Capitol Corner December 2023

Efforts to Streamline the Federal Grants Process

Each year, the federal government provides significant funding to state and local governments. Those funds, usually in the form of federal grants, awards and assistance agreements, provide funding for all types of programs and services, including but not limited to, water and transportation infrastructure, public safety, environmental improvements and energy efficiency. Last year alone, the federal government issued over $1.2 trillion in federal financial assistance.

The federal government places conditions on this type of funding with the goal of making sure federal dollars are spent properly. Those conditions, however, can sometimes create burdens without adding value, and those in Washington are taking note. This fall produced at least two proposals to address this problem; one from the Presidential Administration and another from Congress.

The U.S. Office of Management and Budget (OMB) proposed a rule to revise sections of OMB Guidance for Grants and Agreements, which includes two Code of Federal Regulations in Part 200 (Uniform Guidance). The proposal is almost 500 pages long and is intended to reduce agency and recipient burdens. OMB’s stated objectives for the rule are:

1. Incorporating statutory requirements and administration priorities.

2. Reducing agency and recipient burden.

3. Clarifying sections that recipients or agencies have interpreted in different ways.

4. Rewriting applicable sections in plain language, improving flow and addressing inconsistent use of terms.

Key changes in the proposed rule would increase the “de minimis” indirect cost rate from 10% to 15%, remove the prohibition on using geographic preference requirements, which limited local hire policies, and reduce the requirements for second tier subrecipients and contractors under the Uniform Guidance. The OMB’s proposed revisions are under consideration and have not been made a final rule at this time.

In the U.S. House of Representatives, Congresswoman Virginia Foxx (R-NC) teamed up with Congresswoman Marie Gluesenkamp Perez (D-WA) to propose a bipartisan bill, entitled the “Streamlining Federal Grants Act” (H.R. 5934).This bill, which has been referred to the Committee on Oversight and Accountability, would require that each grant-making agency designate a senior official to streamline grant administration. It would create a grant council to simplify notices of funding opportunities and require the council to work with OMB to develop and implement grant improvement plans. It also aims to improve and requires evaluations by the Government Accountability Office. A summary of the bill can be found here. A Senate version (S. 2286) has also been introduced on a bipartisan basis and has passed out of the Committee on Homeland Security and Governmental Affairs.