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51910 Federal Register/Vol. 70, No. 168 /Wednesday, August 31, 2005 /Rules and Regulations
<br />OFFICE OF MANAGEMENT AND
<br />BUDGET
<br />2 CFR Part 225
<br />Cost Principles for State, Local, and
<br />Indian Tribal Governments (OMB
<br />Circular A-87)
<br />AGENCY: Office of Management and
<br />Budget
<br />ACTION: Relocation of policy guidance to
<br />2 CFR chapter II.
<br />SUMMARY: The Office of Management
<br />and Budget (OMB) is relocating Circular
<br />A -87, "Cost Principles for State, Local,
<br />and Indian Tribal Governments," to
<br />Title 2 in the Code of Federal
<br />Regulations (2 CFR), Subtitle A, Chapter
<br />II, part 225 as part of an initiative to
<br />provide the public with a central
<br />location for Federal government policies
<br />on grants and other financial assistance
<br />and nonprocurement agreements.
<br />Consolidating the OMB guidance and
<br />co- locating the agency regulations
<br />provides a good foundation for
<br />streamlining and simplifying the policy
<br />framework for grants and agreements as
<br />part of the efforts to implement the
<br />Federal Financial Assistance
<br />Management Improvement Act of 1999
<br />(Pub. L. 106 -107).
<br />DATES: This document is effective
<br />August 31, 2005. This document
<br />republishes the existing OMB Circular
<br />A -87, which already is in effect.
<br />FOR FURTHER INFORMATION CONTACT: Gil
<br />Tran, Office of Federal Financial
<br />Management, Office of Management and
<br />Budget, telephone 202 - 395 -3052
<br />(direct) or 202 - 395 -3993 (main office)
<br />and e -mail: Hai_M._Tran©omb.eop.gov.
<br />SUPPLEMENTARY INFORMATION: On May
<br />10, 2004 [69 FR 259701, we revised the
<br />three OMB circulars containing Federal
<br />cost principles. The purpose of those
<br />revisions was to simplify the cost
<br />principles by making the descriptions of
<br />similar cost items consistent across the
<br />circulars where possible, thereby
<br />reducing the possibility of
<br />misinterpretation. Those revisions, a
<br />result of OMB and Federal agency
<br />efforts to implement Public Law 106-
<br />107, were effective on June 9, 2004.
<br />In this document, we relocate OMB
<br />Circular A -87 to the CFR, in Title 2
<br />which was established on May 11, 2004
<br />[69 FR 262761 as a central location for
<br />OMB and Federal agency policies on
<br />grants and agreements.
<br />Our relocation of OMB Circular A -87
<br />does not change the substance of the
<br />circular. Other than adjustments needed
<br />to conform to the formatting
<br />requirements of the CFR, this notice
<br />relocates in 2 CFR the version of OMB
<br />Circular A -87 as revised by the May 10,
<br />2004 notice.
<br />List of Subjects in 2 CFR Part 225
<br />Accounting, Grant administration,
<br />Grant programs, Reporting and
<br />recordkeeping requirements, State,
<br />local, and Indian tribal governments.
<br />Dated: August 8, 2005.
<br />Joshua B. Bolten,
<br />Director.
<br />Authority and Issuance
<br />■ For the reasons set forth above, the
<br />Office of Management and Budget
<br />amends 2 CFR Subtitle A, Chapter II, by
<br />adding a part 225 as set forth below.
<br />PART 225 —COST PRINCIPLES FOR
<br />STATE, LOCAL, AND INDIAN TRIBAL
<br />GOVERNMENTS (OMB CIRCULAR
<br />A -87)
<br />Sec.
<br />225.5 Purpose.
<br />225.10 Authority
<br />225.15 Background
<br />225.20 Policy.
<br />225.25 Definitions.
<br />225.30 OMB responsibilities.
<br />225.35 Federal agency responsibilities.
<br />225.40 Effective date of changes.
