible accompanied by a certification in the fol-
for negotiating and/or monitoring the sub- lowing form:
recipient’s indirect costs.
c. Each Indian tribal government desiring CERTIFICATE OF INDIRECT COSTS
reimbursement of indirect costs must submit This is to certify that I have reviewed the
its indirect cost proposal to the Department indirect cost rate proposal submitted here-
of the Interior (its cognizant agency for indi- with and to the best of my knowledge and
rect costs). belief:
d. Indirect cost proposals must be devel- (1) All costs included in this proposal [iden-
oped (and, when required, submitted) within tify date] to establish billing or final indi-
six months after the close of the govern- rect costs rates for [identify period covered
mental unit’s fiscal year, unless an exception by rate] are allowable in accordance with the
is approved by the cognizant agency for indi- requirements of the Federal award(s) to
rect costs. If the proposed central service which they apply and the provisions of this
cost allocation plan for the same period has Part. Unallowable costs have been adjusted
not been approved by that time, the indirect for in allocating costs as indicated in the in-
cost proposal may be prepared including an direct cost proposal
amount for central services that is based on (2) All costs included in this proposal are
the latest federally approved central service properly allocable to Federal awards on the
basis of a beneficial or causal relationship
cost allocation plan. The difference between
between the expenses incurred and the agree-
these central service amounts and the
ments to which they are allocated in accord-
amounts ultimately approved will be com-
ance with applicable requirements. Further,
pensated for by an adjustment in a subse- the same costs that have been treated as in-
quent period. direct costs have not been claimed as direct
costs. Similar types of costs have been ac-
2. Documentation of Proposals
counted for consistently and the Federal
The following must be included with each Government will be notified of any account-
indirect cost proposal: ing changes that would affect the predeter-
a. The rates proposed, including subsidiary mined rate.
work sheets and other relevant data, cross I declare that the foregoing is true and cor-
referenced and reconciled to the financial rect.
data noted in subsection b. Allocated central Governmental Unit: lllllllllllll
service costs will be supported by the sum- Signature: llllllllllllllllll
mary table included in the approved central Name of Official: llllllllllllll
service cost allocation plan. This summary Title: llllllllllllllllllll
table is not required to be submitted with Date of Execution: lllllllllllll
the indirect cost proposal if the central serv-
E. NEGOTIATION AND APPROVAL OF RATES
ice cost allocation plan for the same fiscal
year has been approved by the cognizant 1. Indirect cost rates will be reviewed, ne-
agency for indirect costs and is available to gotiated, and approved by the cognizant
the funding agency. agency on a timely basis. Once a rate has
b. A copy of the financial data (financial been agreed upon, it will be accepted and
statements, comprehensive annual financial used by all Federal agencies unless prohib-
report, executive budgets, accounting re- ited or limited by statute. Where a Federal
ports, etc.) upon which the rate is based. Ad- awarding agency has reason to believe that
justments resulting from the use of special operating factors affecting its Fed-
unaudited data will be recognized, where ap- eral awards necessitate special indirect cost
propriate, by the Federal cognizant agency rates, the funding agency will, prior to the
for indirect costs in a subsequent proposal. time the rates are negotiated, notify the cog-
nizant agency for indirect costs.
c. The approximate amount of direct base
2. The use of predetermined rates, if al-
costs incurred under Federal awards. These
lowed, is encouraged where the cognizant
costs should be broken out between salaries agency for indirect costs has reasonable as-
and wages and other direct costs. surance based on past experience and reli-
d. A chart showing the organizational able projection of the non-Federal entity’s
structure of the agency during the period for costs, that the rate is not likely to exceed a
which the proposal applies, along with a rate based on actual costs. Long-term agree-
functional statement(s) noting the duties ments utilizing predetermined rates extend-
and/or responsibilities of all units that com- ing over two or more years are encouraged,
rmajette on LAPJN3WLY3PROD with CFR
prise the agency. (Once this is submitted, where appropriate.
only revisions need be submitted with subse- 3. The results of each negotiation must be
quent proposals.) formalized in a written agreement between
233
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00245 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
Pt. 200, App. VIII 2 CFR Ch. II (1–1–26 Edition)
the cognizant agency for indirect costs and narrative cost allocation methodology
the governmental unit. This agreement will should be developed, documented, main-
be subject to re-opening if the agreement is tained for audit, or submitted, as appro-
subsequently found to violate a statute, or priate, to the cognizant agency for indirect
the information upon which the plan was ne- costs for review, negotiation, and approval.
