[Federal Register Volume 80, Number 211 (Monday, November 2, 2015)]
[Rules and Regulations]
[Pages 67261-67264]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-27766]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
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Federal Register / Vol. 80, No. 211 / Monday, November 2, 2015 /
Rules and Regulations
[[Page 67261]]
DEPARTMENT OF EDUCATION
2 CFR Part 3474
34 CFR Parts 74, 75, 76, 77, 80, 101, 206, 222, 225, 226, 270, 280,
299, 300, 303, 350, 361, 363, 364, 365, 367, 369, 370, 373, 377,
380, 381, 385, 396, 400, 426, 460, 491, 535, 606, 607, 608, 609,
611, 614, 628, 636, 637, 642, 643, 644, 645, 646, 647, 648, 650,
654, 655, 661, 662, 663, 664, 682, 692, 694, and 1100
RIN 1890-AA19
Uniform Administrative Requirements, Cost Principles, and Audit
Requirements for Federal Awards; Direct Grant Programs
AGENCY: Department of Education.
ACTION: Final regulations.
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SUMMARY: The Secretary adopts as final regulations of the Department
the interim final regulations that were published on December 19, 2014.
This action adopts the OMB guidance in title 2 of the CFR as final
regulations of the Department. The Secretary amends the interim final
regulations to correct technical errors contained in the amendments.
DATES: These regulations are effective December 2, 2015.
FOR FURTHER INFORMATION CONTACT: Phillip Juengst, U.S. Department of
Education, 400 Maryland Avenue SW., Room 6056, PCP, Washington, DC
20202-4450. Telephone: (202) 245-8030 or by email:
[email protected].
If you use a telecommunications device for the deaf (TDD) or a text
telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-
800-877-8339.
SUPPLEMENTARY INFORMATION:
Executive Summary
Purpose of This Regulatory Action: On December 19, 2014, all of the
Federal award-making agencies published a joint Interim Final Rule
(IFR) in the Federal Register, implementing the Office of Management
and Budget's (OMB) Uniform Administrative Requirements, Cost
Principles, and Audit Requirements for Federal awards (Uniform
Guidance). The purpose of this action is to adopt the Uniform Guidance
in 2 CFR part 200, except for 2 CFR 200.102(a), CFR 200.207(a). This
adoption gives regulatory effect to the OMB guidance and supplements
that guidance, as needed, for the Department. The authority to amend
chapter XXXIV of title 2 of the Code of Federal Regulations and
subtitle A and chapters I, II, III, IV, V, and VI of title 34 of the
Code of Federal Regulations is 20 U.S.C. 1221e-3, 3474, and 2 CFR part
200, unless otherwise noted.
Summary of the Major Provisions of This Regulatory Action: This
rule allows the Department to incorporate into regulation and thus
bring into effect the Uniform Guidance as required by OMB and reduces
administrative burden and risk of waste, fraud, and abuse for the funds
awarded by the Department through grants and cooperative agreements.
Costs and Benefits: The Secretary believes that these regulations
do not impose significant costs on entities that would receive
assistance through Department of Education programs. The benefits of
the regulations far outweigh any potential costs incurred by entities.
The benefits of the amendments in these regulations include eliminating
duplicative and conflicting guidance contained in eight previously
separate sets of OMB guidance documents; streamlining reporting
requirements; reducing burden for entities that have never received an
indirect cost rate; and setting standard business processes using data
definitions to reduce administrative burden on non-Federal entities
that conduct business with multiple federal agencies.
On December 19, 2014, the Secretary published an IFR for these
amendments in the Federal Register (79 FR 75871).
Except for minor editorial and technical revisions, there are no
differences between the IFR and these final regulations.
Technical Changes
The Secretary makes two amendments to the interim final regulations
to correct errors made in the adoption of the Uniform Guidance. First,
in amending Sec. 75.135 to reference the Uniform Guidance, the
Department failed to amend paragraph (b) of that section to reference
the correct requirement in part 200. Second, in amending 34 CFR part
75, the Department inadvertently removed Sec. 75.263 when we should
have just revised the cross references in that section to refer to the
appropriate citation in the Uniform Guidance. These two errors are
corrected in these final regulations.
Public Comment: In response to our invitation in the IFR, one party
submitted comments directed at the Department's proposed adoption of
the interim final regulations in 2 CFR part 200. Generally, we do not
address technical and other minor changes raised by the comments.
Analysis of Comments and Changes: An analysis of the comments
follows.
Comment: The commenter requested clarification on whether or not
the Department would grant local educational agencies (LEAs) a one-year
grace period for implementing the procurement standards in 2 CFR
200.317 through 200.326. The commenter also sought clarity on the
specific date that the procurement standards would go into effect for
LEAs after the grace period.
