- Briefing Room
U.S. Department of Transportation
Federal Highway Administration
1200 New Jersey Avenue, SE
Washington, DC 20590
Attachment A: Questions and Answers
OMB Circular A-133 (superseded by 2 CFR 200 Subpart F) made a distinction between subrecipients and “vendors”, while other circulars describe either “subawards” or “subcontracts”. Under the Uniform Guidance, when a non-Federal entity provides funds from a Federal award to a non-Federal entity, the non-Federal entity receiving these funds may be either a subrecipient or a contractor depending upon the substance of the agreement and the relationship with either the federal awarding agency or the pass-through entity. The term contractor is used for purposes of consistency and clarity to replace references in the previous guidance that referred to vendors, though these two terms have always had the same meaning in the previous guidance.
Section 200.330 Subrecipient and Contractor Determinations, as well as definitions sections 200.22 (Contract) and 200.92 (Subaward) provide guidance on making subrecipient and contractor determinations. This language was largely taken from existing guidance in OMB Circular A-133 on subrecipient and vendor determinations.
As described in the Uniform Guidance, the substance of the award and the activities that are reimbursed determine whether the agreement provides federal assistance or is contractual in nature, and how the substantive agreement should be treated, even though the pass-through entity or non-Federal entity receiving the award may refer to the agreement by a different name. If a pass-through entity makes an award that it calls a “contract”, but which meets the criteria under section 200.330 of a subaward to a subrecipient, the non-Federal entity must comply with the provisions of the Uniform Guidance relevant to subawards. Likewise, any Federal awards that meet the criteria under section 200.330 for the non-Federal entity to be considered a contractor, whether the non-Federal entity providing the funds calls the agreement a “vendor agreement” or a “subcontract,” in those situations the non-Federal entity must comply with the provisions of the Uniform Guidance relevant to a contractor.
Section 200.54 of the published guidance removes Indian tribes from the definition of State. In some cases, state law includes tribal law. The Council on Financial Assistance Reform (COFAR) will review the Uniform Guidance and, when Federal agencies issue implementing regulations, make technical edits as necessary to ensure that references to tribal law are included where intended. Federal awards to US Territories are subject to the requirements under 2 CFR 200.
This should have no impact on the application process for funds reserved for states. These definitions are applicable only to the Uniform Guidance at 2 CFR 200 unless specifically indicated otherwise.
Road construction projects are considered capital expenditures. Capital outlays consists of those expenditures associated with highway improvements that have a useful life of more than a year and are capitalized in accordance with generally accepted accounting principles (GAAP). Improvements include land acquisition and other right-of-way costs; preliminary and construction engineering; new construction, reconstruction, resurfacing, rehabilitation, and restoration; and installation of guardrails, fencing, signs, and signals. According to the definition of MTDC, only the first $25,000 of a subaward should be used to apply an indirect cost rate when MTDC is being used. MTDC means all direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $25,000 of each subaward (regardless of the period of performance of the subawards and subcontracts under the award). MTDC excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000. Other items may only be excluded when necessary to avoid a serious inequity in the distribution of indirect costs, and with the approval of FHWA. Recipients and subrecipients should refer to the Generally Accepted Accounting Principles (GAAP) and the definition of capital expenditure when applying a MTDC base.
Does an audit conducted in accordance with Subpart F of the Uniform Guidance that implements the Single Audit Act (SAA) requirements satisfy the contract audit requirements of FAR based contracts awarded by a Federal agency (200.101)?
No; the audit required by Subpart F of the Uniform Guidance does not satisfy the audit requirements of the FAR based contracts, including, but not limited to, the Cost Accounting Standards (CAS), Truth in Negotiations Act (TINA), contractor business systems, incurred costs, and indirect costs/overhead rates (see section 200.503(c)). Despite the name, the SAA (31 U.S.C. 7503(b) – Relation to other audit requirements) gives a Federal agency, Inspector General, or the Government Accountability Office (GAO) the authority to conduct additional audits beyond the Single Audit when the agency needs additional audits to carry out its responsibilities under Federal law or regulation. See section 200.503(b) of the Uniform Guidance.
