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Understanding the New OMB Supercircular: Impacts on Federal Grants and Compliance

The New OMB Supercircular consolidates old guidance into a streamlined framework for federal awards, focusing on performance rather than compliance. This change encourages federal agencies to define clear performance goals, linking financial data to outcomes. By replacing eight prior circulars, the Supercircular seeks to eliminate redundancies, enhance transparency, and ensure efficient use of federal resources, impacting state and local governments heavily. Stakeholders must adapt to the increased responsibilities and objectives to align with these new requirements.

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Understanding the New OMB Supercircular: Impacts on Federal Grants and Compliance

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  1. THE NEW OMB SUPERCIRCULAR: WHAT DOES IT MEAN TO YOU?

  2. OMB SUPERCIRCULAR UPERCIRCULAR “UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES & AUDIT REQUIREMENTS FOR FEDERAL AWARDS” Federal Register Vol. 78, No. 248 December 26, 2013 Codified as: 2 Code of Federal Regulations, Part 200

  3. TRADITIONAL APPROACH TO FEDERAL GRANTS • Assistance to others in accomplishing their own purposes • “Gifts with strings attached” • “Best efforts” are good enough • The SUPERCIRCULAR changes all this!

  4. COMMITTEE ON FINANCIAL ASSISTANCE REFORM (COFAR) Comprised of major federal grant making departments and agencies: • Department of Health & Human Services • Department of Housing & Urban Development • Department of Labor • National Science Foundation • Others

  5. COFAR’S STATED REASONS FOR THE SUPERCIRCULAR • to eliminate duplicative and conflicting guidance found in the various older OMB circulars, • to provide for consistent and transparent treatment of costs, • to encourage efficient use of information technology and shared services, • to set standard business process using data definitions, • to target audit requirements on risk of waste, fraud and abuse • to limit allowable costs to make the best use of federal resources, • to encourage non-federal entities to have family-friendly policies, • to strengthen oversight, • to focus on performance over compliance

  6. COMMENTS SUBMITTED ON THE DRAFT SUPERCIRCULAR • 360 organizations and individuals submitted written comments on the draft SUPERCIRCULAR • No comments were received from the: National League of Cities, the National Governors Association or the ICMA

  7. SUPERCIRCULAR REPLACES EIGHT (8) OMB CIRCULARS

  8. CROSSWALK: OLD OMB CIRCULARSTO SUPERCIRCULAR

  9. SUPERCIRCULAR CHANGES • PROCEDURAL • MINOR • MAJOR (FOCUS ON • PERFORMANCE)

  10. PROCEDURAL CHANGES • Moving furniture - a rule, definition, concept, guidance, etc. has been moved from an Old OMB Circular to the SUPERCIRCULAR • One stop shopping center

  11. MINOR CHANGES • Definitions (99 standard definitions) • Cost Policies • Grant Administration Requirements • Audit Requirements • Other Requirements Note: the cumulative impact of these “minor changes” could be a major change for any particular state or local government

  12. MAJOR CHANGE: FOCUS ON PERFORMANCE • The SUPERCIRCULAR trades financial compliance for performance accountability • The word performance appears 177 times • The word outcomes appears 22 times • The word contract appears 265 times

  13. MOVING TO PERFORMANCE • Government Performance & Results Act of 1993 (GPRA) • OMB Circular A-76 & Federal Acquisition Regulation (FAR) • OMB Memorandum M-13-17: Next Steps in the Evidence & Innovation Agenda

  14. GPRA • Requires federal departments and agencies to report annually on their performance • Focus on outcomes • Federal problem with grants to: states, local governments, universities, others

  15. OMB CIRCULAR A-76 & FAR Federal departments and agencies are to use performance - based contracting to the maximum extent possible

  16. OMB MEMO M-13-17 • Guidance on FY 2015 federal budget • Agencies are encouraged to allocate resources to programs and practices backed by strong evidence of effectiveness (outcomes) • “Because many Federal dollars flow to states, locals, others, grants reforms are an importance component . . .”

  17. SUPERCIRCULAR GRANT REQUIREMENTS • Federal agencies must include the performance to be achieved • Federal agencies must require recipients to relate financial data to performance • Federal agencies may include specific performance goals, indicators, milestones, or expected outcomes

  18. SUPERCIRCULAR GRANT REQUIREMENTS • Federal agencies are required to provide recipients (grantees) with clear performance goals, indicators and milestones

  19. SUPERCIRCULAR GRANT REQUIREMENTS Federal agencies may structure grant funding to include: • progress payments based on accomplishing milestones • unit price payments (unit of output, unit of service, outcome unit) • fixed price payments (one payment at end of grant)

  20. SUPERCIRCULAR IMPACT ON STATE & LOCAL GOVERNMENTS • The days of “gifts with strings attached” and “best efforts” are over • Grants will function more like contracts • Grant recipients will act more like administrative arms of the federal government • Grant recipients will have more responsibilities for sub-recipients

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