Discussion: The Uniform Guidance regulations, as adopted by the
Department, 79 FR 75872 (December 19, 2014) authorize all non-Federal
entities (including LEAs) to delay implementation of the procurement
requirements in 2 CFR 200.318 through 200.326 for one fiscal year after
the regulations would otherwise apply to a grant. A recent technical
amendment to the Uniform Guidance expanded that grace period to two
years. See 80 FR 54407 (September 10, 2015). As such, each LEA will
have the option of delaying implementation of the procurement standards
until the end of its second fiscal year that begins after the effective
date of the Uniform Guidance (December 26, 2014). For LEAs with a
fiscal year that ends on June 30, 2015 that decide to defer
implementation for the full two years, the LEA's new procurement
standards would not have to be effective until July 1, 2017.
Changes: None.
Comment: The commenter requested clarification of the phrase
``tangible
[[Page 67262]]
personal benefit'' in 2 CFR 200.318(c)(1).
Discussion: The phrase ``tangible personal benefit'' is new
language added to the general conflict of interest section of the
general procurement standards that existed previously under the
Education Department General Administrative Regulations (EDGAR) 34 CFR
80.36(b)(3) and OMB Circular A-102. The language was expanded from just
``financial or other interest in'' to also include ``or a tangible
personal benefit from'' a firm considered for a contract from a
grantee. This new language stresses the importance of ensuring that
employees who select, award, and administer contracts supported by a
Federal award are free from any real or apparent conflict of interest,
including financial interests and other non-financial benefits that
result in a personal benefit for the employee (such as improved
employment opportunities, business referrals, political influence,
etc.).
Changes: None.
Comment: The commenter expressed concern regarding the conflict of
interest rules in 2 CFR 200.319(a), specifically with regard to vendors
with specialized expertise that may collaborate with grant applicants,
because these vendors would be excluded from competing for a contract
(if the applicant is awarded a grant) due to their organizational
conflict of interest. The commenter requested that the Department issue
guidance allowing vendors to provide minimal input to applicants, such
as LEAs, for the purpose of informing a Request for Proposal (RFP) and
to not prohibit these vendors from competing for the RFP because of a
conflict of interest.
Discussion: The Department understands that an LEA may need to
inform itself about the capacity and capability of potential
contractors in order to prepare an RFP. In the course of doing so, an
LEA may contact a number of vendors to collect information necessary
for developing the RFP, as long as the LEA poses its request for
information broadly so that any potential vendor has an opportunity to
provide input. Soliciting input from one or two vendors would create,
in most cases, an unfair competitive advantage constituting an
organizational conflict of interest.
Changes: None.
Comment: The commenter raised concerns with regard to the
prohibition of using ``brand name'' instead of ``an equal'' product in
order to avoid restrictive competition under 2 CFR 200.319(a)(6).
Specifically, the commenter noted that in some cases, a school may have
already invested in a particular technology infrastructure or selected
a particular instructional framework and it would be impractical or
impossible to switch to another product or instructional approach. The
commenter requested that the Department issue guidance to clarify when
specifying a ``brand name'' might be appropriate and not considered a
restriction on competition under 2 CFR 200.319(a)(6).
Discussion: The new procurement requirements in the Uniform
Guidance do not require an LEA to abandon a technology or instructional
approach just because a similar technology or instructional approach
would cost less. The Department also understands that in some limited
situations, specifying a ``brand name'' may not restrict competition
under 2 CFR 200.319(a)(6). If an LEA has already invested in a
particular infrastructure or instructional framework, specifying a
``brand name'' compatible with the infrastructure or framework may be
appropriate. However, the procurement regulations are designed to
ensure competition so the selected proposal is most advantageous to the
program, with price and other factors considered. Thus, the LEA needs
to compete to find the lowest cost supplier of the technology or
instructional approach (other factors) desired by the LEA. The
Department will consider developing additional guidance on this issue.
Changes: None.
Comment: The commenter noted two instances in which it believes
that procurement by noncompetitive proposals (sole sourcing) should be
allowed under 2 CFR 200.320(f)(1) where ``the item is available only
from a single source.'' The first situation involves instances where an
LEA has an existing technology infrastructure or instructional
framework and requires specific hardware or software; the second
situation involves instances where schools engage in pilot trials for
educational technologies or instructional strategies or materials and
want to ``scale up'' the piloted product.
Discussion: Generally, procurement by noncompetitive proposals is
procurement through solicitation of a proposal from only one source.