December 26, 2014. Grants in existence at the time of the effective date of the new rule will continue to be administered in accordance with 49 CFR Parts 18 and 19, as well as all other circulars/guidance in place at the time of publication, such as cost principles. The Uniform Guidance applies to all Federal-aid projects with a project agreement executed on or after the December 26, 2014 implementation date. Project modifications made on or after December 26, 2014 may be subject to the Uniform Guidance requirements if the Federal agency’s modification also amends the terms and conditions of the Federal award. Projects authorized prior to the effective date that include the provisions of Advance Construction (AC), are subject to the Uniform Guidance provisions if the conversion of AC and obligation of Federal funds occurs subsequent to the effective date. Existing Federal awards that do not receive incremental funding with new terms and conditions will continue to be governed by the terms and conditions of the Federal award in effect prior to December 26, 2014.
Existing negotiated indirect cost rates will remain in place until they are re-negotiated. The “effective date” of changes to indirect cost rates must be based upon the date that a newly re-negotiated rate goes into effect for a specific non-Federal entity’s fiscal year. Therefore, for indirect cost rates and cost allocation plans, FHWA will use the Uniform Guidance both in generating proposals for and negotiating a new rate (when the rate is due to be re-negotiated) for non-Federal entity fiscal years starting on or after December 26, 2014. For example, the Uniform Guidance eliminates the concept of “use allowance” for depreciation. Nevertheless, non-Federal entities with negotiated rates that are based on “use allowance”, will continue to use their existing rate until the rate is due to be re-negotiated.
Non-Federal entities may begin to submit actual cost proposals based on the Uniform Guidance when they are due for fiscal years that begin on or after December 26, 2014. For example, if a non-Federal entity is required to submit a rate proposal based on FY 2014 actual costs to set rates for FY 2016, it can use the provisions in the Uniform Guidance.
The effective date in section 200.110 applies to both formula and entitlement awards.
The effective date of the Uniform Guidance for subawards is the same as the effective date of the Federal award from which the subaward is made. The requirements for a subaward, no matter when made, flow from the requirements of the original Federal award from the Federal awarding agency.
The effective date is covered in section 200.110. Federal agencies must implement the requirements to be effective by December 26, 2014. Subpart F, Audit requirements, will apply to audits of non-Federal entity fiscal years beginning on or after December 26, 2014. The revised audit requirements are not applicable to fiscal years beginning before that date. Administrative requirements and cost principles will apply to new awards and to funding increments, in cases where the Federal agency considers funding increments to be an opportunity to modify the terms and conditions of the Federal award on or after December 26, 2014. Existing Federal awards that do not receive incremental funding with new terms and conditions on or after the December 26, 2014 effective date, will continue to be governed by the terms and conditions of the Federal award. The terms and conditions of a Federal award executed prior to the effective date should not be modified to reflect the Uniform Guidance if the project has been completed or substantially completed and Federal funds are being obligated or deobligated to reflect the actual cost of the project .
In accordance with 2 CFR 200.210, CFDA numbers must be identified in Federal awards. When multiple program funding codes and associated CFDA numbers are authorized on a single project agreement, each CFDA number must be identified in the agreement. FMIS 4 and the initial release of FMIS 5 will not include designated fields for CFDA numbers. Until this functionality is available in FMIS 5, all CFDA numbers applicable to the award (project agreement) must be identified in the State Remarks field.
No. A Fixed Price or Fixed Amount Award cannot be used in programs which require a mandatory cost sharing or match (2 CFR 200.201 (b)(2)). In accordance with 23 U.S.C. 121, FHWA reimburses a State as work progresses for costs incurred on a project.
In accordance with 2 CFR 200.210, a Federal award must include the period of performance start and end date. The period of performance is the time period in which incurred costs are eligible for reimbursement. The project agreement start date is the original authorization date for the project. The project agreement end date is determined by the recipient (e.g. State Department of Transportation) and is estimated based on the anticipated completion of the project. As such, the project agreement end date may include additional time to ensure all Federal-aid requirements have been met and the project is ready to be closed to include project closeout requirements and necessary audits.. The project agreement end date may be modified as necessary based on documented revisions to project schedules or other circumstances. FMIS 4 does not include a designated data field to record the project agreement end date. Until such time when a designated field is programmed in FMIS 5, States must enter information regarding the project agreement end date in the State Remarks field. Additional FMIS fields (e.g. State Defined field) may also be used to document the project agreement end date until FMIS 5 includes a designated mandatory field. The syntax of the entry in the State Remarks field should also to be consistent across the Agency when entering the information The suggested syntax is “Project Agreement End Date MM/DD/YYYY” This syntax will allow the contents of the field to be searched or queried. The period of performance must be based on the State’s estimated project schedule, including required processes to ensure all Federal requirements have been satisfied. Divisions must ensure the estimated period of performance is in line with the States established policies, procedures, and project schedules.