gotiated is later found to be materially in-
complete or inaccurate. The agreed upon 4. Appeals
rates must be made available to all Federal If a dispute arises in a negotiation of an in-
agencies for their use. direct cost rate (or other rate) between the
4. Refunds must be made if proposals are cognizant agency for indirect costs and the
later found to have included costs that (a) governmental unit, the dispute must be re-
are unallowable (i) as specified by law or reg- solved in accordance with the appeals proce-
ulation, (ii) as identified in § 200.420, or (iii) dures of the cognizant agency for indirect
by the terms and conditions of Federal costs.
awards, or (b) are unallowable because they
are clearly not allocable to Federal awards. 5. Collection of Unallowable Costs and
These adjustments or refunds will be made Erroneous Payments
regardless of the type of rate negotiated Costs specifically identified as unallowable
(predetermined, final, fixed, or provisional). and charged to Federal awards either di-
rectly or indirectly will be refunded (includ-
F. OTHER POLICIES
ing interest chargeable in accordance with
1. Fringe Benefit Rates applicable Federal cognizant agency for indi-
rect costs regulations).
If overall fringe benefit rates are not ap-
proved for the governmental unit as part of 6. OMB Assistance
the central service cost allocation plan,
To the extent that problems are encoun-
these rates will be reviewed, negotiated and
tered among the Federal agencies or govern-
approved for individual recipient agencies
mental units in connection with the negotia-
during the indirect cost negotiation process.
tion and approval process, OMB will lend as-
In these cases, a proposed fringe benefit rate sistance, as required, to resolve such prob-
computation should accompany the indirect lems in a timely manner.
cost proposal. If fringe benefit rates are not
used at the recipient agency level (i.e., the [78 FR 78608, Dec. 26, 2013, as amended at 79
agency specifically identifies fringe benefit FR 75889, Dec. 19, 2014; 85 FR 49581, Aug. 13,
costs to individual employees), the govern- 2020; 89 FR 30207, Apr. 22, 2024]
mental unit should so advise the cognizant
agency for indirect costs. APPENDIX VIII TO PART 200—NONPROFIT
ORGANIZATIONS EXEMPTED FROM
2. Billed Services Provided by the Recipient SUBPART E OF PART 200
Agency
1. Advance Technology Institute (ATI),
In some cases, governmental departments
Charleston, South Carolina
or agencies (components of the govern-
2. Aerospace Corporation, El Segundo, Cali-
mental unit) provide and bill for services
fornia
similar to those covered by central service
3. American Institutes of Research (AIR),
cost allocation plans (e.g., computer cen-
Washington, DC
ters). Where this occurs, the governmental
4. Argonne National Laboratory, Chicago, Il-
departments or agencies (components of the
linois
governmental unit)should be guided by the 5. Atomic Casualty Commission, Wash-
requirements in Appendix V relating to the ington, DC
development of billing rates and documenta- 6. Battelle Memorial Institute,
tion requirements, and should advise the Headquartered in Columbus, Ohio
cognizant agency for indirect costs of any 7. Brookhaven National Laboratory, Upton,
billed services. Reviews of these types of New York
services (including reviews of costing/billing 8. Charles Stark Draper Laboratory, Incor-
methodology, profits or losses, etc.) will be porated, Cambridge, Massachusetts
made on a case-by-case basis as warranted by 9. CNA Corporation (CNAC), Alexandria, Vir-
the circumstances involved. ginia
10. Environmental Institute of Michigan,
3. Indirect Cost Allocations Not Using Rates
Ann Arbor, Michigan
In certain situations, governmental de- 11. Georgia Institute of Technology/Georgia
partments or agencies (components of the Tech Applied Research Corporation/Geor-
governmental unit), because of the nature of gia Tech Research Institute, Atlanta,
their Federal awards, may be required to de- Georgia
rmajette on LAPJN3WLY3PROD with CFR
velop a cost allocation plan that distributes 12. Hanford Environmental Health Founda-
indirect (and, in some cases, direct) costs to tion, Richland, Washington
the specific funding sources. In these cases, a 13. IIT Research Institute, Chicago, Illinois
234
VerDate Sep<11>2014 09:32 Sep 21, 2026 Jkt 268005 PO 00000 Frm 00246 Fmt 8010 Sfmt 8002 Y:\SGML\268005.XXX 268005
File and source
- File
- CFR-2026-title2-vol01-part200.pdf
- Size
- 701,627 bytes
- SHA-256
- 0a6079a15ee0d9ae4616b7cd8d748dfa5ddd4b8a75589a7f7e59206722b7e77a
- Original
- www.govinfo.gov