2 CFR 200 Changes for 2024

There were a few changes to 2 CFR 200 in 2024 that affect local governments. Here's a list of the most relevant changes:

• Single Audit threshold increases from $750K to $1M.

• Increasing the threshold of equipment from $5K to $10K.

• Federal (awarding) agencies may permit the recipient to retain equipment with no further obligation to the Federal government when it is not prohibited by Federal statue or regulation

• Prohibition on using geographic preference requirement removed.

Several parts of 2 CFR changed in addition to Part 200. Here's list of the parts that have changed. Below, are more details of the changes to these parts.

1. Part 1 and Subpart A

2. Part 25 - Universal Identifier and SAM

3. Part  170 - Reporting Subaward and Executive Compensation

4. Part 175 - Award Term for Trafficking in Persons

5. Part 180 - Debarment and Suspension

6. Part 182 - Governmentwide Requirements for  Drug-Free Workplace (Financial Assistance)

7. Part 183 - Never Contracting with the Enemy

8. Part 184 - Buy America Preferences for Infrastructure Projects

9. Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements

Notes:

1. Changes apply to grants that have not yet been awarded (period of performance started).

2. Awarding agency may need to approve use of new 2 CFR rules on current grants.

3. Local governments should watch for related change to 2 CFR 910 for DOE directive.

4. Local governments are required to confirm that potential subrecipients are not suspended, debarred, or otherwise excluded from receiving Federal funds.

5. De minimis rate raised from 10% to 15%.

6. Subrecipients are required to certify that financial information (e.g., billing, financial reports, etc.) submitted are complete and accurate.

7. Threshold for Single audit raised from $750K to $1M.

Source or information: Federal Register (FR) No. 2023-21078 and 2 CFR 200 (as of 4/5/24). Note: The FR contains discussion and provides intent with proposed changes. Subject matter experts and legal counsel should refer to the FR to help understand the guidance in 2 CFR 200.

Part 1 and Subpart A

• Terms change from "Grant and Agreements" to "Federal Financial Assistance".

Part 25 - Unique Entity Identifier (UEI) and System for Award Management (SAM)

• Clarification that the requirement to obtain a UEI and register in SAM.gov does not apply to second-tier subrecipients or contractors.

Part 170 - Reporting Subaward and Executive Compensation Information:

• Revised to align with changes to Federal statute.

• Revised to clarify applicability

Part 175 - Award Term for Trafficking in Persons

• Revised to align with changes to Federal statute.

Part 180 - OMB Guidelines to Agencies on Government-Wide Debarment and Suspension (Nonprocurement)

• Clarifies available administrative actions in lieu of debarment (for awarding agencies).

Part 182 - Government-Wide Requirements for Drug-Free Workplace (Financial Assistance)

• Revises language to be more plain.

Part 183 - Never Contract With The Enemy

• Revises language to be more plain.

Part 184 - Buy America Preferences for Infrastructure Projects

• Update terms such as "Federal Awarding Agency" in the new Part 184 (2023) for Build America Buy American Act released by Federal Register No. 2023-17724.

Part 200 - Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards

Subpart A - Acronyms and Definitions

• Some acronyms added.

• Some definitions used only once moved to appropriate sections of UG (Uniform Guidance).

• New definitions added for "continuation funding", "for-profit organization", "key personnel", "participant", and "prior approval".

• Definitions revised to raise threshold amounts:

  • Equipment to $10K.

  • Total Direct Costs updated exclusion for subaward costs from $25K to $50K.

• Revises definition of "intangible property" to include more information related to date and licenses.

• Expands definition of "participant support costs" and "questioned costs".

• Other definitions updated:

  • Cost Sharing

  • Federal Agency

  • Federal Award Date

  • Financial Obligations

  • Indian Tribe

  • Period of Performance

  • Prior Approval

  • Real Property

  • Recipient

  • Special Purpose Equipment

  • Subaward

  • Termination

Subpart B - General Provisions

• Clarifies applicability of UG.