Yes An extension to the project agreement end date may be granted if the change reflects a delay in the project which is beyond the control of the recipient/subrecipient or is based on changes to the project agreement which would have an impact on the project agreement end date (e.g. change in project scope) Any modification to the project agreement end date must be documented and authorized by FHWA as an internal control matter If the project agreement end date is modified after the authorized project agreement end date has past, any costs incurred between the expiration of the project agreement end date and the modification date are ineligible for reimbursement Examples of situations which are “beyond the control of the recipient/subrecipient” includes, but are not limited to:litigation, major changes in design, environmental or permit issues, construction claims, differing site conditions, significant additional work, area-wide material shortages, labor strikes, unusually severe weather or other events which are outside the control of the recipient or subrecipient.
No. Project agreement end dates must reflect the estimated completion for the phase of work or activity being authorized. For example, if PE is being authorized, the project agreement end date is based on the scope of work for PE only. Upon modification of the project authorization to add a future phase of work such as ROW or construction the project agreement end date must also be modified
Yes In accordance with 23 CFR 630.705(a) “An advance construction project shall meet the same requirements and be processed in the same manner as a regular Federal-aid project ” As such, each project must have a period of performance The period of performance reflects the time period in which costs are incurred to complete the project and are eligible for reimbursement. Due to the flexibility of AC provisions, the obligation of Federal funds on an AC project can occur at any time during or after the period of performance. The project agreement end date should only be modified as a result of changes to the time needed to complete the project (see Question 15) and is unrelated to the obligation and liquidation of Federal funds If the conversion of AC to a Federal obligation occurs after the project agreement end date, the SHA should submit a request for reimbursement within 90 days after the conversion to liquidate the obligation. Once all Federal funds have been obligated and the project agreement end date has passed, the project must be closed in accordance with 2 CFR 200.343.
Yes. Projects, where an AC Conversion occurs after the project agreement end date, may not be able to be closed out and meet the 90 day closeout period required by 2 CFR 200.343. As such, when there is not an obligation of Federal funds or an AC project has not been fully converted, an extension of the closeout period should be granted. Once Federal funds are obligated to the AC project which has past the project agreement end date, the obligations should be liquidated promptly and no more than 90 days after the conversion. The obligation may be a full conversion or partial conversion of the AC. A “token” or insignificant amount of AC should not be left on the project simply to postpone the closeout requirements.
The indirect cost rate of the State DOT (or recipient), must be entered in the FMIS State Remarks field of each FMIS project agreement until such time that FMIS includes this field. The indirect cost rate of sub-recipients should not be entered in FMIS but it must be included in the subgrant between the State DOT (pass-through entity) and the subrecipient Understanding that these indirect cost rates change periodically, it is not necessary to modify each Federal award to update the indirect cost rate once it has be reviewed and approved. However if a project agreement is modified to reflect other changes to the agreement, the indirect cost rate should be updated to reflect the current rate.
Recipients of Federal awards must relate financial data to the performance accomplishments of an award. Recipients must also provide cost information to demonstrate cost effective practices. The Federal-aid highway program performance management measures under Chapter 1 of Title 23 will be set forth in the regulations that implement 23 U.S.C. 150. Under the Uniform Guidance (2 CFR 200.101(a)(3)), where Federal statutes or regulations differ from the Uniform Guidance requirements, the provisions of Federal statutes or regulations govern administration of those requirements. Accordingly, for FHWA awards made under chapter 1 of Title 23, the requirements of 2 CFR 200.301 do not apply. Other programs not carried out under chapter 1 of Title 23 may need to address financial and performance data consistent with the requirements in 2 CFR 200.301. In these instances, FHWA must provide enhanced and proactive oversight to ensure goals and milestones are met during the implementation of the program.
No. The word “must” is used throughout part 200 to indicate statutory or regulatory requirements. The word “should” is used to indicate recommended government-wide practices or approaches that are not mandatory requirements. Any deviation from a best practice should be documented.
Yes. The Office of Program Administration is developing guidance concerning the use, management and disposition of equipment and supplies that may be acquired through a Federal-aid highway construction project.
