Health and Human Services Adoption of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards

<RULE> DEPARTMENT OF HEALTH AND HUMAN SERVICES <CFR>2 CFR Part 300</CFR> <CFR>42 CFR Parts 38, 50, 51, 51a, 51b, 51c, 51d, 52, 52a, 52b, 52c, 52d, 52e, 55a, 56, 57, 59, 59a, 62, 63a, 64, 65, 65a, 66, 67, 124, 136, 430, 433, 434, 436, 438, 440, 441, 456, 457, 1001, and 1007</CFR> <CFR>45 CFR Parts 16, 63, 75, 87, 95, 98, 261, 262, 263, 265, 286, 287, 301, 302, 303, 304, 309, 400, 1000, 1303, 1321, 1336, 1355, and 1357</CFR> <SUBJECT>Health and Human Services Adoption of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Office of the Secretary, Office of the Assistant Secretary for Financial Resources, Office of Grants, HHS. <HD SOURCE="HED">ACTION:</HD> Interim final rule with comment period. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Department of Health and Human Services (HHS) adopts with this rule OMB's Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, to include 12 existing HHS-specific modifications. This rule also repeals HHS' existing regulations governing the administration of HHS financial assistance awards. The existing HHS-specific modifications are described in the rule's preamble. Additionally, the rule will correct citations throughout all relevant HHS regulations. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> The rule is effective October 1, 2025, except for amendatory instruction 2, which is effective October 1, 2024. <E T="03">Comment date:</E> Comments must be received by HHS electronically through <E T="03">www.regulations.gov</E> no later than midnight Eastern Daylight Time (E.D.T) on November 1, 2024. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Responses can be submitted via the Federal eRulemaking Portal ( <E T="03">https://www.regulations.gov/</E> ). <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Johanna Nestor, Director for Grants Policy, Oversight, and Evaluation, Office of Grants at (202) 260-6118, or via email at <E T="03">grantpolicyreq@hhs.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">Background</HD> <HD SOURCE="HD2">OMB Adoptions</HD> After decades of utilizing various circulars to provide guidance to agencies on federal grants, OMB engaged in a lengthy public process to create unified, consolidated, uniform guidance that was easy to locate and applied to all recipients regardless of recipient type. To do so, OMB provided opportunities for the general public to comment on an Advanced Notice of Proposed Guidance, 77 FR 11778 (Feb. 28, 2012) and a Notice of Proposed Guidance, 78 FR 7282 (Feb. 1, 2013), before publishing the Final Guidance, 78 FR 78590 (Dec. 26, 2013). In 2020, OMB sought public comment on a Notice of Proposed Guidance, 85 FR 3766 (Jan. 22, 2020), and issued revised Final Guidance, 85 FR 49506 (Aug. 13, 2020). The 2020 revisions addressed program development and design, measuring recipient performance to assist Federal awarding agencies and recipients to improve program goals and objectives, share lessons learned, and adopt promising performance practices. In 2023, based on ongoing engagement with Federal agencies and the broader Federal financial assistance community, OMB again sought to update the Uniform Guidance. OMB allowed multiple rounds of public input, through a Notice of Request for Information, 88 FR 8480 (Feb. 9, 2023), and Notification of Proposed Guidance, 88 FR 69390 (Oct. 5, 2023). After review and consideration of received comments and to effectuate the goals of increasing accessibility and equity with respect to Federal funding opportunities, OMB updated the Uniform Guidance with an effective date of October 1, 2024. 89 FR 30046 (Apr. 22, 2024). The 2024 OMB revisions further streamline, clarify, and update the guidance, including raising certain thresholds, where permissible under law, in recognition of inflation over time. The 2024 OMB revisions to 2 CFR part 200 have three primary objectives: (1) to reduce agency and recipient burden; (2) to clarify sections that recipients or agencies may have interpreted in different ways; and (3) to rewrite applicable sections in plain language, improving flow and addressing inconsistent use of terms. In addition to the revisions in part 200, OMB revised other parts in subtitle A of 2 CFR for similar reasons, including parts 1, 25, 170, 175, 180, 182, and 183. <HD SOURCE="HD2">HHS Adoption</HD> HHS is the largest grant-making agency in the United States and, historically, has had its own set of implementing regulations, codified prior to OMB's initial streamlining efforts, at 45 CFR parts 74 (regulating awards to institutions of higher education, hospitals, other non-profit organizations, commercial organizations, and certain grants and agreements with states, local governments, and Indian tribal governments), and 92 (regulating awards to state, local, and Indian tribal governments). In 2014, the Federal grant awarding agencies, including HHS, adopted the 2013 Final Guidance through a joint interim final rule (IFR) with comment period. 