• Adds language to 200.111 requiring recipients and subrecipients to promptly disclose any credible evidence of a violation of Federal criminal law potentially affecting the Federal award. Requires disclosure (reporting) of credible evidence to Federal (awarding) Agency's Office of Inspector General (IG), and pass-through entity (prime recipient).  Legal determination required prior to disclosure.

Subpart C - Pre-Federal Award Requirements and Contents of Federal Awards

• 200.202: Federal agencies are encouraged to develop programs in consultation with the communities that will benefit from or be impacted by a program.  Federal agencies should consider all available data and evaluation results from past programs and coordinate with other agencies during program planning and design.

• 200.206: Clarifying agency's risk assessment requirements to appropriately review eligibility qualifications and financial integrity information. Allows agency processes to consider any risk criteria pertinent to a program, such as cybersecurity risk or impacts on local jobs and the community.

• 200.209:  Clarifies that those entities who are exempt from the requirements of 2 CFR part 25 must still complete certifications and representations by submitting the appropriate assurance form.

• 200.216: Expands guidance on prohibition of certain telecommunications and video surveillance services or equipment.

• 200.217: New section to expand on the whistleblower protections and requirement for recipients of Federal financial assistance (previously referenced in 200.300)

Subpart D - Post Federal Award Requirements

• 200.306: Cost sharing clarified "matching" as one category of cost sharing. Additional guidance provided on voluntary uncommitted cost sharing for institutes of higher education.

• 200.307: Revised to allow program income for certain closeout costs.  Clarifies use of the three methods for use of program income.

• 200.308:

  • Combined requirements for changes to budget and program plans construction and non-construction awards.

  • Recipients do not need approval of individual subrecipients under all circumstances.

  • Approval of a change in a proposed subrecipient not required unless the initial inclusion of a subrecipient was a determining factor in the agency's merit review process.

  • Identifies other items requiring prior approval: additional funds, transferring funds, and no-cost extensions.

• 200.309: Incorporates definition of "renewal award". Provides guidance for Federal (awarding) agency to change period of performance when award is not continued past a budget period.

• 200.311: Provides definition of "encumbrance".

• 200.313: Changes threshold value for equipment from $5K to $10K. Provides guidance on the meaning of "conditional title".  Allows Indian Tribes to dispose of equipment in accordance with tribal law. Federal (awarding) agencies may permit the recipient to retain equipment with no further obligation to the Federal government when it is not prohibited by Federal statue or regulation. Language added for recipient responsibility to maintain updated records.

• 200.314: Threshold raised form $5K to $10K. Clarified definition of aggregate value to all supply types and not just like-item supplies. Added definition of "unused supplies".

• 200.315: Requires recipients and subrecipients to make intangible property available on agency-designated websites. Defines encumbrance for intangible property.

• 200.317: Indian Tribes now allowed to use their own procurement policies and procedures.

• 200.318: Procurement

  • New guidance provided that contractors appropriately classify employees consistent with the Fair Labor Standards Act.

  • Language to clarify that recipients are not restricted from using Project Labor Agreements or similar forms of pre-hire collective bargaining agreements; requiring commitments or goals to hire people residing in high-poverty areas, disadvantaged communities as defined by the Justice40 Initiative OMB Memorandum M–21–28, or high-unemployment census tracts within a region no smaller than the county where a federally funded construction project is located.

• 200.319: Prohibition on using geographic preference requirement removed.  Additional language added to clarify that subpart D does not prohibit recipients and subrecipients from incorporating a scoring mechanism that rewards bidders committing to specific numbers and types of U.S. jobs, as well as certain compensation and benefits.

• 200.320: Clarifies that "simplified acquisitions" and "micro-purchases" are informal procurement for small purchases.  Also removes requirement for local and tribal governments to open sealed bids in public.

• 200.321: Adds Veteran Owned Businesses as types of business recipients and subrecipients are encouraged to consider for procurement.

• 200.323: New paragraph. Encourages recipients to purchase, acquire, or use products and services that can be reused, refurbished, or recycled; contain recycled content, are biobased, or are energy and water efficient; and are sustainable.

