[Federal Register Volume 69, Number 67 (Wednesday, April 7, 2004)]
[Notices]
[Pages 18380-18382]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-7867]
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ENVIRONMENTAL PROTECTION AGENCY
[FRL-7644-5]
Interpretation of Regulations Related to Payments to Consultants
Under Grants
AGENCY: Environmental Protection Agency.
ACTION: Notice.
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SUMMARY: EPA's Appropriation Act limits the Agency's participation in
the amounts recipients pay to consultants to the maximum daily rate of
pay for Level IV of the Executive Schedule. Recently, questions have
been posed regarding how to interpret both the statutory consultant fee
limitation and the EPA regulation. The purpose of the attached document
is to provide EPA grant specialists and project officers guidance
regarding the Agency's interpretation of the appropriation act language
as well as the regulatory provisions. This notice explains for EPA
applicants and recipients how EPA applies the payment limit.
DATES: The attached document becomes effective on April 7, 2004.
FOR FURTHER INFORMATION CONTACT: William Hedling, 1200 Pennsylvania
Ave., Mail Stop 3903 R, Washington, DC 20460, Telephone--202-564-5377,
[email protected].
SUPPLEMENTARY INFORMATION: EPA's appropriation act limits the Agency's
participation in the amounts recipients pay consultants to the maximum
daily rate of pay for Level IV of the Executive Schedule. This limit
was first established in EPA's Fiscal Year 1978 appropriation act and
Congress clarified the scope of the limit in EPA's Fiscal Year 1979
appropriation act. The Agency applies the limit to EPA assistance
agreements through EPA's Uniform Administrative Requirements and
Agreements with Institutions of Higher Education, Hospitals, and Other
Nonprofit Organizations (40 CFR 30.27(b)) and Uniform Administrative
Requirements for Grants and Cooperative Agreements to State and Local
Governments (40 CFR 31.36(j)). In addition, EPA's regulations provide
that contracts with firms for services which are awarded using the
prescribed procurement requirements are not subject to the consultant
fee limitations (40 CFR 30.27(b) and 31.36 (j)).
Recently, there have been some questions raised regarding EPA's
application of the limit. The purpose of the attached document is to
provide EPA grant specialists and project officers guidance regarding
the Agency's interpretation of the appropriation act language as well
as the regulatory provisions. This notice provides information to EPA
applicants and recipients to make them aware of how EPA applies the
payment limit. This guidance clarifies existing EPA policy and applies
to all EPA assistance agreements, regardless of award dates.
This document reiterates the limits under EPA's appropriation act
and makes clear that:
If a recipient, or its contractor, chooses to
pay more than the consultant fee cap ($524.72 per day in 2004), the
recipient must use its own funds to pay the difference. Also, if the
assistance agreement includes a recipient indirect cost rate, the
recipient can apply it only to allowable costs, not to amounts in
excess of the consultant fee cap. Finally, recipients cannot use the
amount in excess of the consultant fee cap for cost sharing purposes.
(The consultant fee cap does not apply to reasonable consultant
overhead or travel direct costs. Recipients may reimburse these direct
costs in accordance with their normal practices.)
If a consultant is paid on an hourly basis, EPA
will not participate in more than the hourly equivalent of the rate
($65.59 per hour for 2004), nor will EPA participate in more than the
maximum daily rate if a consultant paid on an hourly basis works more
than 8 hours in a day. Further, if a consultant works less than 8 hours
in a day, EPA will not participate in more than the hourly equivalent
rate for each hour worked even if the consultant is paid on a daily
basis. There may be cases where recipients believed that EPA would
participate in the maximum daily rate, even if the consultant worked
less than 8 hours in a day. In such cases, recipients and EPA Grants
Management Offices should document the situation and may request the
Director, Grants Administration Division, to waive the hourly limit
under section 9 of the EPA Order.