The use of this procurement method is permitted under very limited
circumstances, but one basis for an authorized sole source contract is
when the item is available only from a single source (2 CFR
200.320(f)(1)). If particular software or hardware is required because
of an LEA's existing technology infrastructure or instructional
framework and the hardware or software is truly only available from one
source, noncompetitive procurement may be appropriate. The LEA must
maintain records documenting the rationale for why sole sourcing was
used (2 CFR 200.318(i)). If the desired software or hardware is
available from more than one vendor, the LEA must use a competitive
process, as described in 2 CFR 200.320(d).
LEAs that engage in pilot trials of educational technologies or
instructional materials that then wish to ``scale up'' are not exempted
from competitive procurement. Procurement transactions must be
conducted in a manner providing full and open competition, as described
in 2 CFR 200.319. If an LEA wants to experiment with a new educational
technology or instructional strategy or material, it may do so without
violating conflict of interest requirements by holding an open
procurement competition, identifying the specifications for the
technology, strategy, or material and stating the initial contract
would be for a pilot of that product with an option to ``scale up'' the
product if the pilot proves successful.
Changes: None.
Comment: The commenter raised concerns regarding the cost and
efficiency of competitive bidding required under 2 CFR 200.320, noting
that it would be more cost effective for the LEA to perform a cost
analysis rather than use a Request for Proposal (RFP) process. The
commenter encouraged the Department to allow for instances when the
small purchase procedures could be used for procurements that exceed
the Simplified Acquisition Threshold, including when the item is a
commercially available product.
Discussion: The Department has allowed for limited instances when
small purchase procedures may be used for procurements that exceed the
simplified acquisition threshold. These limited instances are specified
in a section in EDGAR that was established in 2013, 34 CFR 75.135,
which authorizes discretionary grant applicants to use the informal
small purchase procedures to procure evaluation service providers and
providers of any other service that is essential to the grant, provided
that the service provider is identified in the grant application. The
service provider must be needed to meet a statutory, regulatory, or
priority requirement related to the competition. See the final
rulemaking document, published at 78 FR 49352, August 13, 2013, for a
fuller discussion of the requirements in Sec. 75.135. These limited
exceptions do
[[Page 67263]]
not include allowing the use of small purchase procedures just because
an item is a commercial (off the self) product and not one that is
custom-built based on unique specifications.
Changes: None.
Comment: The commenter sought clarification from the Department on
whether or not price comparison under 2 CFR 200.323 could be considered
a form of price competition, such that a non-federal entity would not
be required to negotiated price as a separate element.
Discussion: Price comparison is not a form of price competition
that would exempt a non-federal entity from negotiating profit as a
separate element of the price.
Changes: None.
Comment: The commenter sought clarification on the definition of
``procurement'' for determining whether or not the transaction meets
the small purchase or simplified acquisition threshold.
Discussion: The word ``procurement'' is used consistently
throughout the Uniform Guidance and the Department does not intend to
use that term differently in its implementation of the Uniform
Guidance. The simplified acquisition threshold is the ``dollar amount
below which a non-Federal entity may purchase property or services
using small purchase methods'' (2 CFR 200.88). If a non-Federal entity
seeks to acquire property or services that have an anticipated dollar
value exceeding the simplified acquisition threshold, the non-Federal
entity must use a competitive process and cannot use small purchase
procedures unless the procurement meets the requirements of 34 CFR
75.135. Procurement actions must not be split into separate
procurements to avoid competition thresholds.
Changes: None.
After consideration of all the comments regarding the IFR, the
Secretary makes no changes to the regulations adopting the Uniform
Guidance that were published on December 19, 2014 except for the two
technical amendments discussed earlier in this preamble.
Executive Orders 12866 and 13563
Regulatory Impact Analysis
Under Executive Order 12866, the Secretary must determine whether
this regulatory action is ``significant'' and, therefore, subject to
the requirements of the Executive order and subject to review by the
Office of Management and Budget (OMB). Section 3(f) of Executive Order
12866 defines a ``significant regulatory action'' as an action likely
to result in a rule that may--
(1) Have an annual effect on the economy of $100 million or more,
or adversely affect a sector of the economy, productivity, competition,
jobs, the environment, public health or safety, or State, local, or
tribal governments or communities in a material way (also referred to
as an ``economically significant'' rule);
(2) Create serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impacts of entitlement grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles stated in the
Executive order.
This final regulatory action is not a significant regulatory action
subject to review by OMB under section 3(f) of Executive Order 12866.