79 FR 75871 (Dec. 19, 2014). HHS' adoption codified the 2013 Final Guidance with HHS specific modifications at 45 CFR part 75, <E T="03">Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards. Id.</E> In the preamble to that rule, HHS explained all of the changes it made to the 2013 Final Guidance, each one of which was previously codified in either 45 CFR part 74 or 92. The changes consisted of: <E T="03">Format and style changes, for example:</E> <EXTRACT> <FP SOURCE="FP-2">1. Replaced “Federal” with “HHS”</FP> <FP SOURCE="FP-2">2. Removed titles of sections to improve readability</FP> <FP SOURCE="FP-2">3. Revised numbering to allow for possible later changes</FP> <FP SOURCE="FP-2">4. Revised internal citations to reflect codification in 45 CFR part 75</FP> <FP SOURCE="FP-2">5. Replaced “non-Federal entity” with “recipient”</FP> </EXTRACT> <E T="03">Substantive changes:</E> <EXTRACT> <FP SOURCE="FP-2">1. Added acronyms and definitions, for example:</FP> <FP SOURCE="FP1-2">a. Commercial organization</FP> <FP SOURCE="FP1-2">b. Departmental Appeals Board</FP> <FP SOURCE="FP1-2">c. Excess property</FP> <FP SOURCE="FP1-2">d. Principal Investigator/Program Director</FP> <FP SOURCE="FP1-2">e. Suspension of award activities</FP> <FP SOURCE="FP-2">2. Included additional detail, for example:</FP> <FP SOURCE="FP1-2"> a. Examples of cost sharing </FP> <FP SOURCE="FP1-2">b. Examples of personal property</FP> <FP SOURCE="FP1-2">c. HHS-specific forms</FP> <FP SOURCE="FP1-2">d. Citations to existing HHS regulations and other statutes including:</FP> <FP SOURCE="FP1-2">Nonprocurement Debarment and Suspension, 2 CFR part 376,</FP> <FP SOURCE="FP1-2">Procedures of the Departmental Grant Appeals Board, 45 CFR part 16,</FP> <FP SOURCE="FP1-2">Claims Collection, 45 CFR part 30,</FP> <FP SOURCE="FP1-2">Equal Treatment for Faith-Based Organizations, 45 CFR part 87,</FP> <FP SOURCE="FP1-2">New Restrictions on Lobbying, 45 CFR part 93, and</FP> <FP SOURCE="FP1-2">Metric Conversion Act</FP> <FP SOURCE="FP1-2">e. Supersession of HHS rules, and details regarding adoption of 45 CFR part 75</FP> <FP SOURCE="FP-2">3. HHS-specific changes, for example:</FP> <FP SOURCE="FP1-2">a. Inclusion of appendix IX, Principles for Determining Costs Applicable to Research and Development under Grants and Contracts with Hospitals</FP> <FP SOURCE="FP1-2">b. Articulation of HHS' conflict of interest policies and disclosures</FP> <FP SOURCE="FP1-2">c. Special provisions for awards to commercial organizations and federal agencies, including application of patent law</FP> <FP SOURCE="FP1-2">d. Specified provisions for payments to States</FP> <FP SOURCE="FP1-2">e. Added additional prior approval requirement for research patient care costs, subaward relations to the Simplified Acquisition Threshold, and disposition of property and equipment</FP> <FP SOURCE="FP1-2">f. Added HHS policy related to property management</FP> <FP SOURCE="FP1-2">g. Reduced the period for close out</FP> <FP SOURCE="FP1-2">h. Added HHS select item of cost related to independent research and development costs</FP> </EXTRACT> With this interim final rule, HHS will forgo the separate codification, fully adopt 2 CFR part 200, reduce the total number of HHS-specific changes, and codify those changes in 2 CFR part 300. Nearly all the changes HHS adopted in 2014 have been formally adopted by OMB in the most recent Uniform Guidance, and thus are no longer necessary. For example, the Uniform Guidance has adopted terminology related to “recipient” and has expressly recognized its applicability to awards to for-profit entities and Federal agencies. It also modified the numbering system by eliminating individual numbers for each definition and removed the internal titles to improve readability. Thus, HHS will not retain those 2014 changes. Many other HHS changes merely cite to other existing regulations or statutes, and thus are not legally required to be included; removing the citations has no effect on the other regulations, nor on their applicability to the regulated community. A few changes are articulation of HHS policy; these are better suited to sub-regulatory guidance. HHS will move these provisions to the HHS Grants Policy Statement (GPS). They include, for example: forms for HHS financial assistance (previously at 45 CFR 75.206) and HHS policy on property (previously at 45 CFR 75.316). HHS will also move the provision for the metric system of measurement (previously at 45 CFR 75.214) to the HHS GPS, as well as references to existing regulations that continue to be applicable to the regulated community. Many revisions adopted in 2014 are no longer required because HHS policy is aligne ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 140k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━