The consultant fee cap does not apply to
contracts with firms or individuals that are awarded pursuant to the
procurement procedures under 40 CFR Parts 30 and 31 (40 CFR 30.27(b)
and 40 CFR 31.36(j)(2)) so long as the terms of the contract do not
provide the recipient with responsibility for the selection, direction,
and control of the individual(s) who will be providing services under
the contract. Conversely, the consultant fee cap does apply to
contracts with firms or individuals that are awarded under the
procurement procedures of 40 CFR Parts 30 and 31 if the terms of the
contract provide the recipient with responsibility for the selection,
direction, and control of the individuals who will be providing
services under the contract at an hourly or daily rate of compensation.
The cap does not apply to fixed priced or lump sum contracts for
specified products such as reports or delivery of a training course.
Applicants or recipients who have questions concerning whether an
individual is a consultant subject to the fee cap should contact the
appropriate EPA project officer or grants specialist.
The consultant fee cap does not apply to
contracts for technical advisory services awarded competitively under
EPA's Superfund Technical Assistance Grant (TAG) program regulations at
40 CFR 35.4205 provided that the terms of the contract indicate that
the technical advisor has the discretion of an independent contractor
and do not vest the TAG recipient with responsibility
[[Page 18381]]
for the direction and control of the technical advisor.
The ``Consultant Fees Under EPA Assistance Agreements Policy'' (GPI
04-04), is attached following this announcement.
Authority: Pub. L. 95-119, 40 CFR 30 and 31.
Dated: April 1, 2004.
David J. O'Connor,
Acting Assistant Administrator, Office of Administration and Resources
Management.
GPI-04-04
Consultant Fees Under EPA Assistance Agreements
1. Purpose: This policy clarifies the Environmental Protection
Agency's (EPA) interpretation of the statutory and regulatory
provisions regarding EPA's participation in the amounts recipients pay
to consultants under EPA assistance agreements. The policy also shows
how EPA calculates and applies the daily and hourly rates.
2. Background: EPA's appropriation act limits the Agency's
participation in the amounts recipients pay to consultants to the
maximum daily rate of pay for Level IV of the Executive Schedule. This
limit was first established in EPA's 1978 appropriation act and is made
applicable to EPA assistance agreements by EPA's Uniform Administrative
Requirements and Agreements with Institutions of Higher Education,
Hospitals, and Other Nonprofit Organizations (40 CFR 30.27(b)) and
EPA's Uniform Administrative Requirements for Grants and Cooperative
Agreements to State and Local Governments (40 CFR 31.36(j)). In
addition, EPA's regulations provide that contracts with firms for
services which are awarded using the prescribed procurement
requirements are not subject to the consultant fee limitations (40 CFR
30.27(b) and 31.36 (j)). Recently, questions have been posed regarding
how to interpret the EPA regulations implementing the statutory
consultant fee limitation. The purpose of this document is to provide
EPA staff with information regarding EPA's interpretation of the
appropriation act language as well as the regulatory provisions.
3. Definitions:
Consultant--For the purposes of this policy, a consultant is an
individual with specialized skills who, although not on the recipient's
payroll as an employee, provides personal services to the recipient
under an agreement which essentially establishes an employer-employee
relationship between the recipient and the individual providing the
services. Consultants are typically individuals who are experts with
excellent qualifications and are usually regarded as authorities or
practitioners of unusual competence and skill by other individuals
engaged in the same profession. An employer-employee relationship may
be found to exist when the recipient selects the individual based on
expertise in a particular field, directs the individual's work, and
exercises day-to-day control of the individual's activities.
Consultant fee cap--The daily or hourly salary of Federal employees
at Level IV of the Executive Schedule. EPA will not participate in any
amount greater than that rate; recipients may, however, pay more. The
2004 annual salary for Level IV of the Executive Schedule is $136,900
per year. The current maximum daily rate (the consultant fee cap) of
$524.72 is computed as follows: $136,900/2087 hours per year = $65.59
per hour x 8 hours per day = $524.72 per day. If a consultant works
less than 8 hours in a day, the hourly consultant fee cap is $65.59 per
hour.