We have also reviewed these regulations under Executive Order
13563, which supplements and explicitly reaffirms the principles,
structures, and definitions governing regulatory review established in
Executive Order 12866. To the extent permitted by law, Executive Order
13563 requires that an agency--
(1) Propose or adopt regulations only on a reasoned determination
that their benefits justify their costs (recognizing that some benefits
and costs are difficult to quantify);
(2) Tailor its regulations to impose the least burden on society,
consistent with obtaining regulatory objectives and taking into
account--among other things and to the extent practicable--the costs of
cumulative regulations;
(3) In choosing among alternative regulatory approaches, select
those approaches that maximize net benefits (including potential
economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity);
(4) To the extent feasible, specify performance objectives, rather
than the behavior or manner of compliance a regulated entity must
adopt; and
(5) Identify and assess available alternatives to direct
regulation, including economic incentives--such as user fees or
marketable permits--to encourage the desired behavior, or provide
information that enables the public to make choices.
Executive Order 13563 also requires an agency ``to use the best
available techniques to quantify anticipated present and future
benefits and costs as accurately as possible.'' The Office of
Information and Regulatory Affairs of OMB has emphasized that these
techniques may include ``identifying changing future compliance costs
that might result from technological innovation or anticipated
behavioral changes.''
We are issuing these final regulations only on a reasoned
determination that their benefits justify their costs. In choosing
among alternative regulatory approaches, we selected those approaches
that maximize net benefits. Based on the analysis that follows, the
Department believes that these final regulations are consistent with
the principles in Executive Order 13563.
We also have determined that this regulatory action does not unduly
interfere with State, local, or tribal governments in the exercise of
their governmental functions.
In accordance with both Executive orders, the Department has
assessed the potential costs and benefits, both quantitative and
qualitative, of this regulatory action. The potential costs associated
with this regulatory action are those resulting from statutory
requirements and those we have determined as necessary for
administering the Department's programs and activities.
Paperwork Reduction Act of 1995
These regulations do not contain any information collection
requirements.
Intergovernmental Review
These regulations are subject to the requirements of Executive
Order 12372 and the regulations in 34 CFR part 79. One of the
objectives of the Executive order is to foster an intergovernmental
partnership and a strengthened federalism. The Executive order relies
on processes developed by State and local governments for coordination
and review of proposed Federal financial assistance.
This document provides early notification of our specific plans and
actions for these regulations.
Assessment of Educational Impact
In the IFR we requested comments on whether the proposed
regulations would require transmission of information that any other
agency or authority of the United States gathers or makes available.
Based on the response to the IFR and on our review, we have
determined that these final regulations do not require transmission of
information that any other agency or authority of the United States
gathers or makes available.
Accessible Format: Individuals with disabilities can obtain this
document in
[[Page 67264]]
an accessible format (e.g., braille, large print, audiotape, or compact
disc) on request to the contact person listed under FOR FURTHER
INFORMATION CONTACT.
Electronic Access to This Document: The official version of this
document is the document published in the Federal Register. Free
Internet access to the official edition of the Federal Register and the
Code of Federal Regulations is available via the Federal Digital System
at: www.gpo.gov/fdsys. At this site you can view this document, as well
as all other documents of this Department published in the Federal
Register, in text or Adobe Portable Document Format (PDF). To use PDF
you must have Adobe Acrobat Reader, which is available free at the
site.
You may also access documents of the Department published in the
Federal Register by using the article search feature at:
www.federalregister.gov. Specifically, through the advanced search
feature at this site, you can limit your search to documents published
by the Department.
Dated: October 27, 2015.
Arne Duncan,
Secretary of Education.
For the reasons discussed in the preamble, and under the authority
of 5 U.S.C. 301 and the authorities listed below, the interim rule
amending chapter XXXIV of 2 CFR and subtitle A and chapter I of title
34 of the Code of Federal Regulations, which was published at 79 FR
75871 on December 19, 2014, is adopted as a final rule with the
following changes:
Title 34--Education
Subtitle A--Office of the Secretary, Department of Education
PART 75--DIRECT GRANT PROGRAMS
0
1. The authority citation for part 75 continues to read as follows:
Authority: 20 U.S.C. 1221e-3 and 3474, unless otherwise noted.
Sec. 75.135 [Amended]
0
2. Section 75.135(b) is amended by removing ``34 CFR 80.36(d)(1),'' and
adding in its place ``2 CFR 200.320(b),''.
0
3. Section 75.263 is added to read as follows.
Sec. 75.263 Pre-award costs; waiver of approval.
A grantee may, notwithstanding any requirement in 2 CFR part 200,
incur pre-award costs as specified in 2 CFR 200.308(d)(1) unless--
(a) ED regulations other than 2 CFR part 200 or a statute prohibit
these costs; or
(b) The conditions of the award prohibit these costs.
(Authority: 20 U.S.C. 1221e-3 and 3474; 2 CFR 200.308(d)(1))
[FR Doc. 2015-27766 Filed 10-30-15; 8:45 am]
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