<br />225.45 Relationship to previous issuance.
<br />225.50 Policy review date.
<br />225.55 Information Contact.
<br />Appendix A to Part 225 — General Principles
<br />for Determining Allowable Costs
<br />Appendix B to Part 225— Selected Items of
<br />Cost
<br />Appendix C to Part 225— State /Local -Wide
<br />Central Service Cost Allocation Plans
<br />Appendix D to Part 225— Public Assistance
<br />Cost Allocation Plans
<br />Appendix E to Part 225 —State and Local
<br />Indirect Cost Rate Proposals
<br />Authority: 31 U.S.C. 503; 31 U.S.C. 1111;
<br />41 U.S.C. 405; Reorganization Plan No. 2 of
<br />1970; E.O. 11541, 35 FR 10737, 3 CFR, 1966-
<br />1970, p. 939.
<br />§ 225.5 Purpose.
<br />This part establishes principles and
<br />standards for determining costs for
<br />Federal awards carried out through
<br />grants, cost reimbursement contracts,
<br />and other agreements with State and
<br />local governments and federally -
<br />recognized Indian tribal governments
<br />(governmental units).
<br />§225.10 Authority.
<br />This part is issued under the authority
<br />of the Budget and Accounting Act of
<br />1921, as amended; the Budget and
<br />Accounting Procedures Act of 1950, as
<br />amended; the Chief Financial Officers
<br />Act of 1990; Reorganization Plan No. 2
<br />of 1970; and Executive Order No. 11541
<br />( "Prescribing the Duties of the Office of
<br />Management and Budget and the
<br />Domestic Policy Council in the
<br />Executive Office of the President").
<br />§225.15 Background.
<br />As part of the government -wide grant
<br />streamlining effort under Public Law
<br />106 -107, Federal Financial Award
<br />Management Improvement Act of 1999,
<br />OMB led an interagency workgroup to
<br />simplify and make consistent, to the
<br />extent feasible, the various rules used to
<br />award Federal grants. An interagency
<br />task force was established in 2001 to
<br />review existing cost principles for
<br />Federal awards to State, local, and
<br />Indian tribal governments; colleges and
<br />universities; and non - profit
<br />organizations. The task force studied
<br />"Selected Items of Cost" in each of the
<br />three cost principles to determine which
<br />items of costs could be stated
<br />consistently and /or more clearly.
<br />§225.20 Policy.
<br />This part establishes principles and
<br />standards to provide a uniform
<br />approach for determining costs and to
<br />promote effective program delivery,
<br />efficiency, and better relationships
<br />between governmental units and the
<br />Federal Government. The principles are
<br />for determining allowable costs only.
<br />They are not intended to identify the
<br />circumstances or to dictate the extent of
<br />Federal and governmental unit
<br />participation in the financing of a
<br />particular Federal award. Provision for
<br />profit or other increment above cost is
<br />outside the scope of this part.
<br />§ 225.25 Definitions.
<br />Definitions of key terms used in this
<br />part are contained in Appendix A to this
<br />part, Section B.
<br />§225.30 OMB responsibilities.
<br />The Office of Management and Budget
<br />(OMB) will review agency regulations
<br />and implementation of this part, and
<br />will provide policy interpretations and
<br />assistance to insure effective and
<br />efficient implementation. Any
<br />exceptions will be subject to approval
<br />by OMB. Exceptions will only be made
<br />in particular cases where adequate
<br />justification is presented.
<br />§225.35 Federal agency responsibilities.
<br />Agencies responsible for
<br />administering programs that involve
<br />cost reimbursement contracts, grants,
<br />and other agreements with
<br />governmental units shall issue
<br />regulations to implement the provisions
<br />of this part and its appendices.
<br />§ 225.40 Effective date of changes.
<br />This part is effective August 31, 2005.
<br />§ 225.45 Relationship to previous
<br />issuance.
<br />(a) The guidance in this part
<br />previously was issued as OMB Circular
<br />
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