4. Authority: The consultant fee cap first appeared in Section 409
of the Fiscal Year (FY) 1978 Appropriations Act for the Department of
Housing and Urban Development and Independent Agencies, including EPA
(Pub. L. 95-119). It limited the amount EPA could participate in to the
rate paid to a Federal employee at the GS-18 level. The consultant fee
cap in Section 408 of the FY 2002 Departments of Veterans Affairs, and
Housing and Urban Development and Independent Agencies Appropriation
Act, (Pub. L. 107-272), which covers EPA, is identical to that
contained in the FY 1978 appropriations act except that the limit is
based on the daily rate for a Federal employee at the ES-IV level.
EPA implemented the consultant fee cap in its regulations at 40 CFR
30.27(b) for grants made to non-profit organizations and universities,
and at 40 CFR 31.36.(j)(2) for grants to States, local governments, and
Indian Tribes.
5. Policy: It is EPA policy, consistent with the relevant
appropriation acts and regulations, to limit EPA's participation in the
amounts recipients pay to consultants to the consultant fee cap
($524.72 per day and $65.59 per hour in 2004). Recipients may pay more
than the consultant fee cap, but EPA will not participate in any amount
over the maximum. The consultant fee cap also applies to consultants
hired by a recipient's contractors.
If the recipient, or its contractor, chooses to pay more than the
consultant fee cap, the recipient must use its own funds to pay the
difference. ( If the assistance agreement includes a recipient indirect
cost rate, the recipient can apply it only to allowable costs, not to
amounts in excess of the consultant fee cap). Further, recipients
cannot use the amount in excess of the consultant fee cap for cost
sharing purposes. The consultant fee cap does not apply to reasonable
consultant overhead or travel direct costs. Recipients may reimburse
these costs in accordance with their normal practices.
The consultant fee cap does not apply to contracts awarded to firms
or individuals that are awarded under the procurement procedures under
40 CFR Parts 30 and 31 (40 CFR Sec. 30.27(b) and 40 CFR Sec.
31.36(j)(2)) so long as the terms of the contract do not provide the
recipient with responsibility for the selection, direction, and control
of the individual(s) who will be providing services under the contract.
Conversely, the consultant fee cap does apply to contracts awarded to
firms or individuals that are awarded under the procurement procedures
of 40 CFR Parts 30 and 31 if the terms of the contract provide the
recipient with responsibility for the selection, direction, and control
of the individuals who will be providing services under the contract at
an hourly or daily rate of compensation. The cap does not apply to
fixed priced or lump sum contracts for specified products such as
reports or delivery of a training course.
For example, a contract with a multi-person firm that does not
require the firm to provide to the recipient the services of a
particular individual, and that does not require the recipient to
exercise control and direction over the individual, would not be
subject to the cap. On the other hand, the consultant fee cap would
apply to a contract awarded to a firm with one or more persons that is
justified on the basis of the qualifications of a designated individual
with specialized skills if the terms of the contract require the firm
to provide the recipient with the services of that individual at an
hourly or daily rate of compensation and the recipient will exercise
direction and control over that individual in the performance of the
contract. Questions regarding whether a particular individual under a
contract may be performing as a consultant and thus be subject to the
consultant fee cap should be directed to the Office of General Counsel
or Office of Regional Counsel, as appropriate.
In addition, the consultant fee cap does not apply to contracts for
technical advisory services awarded competitively under EPA's Superfund
Technical Assistance Grant (TAG) program regulations at 40 CFR 35.4205
[[Page 18382]]
provided that the terms of the contract indicate that the technical
advisor has the discretion of an independent contractor and do not vest
the TAG recipient with responsibility for the direction and control of
the technical advisor.