• 200.324: Recipient or subrecipient may consider potential workforce impacts in their procurement analysis if the procurement transaction will potentially displace public sector employees.

• 200.328: Requirement to align financial reporting with progress reporting requirements.

• 200.329: Clarifies that programmatic reporting may not be required more frequently than quarterly unless specific conditions have been applied to the award.

• 200.331: Federal agencies do not have a direct legal relationship with subrecipients and contractors of pass-through entities. Also, subrecipient or contractor determinations are not limited to the sample characteristics in the CFR.

• 200.332: Passthrough entities (prime recipient) are required to confirm that potential subrecipients are not suspended, debarred, or otherwise excluded from receiving Federal funds.

Subpart E - Cost Principles

• 200.403: Clarifying when allowable administrative closeout costs may be incurred.

• 200.407: Removes requirement for prior written approval to incur costs for:

  • Real Property

  • Equipment

  • Direct Costs

  • Entertainment Costs

  • Participant Support Costs

  • Selling and Marketing Costs

  • Taxes

• 200.414: De minimis rate raised from 10% to 15%. De minimis rate may not be applied to cost reimbursement contracts.  Recipients and subrecipients are not required to use the de minimis rate.

• 200.415: Subrecipients are required to certify to pass-through entities that financial information submitted to them is complete and accurate.

• 200.420 Considerations for selected items of costs: Clarifies that lists provided in this subpart are not limiting.

• 200.422: Definition of advisory council or committee added.

• 200.431: Updates the allocation method of fringe benefits.

• 200.432: Removes certain limitations on costs allowed.

• 200.438 Entertainment costs: Adds prizes to this cost item.

• 200.454: Prior approval no longer required.

• 200.455: Clarifies that cost associated with either persuading or dissuading employees from collective bargaining and related activities are not allowable. Adds that costs related to data, evaluation, and other related organization costs are allowable.

• 200.456: Prior approval requirement removed.

• 200.461: Clarifies guidance on publication and printing costs to include article processing charges or similar open access fees.

• 200.467: Removes prior approval requirement but adds that selling and marketing costs are unallowable unless requirements of 200.421 are met.

• 200.472: Adds closeout costs to allowable termination costs.

Subpart F - Audit Requirements

• 200.501: Threshold for Single audit raised from $750K to $1M.

• 200.502: Schedule of Expenditures of Federal Awards (SEFA) must identify the state, municipal or local entity who received the Federal award.

Appendix I to Part 200 - Full Text of Notice of Funding Opportunity

This appendix will be updated in its entirety but is for the awarding agencies.

Appendix III to Part 200 Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Institutions of Higher Education (IHEs)

• Exclusion threshold of subawards changed from $25K to $50K.

Appendix IV to Part 200 - Indirect (F&A) Costs Identification and Assignment, and Rate Determination for Nonprofit Organizations

• Exclusion threshold of subawards changed from $25K to $50K.

Appendix VII to Part 200 - State and Local Government and Indian Tribe Indirect Cost Proposals

• Exclusion threshold of subawards changed from $25K to $50K.

• Clarifies meaning of "department or agency".

• Federal agencies must accept indirect cost proposals where receipt of Federal grant funds is less than $35M.

Appendix X to Part 200 - Data Collection Form (Form SF-SAC)

• Clarifies where audit submission instructions are located.

Appendix XII to Part 200 - Award Term and Condition for Recipient Integrity and Performance

• Award term to be revised in its entirety.

The information contained in this document serves as a guideline to understand the Code of Federal Regulations (CFR).  This document interprets and summarizes requirements from Federal codes and other sources and provides an unqualified opinion as to the nature and application of these regulations. The reader must understand that the full text and context of the CFR and other regulations and requirements must be referenced and applied to applicable and appropriate situations for compliance. A legal professional should also be consulted to ensure accurate interpretation and application of requirements under the CFR, award terms and conditions, and any other applicable regulations.