Section 200.313(a) of the guidance specifies that title for equipment acquired under a Federal award will vest upon acquisition in the non-Federal entity as a “conditional title”. This is new terminology for those non-Federal entities that have followed Circular A-110. What is meant by “conditional title” and how will this affect non-Federal entities?
Federal-aid regulations in 23 CFR 635.106 address the use of publicly owned equipment on projects; the requirements in that regulation govern the use of publicly owned equipment on construction work let by contract. For non construction related equipment, the Uniform Guidance does not change how non-Federal entities should account for equipment ownership. The concept of “conditional title” has not changed. It simply means that equipment ownership vests in the non-Federal entity at the time of acquisition and title to the equipment is contingent on meeting the requirements for use, management, and disposition of the equipment as required in section 200.313.
No. The Uniform Guidance does not change requirements for property records. The requirements for property records ensure that the non-Federal entity maintains an equipment inventory system with an effective process of controls to account for and track equipment that has been acquired with Federal funds. Non-Federal entities do not need to change their equipment inventory systems or the data elements contained in those systems, if they comply with the current requirements in Circular A-110.
Will the FHWA/USDOT provide a waiver of the requirements in 2 CFR 200.317 for subrecipients to comply with State procurement requirements or other policies and procedures approved by the State (200.317)?
Yes. The USDOT requested and received an OMB waiver of the requirements in 2 CFR 200.317 concerning procurement by subrecipients. 2 CFR.1201.317 Procurements by States. Notwithstanding 2 CFR 200.317, subrecipients of States shall follow such policies and procedures allowed by the State when procuring property and services under a Federal award. This waiver provides an exception to the requirement for all subrecipients of a state to follow the procurement requirements in Sections 200.318 through 200.326. The waiver will allow States and subrecipients to continue to use state-approved procurement procedures as they did under 49 CFR Part 18 prior to the adoption of the Uniform Guidance.
No. Non-Federal entities that are able to allocate and charge 100% of their costs directly may continue to do so. Claiming reimbursement for indirect costs is never mandatory; a non-Federal entity may conclude that the amount it would recover would be immaterial and the benefits associated with claiming the costs is outweighed by the effort associated with claiming the indirect costs. A non-Federal entity that has never received a negotiated indirect cost rate and receives $35 million or less in direct federal funding may elect to use a 10% de minimis rate in accordance with 2 CFR 200.414.
No. If the subrecipient already has a negotiated indirect cost rate with the Federal government, it must use the negotiated rate. Pass-through entities may not compel, encourage, or entice a proposed subrecipient who lacks a negotiated rate to accept less than the de minimis rate. The cost principles are designed to provide that the Federal awards pay their fair share of the costs recognized under these principals. (See section 200.100(c).) Pass-through entities may, but are not required, to negotiate a rate with a proposed subrecipient who asks to do so.
For MPOs that are part of a COG/County, or use a fiscal agent to service their administration, do these MPOs need to develop their own indirect cost rates and single audits separate from their cooperative agency or fiscal agent?
No. The MPO (subrecipient) may claim an indirect cost rate using the following procedures (200.331(a)(4)):
(1) Use the indirect cost rate of cooperative agency or fiscal agent, if there’s a negotiated rate with the State (pass-through entity).
(2) Develop their own ICAP, and negotiate their own rate with the State (pass-through entity), unless the entity receives more than $35 million as a direct recipient of federal assistance, in which case the cognizant agency is the Federal awarding agency that provides that direct assistanc; or
(3) The de minimis indirect cost rate of 10%,
All MPOs that expends $750,000 or more in a fiscal year must have a single or program-specific audit (200.331(a)(5) and 200.501(f)). The MPO may have its own single audit performed; or, depending on the terms of the Cooperative/Administrative Agreement, the MPO’s may be part of their cooperative agency’s or their fiscal agent’s single audit
FHWA may grant extensions on a case by case basis. According to the Uniform Guidance, recipients are required to submit all performance and financial reports specified in the project within 90 days after the project agreement end date. The project should then be closed by FHWA no later than 1 year after receipt and acceptance of all required final reports”.