6. Roles and Responsibilities: Program Offices. Project officers
should alert Grants Management Offices (GMOs) if they find indications
that a recipient is using consultants, e.g., statements in workplans or
findings as a result of post award monitoring activities. GMOs Grant
Specialists must review applications for indications that a recipient
may use consultants. If the application or other information, including
the budget, indicates the recipient will use funds for contracts or
consultants, the Grants Specialist must include the ``Consultant Fee''
Term and Condition in the award document. Also, as required by the
protocols for both On-Site and Desk Reviews, Grant Specialists must
verify that consultant fees do not exceed the consultant fee cap. GMOs
should, in cases where it is determined in accordance with Section 5 of
this Order, that a recipient may be obtaining consultant services under
a contract, refer the cases to the Office of Regional or General
Counsel for consideration.
7. Award Term and Condition: The current Integrated Grants
Management System Consultant Fee Term and Condition is shown below:
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Award condition
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Short title A28 Individual consultants
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Type Administrative
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Payment to consultants. EPA participation in the salary rate (excluding
overhead and travel) paid to individual consultants retained by
recipients or by a recipient's contractors or subcontractors shall be
limited to the maximum daily rate for Level IV of the Executive
Schedule, to be adjusted annually. This limit applies to consultation
services of designated individuals with specialized skills who are paid
at a daily or hourly rate. As of January 1, 2004, the limit is $524.72
per day and $65.59 per hour. The rate does not include overhead or
travel costs and the recipient may pay these in accordance with its
normal travel practices.
Subagreements with firms for services which are awarded using the
procurement requirements in 40 CFR Parts 30 or 31, as applicable, are
not affected by this limitation unless the terms of the contract
provide the recipient with responsibility for the selection, direction,
and control of the individuals who will be providing services under the
contract at an hourly or daily rate of compensation. See 40 CFR
31.36(j)(2) or 30.27(b), as applicable.
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EPA updates this term and condition annually based on changes in
Level IV of the Executive Schedule maximum pay.
8. Examples:
A. If a consultant bills the recipient for 3 days of service at
$2,000.00/day, EPA will limit its participation to the consultant fee
cap which would be 3 x $524.72 = $1,574.16, provided the consultant
works 8 or more hours each day. If the recipient pays the consultant
more than $1,574.16, the additional amount is not EPA allowable and
cannot be used for cost sharing.
B. If a consultant works 3 hours in a day, EPA will allow only 3 x
$65.59 or $196.77. If the recipient pays the consultant more than
$196.77, the additional amount is not EPA allowable and cannot be used
for cost sharing.
C. If a consultant works more than 8 hours in a given day and, as a
result, the recipient must pay the consultant more than the daily
consultant fee cap, EPA will limit its participation to $524.72 (NOT,
for example, 10 x $65.59 or $655.90). If the recipient pays the
consultant more than $524.72, the additional amount is not EPA
allowable and cannot be used for cost sharing.
9. Waivers: This policy makes clear that, if a consultant works
less than 8 hours in a day, the maximum amount allowable would be the
number of hours worked times the maximum hourly rate. In the past,
recipients may have believed that EPA would participate in the maximum
daily rate even if a consultant worked less than 8 hours in a day. In
such cases, recipients and Grants Management Offices should document
the facts of the situation and may request a waiver of the hourly limit
from the Director, Grants Administration Division.
10. Anticipated Outcomes/Results: EPA's Regions and Headquarters
offices will apply the consultant fee cap consistently.
11. Sunset/Review Date: The Grants Administration Division will
review this policy annually to determine if adjustments are needed
because of changes in the daily and hourly salary of Federal employees
at the ES-IV level. Adjustments will be reflected in revisions to the
consultant fee assistance agreement term and condition.
12. Supercedes/Cancels: This Grants Policy Issuance (GPI) revises
and rescinds GPI 03-02 to further clarify EPA's policy with respect to
the consultant fee cap.
[FR Doc. 04-7867 Filed 4-6-04; 8:45 am]
BILLING CODE 6560-50-P