No. A non-Federal entity may use the 10 percent de minimis indirect cost rate if it meets the requirements of 200.414 (f). These requirements include limiting availability to organizations that have never received a negotiated indirect cost rate, except for those described in Appendix VII of Part 200, paragraph (D)(1)(b) ”governmental department or agency unit that receives more than $35 million in direct Federal funding must submit its indirect cost rate proposal ”. State and local government departments that have never negotiated indirect cost rates with the Federal government and receive less than $35 million in direct Federal funding per year may use the 10% de minimis indirect cost rate, and must keep the documentation of this decision on file. Federally recognized Indian tribes that have never negotiated an indirect cost rate with the Federal government may also use the 10% de minimis rate and must also keep the documentation of this decision on file.
Yes. 23 USC 101 does not include the territories in the definition of State, however, 2 CFR 200.90 defines “State” to include the Territories. The requirement to develop an ICAP in to claim indirect costs has not changed based on the Uniform Guidance or 23 USC 101. If a recipient/subrecipient receives more than $35 million in direct Federal funding the recipient is required to prepare an ICAP and submit it for approval. If any of the territories receive $35 million or less annually in direct Federal funding, provisions of a de minimis rate can apply. It is unlikely that any of the territories would be able to consider a de minimis rate based on the amounts of their FY 2104 Federal awards.
Section 200.414(g) of the Uniform Guidance states: ”Any non-Federal entity that has a federally negotiated indirect cost rate may apply for a one-time extension of a current negotiated indirect cost rates for a period of up to four years.” A current negotiated indirect cost rate is the negotiated rate in effect (i.e., not expired) when the non-Federal entity requests a rate extension. The negotiated rates must be accepted by all Federal awarding agencies.
FHWA will consider rate extension requests only once in a rate negotiation cycle. For example, a State DOT with a current negotiated rate for July 1, 2015 to June 30, 2016 requests an extension of that rate for 3 years, until June 30, 2019. If approved by FHWA, the State DOT is required to submit a proposal and request a negotiation of an indirect cost rate for the period beginning July 1, 2019. Assuming these are predetermined rates effective until June 30, 2023, the State DOT could then request an extension of the negotiated rate at the end of this approved period, before submission of a proposal for negotiated rates in the next period. If FHWA grants an extension the State DOT may not request a rate review until the extension period ends. Current negotiated rates include “predetermined” and “final” rates.
States should submit such requests 60 days before the due date for the next indirect cost proposal. FHWA will consider extension requests submitted later than that on a case by case basis.
According to the Frequently Asked Questions developed by the Council of Financial Assistance Reform (COFAR), ““current negotiated rates” include only “predetermined” and “final” rates (not “provisional” or “fixed” rates)”. As such, FHWA cannot extend fixed-rate with carry-forward agreements. If a non-Federal entity with a fixed-rate with carry-forward agreement would like to take advantage of the flexibilities in this provision of the Uniform Guidance, it would need to first negotiate a final or predetermined rate, which could then be extended, subject to the approval of the FHWA. The carry-forward for the last fixed year would have to be resolved in accordance with FHWA requirements.
The Uniform Guidance in section 200.414 states that any non-Federal entity with a federally negotiated indirect cost rate may apply for a one-time extension for a period of up to 4 years. FHWA must review and consider approval of the State DOT’s extension request.
A request for an extension may be for periods of less than 4 years. FHWA must review and consider approval of the extension period.
A non-Federal entity can either depreciate the cost of buildings and equipment donated by a third party or claim the fair market value of the donation as part of the non-Federal match requirement. The computation of depreciation must be based on the acquisition cost of the assets involved. For an asset donated to the non-Federal entity by a third party, its fair market value at the time of the donation must be considered as the acquisition cost. Such assets may be depreciated or claimed as matching but not both. For this purpose, the acquisition cost will exclude:
A non-Federal entity that expends $750,000 or more during the non-Federal entity’s fiscal year in Federal awards must have a single or program-specific audit conducted for that year in accordance with the provisions Subpart F of the Uniform Guidance. A State DOT would not qualify for a “program specific” audit under Subpart F because those non-Federal entities administer multiple Federal programs.
This 2015 Compliance Supplement was issued in July 2015 ant it includes changes to complement the Uniform Guidance, such as streamlining the audit objectives and procedures for the 14 types of compliance requirements. OMB conducted outreach efforts to non-Federal stakeholders when developing the 2015 Supplement.
Yes. The Office of Program Administration will develop guidance concerning the applicability of Appendix II requirements in conjunction with Form FHWA-1273 for Federal-aid construction projects.