[Federal Register Volume 70, Number 18 (Friday, January 28, 2005)]
[Notices]
[Pages 4159-4161]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-1643]



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OFFICE OF SCIENCE AND TECHNOLOGY POLICY

OFFICE OF MANAGEMENT AND BUDGET


Office of Federal Financial Management; Proposed Policy on 
Research and Research-Related Grant Terms and Conditions

AGENCY: Executive Office of the President, Office of Science and 
Technology Policy (OSTP) and Office of Management and Budget (OMB), 
Office of Federal Financial Management (OFFM).

ACTION: Notice of proposed issuance of policy on terms and conditions 
for grants under Federal research and research-related programs.

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SUMMARY: The Federal Demonstration Partnership (FDP), a streamlining 
initiative of ten Federal awarding offices and 92 academic and 
nonprofit research institutions, developed a core set of FDP terms and 
conditions that it has been using for several years for the 
implementation of OMB Circular A-110, ``Uniform Administrative 
Requirements for Grants and Agreements With Institutions of Higher 
Education, Hospitals, and Other Non-Profit Organizations,'' (2 CFR part 
215). The OSTP and OFFM request comment on making the FDP terms and 
conditions a government-wide standard, and broadening their use to all 
academic and nonprofit grantees, under Federal research and research-
related programs.
    The proposed policy directive also instructs Federal agencies to 
minimize the degree to which they supplement the core set with agency-
specific, program-specific, or award-specific terms and conditions. The 
directive should therefore result in the near term in the use of more 
uniform terms and conditions for Federal research and research-related 
grants. In parallel with the establishment of this standard for 
research and research-related grants, an interagency group helping to 
implement the Federal Financial Assistance Management Improvement Act 
of 1999 (Public Law 106-107) will continue working toward the longer-
term objective of standard award format and content for all Federal 
grants and cooperative agreements, including government-wide standard 
terms and conditions.

DATES: Comments must be received by February 28, 2005.

ADDRESSES: Comments should be addressed to Beth Phillips, Office of 
Federal Financial Management, 725 17th Street, NW., Washington, DC 
20503; telephone (202) 395-3993; FAX (202) 395-3952; e-mail 
[email protected]. Due to potential delays in OMB's receipt and 
processing of mail sent through the U.S. Postal Service, we encourage 
respondents to submit comments electronically to ensure timely receipt. 
We cannot guarantee that comments mailed will be received before the 
comment closing date.

FOR FURTHER INFORMATION CONTACT: For information on OMB Circular A-110 
requirements, contact Beth Phillips at the addresses noted above. For 
information on the Research Business Models (RBM) Subcommittee see the 
RBM Web site at http://rbm.nih.gov, or contact Geoff Grant at the 
Office of Science and Technology Policy at 725 17th Street, NW., 
Washington, DC 20503; e-mail [email protected]; telephone (202) 456-
6131; FAX (202) 456-6027.

SUPPLEMENTARY INFORMATION

I. Background

    This proposal is an initiative of the Research Business Models 
(RBM) Subcommittee of the Committee on Science (CoS), a committee of 
the National Science and Technology Council (NSTC). The RBM 
Subcommittee's objectives include:
     Facilitating a coordinated effort across Federal agencies 
to address policy implications arising from the changing nature of 
scientific research, and
     Examining the effects of these changes on business models 
for the conduct of scientific research sponsored by the Federal 
government.
    The Subcommittee used public comments, agency perspectives, and 
input from a series of regional public meetings to identify priority 
areas in which it would focus its initial efforts. In each priority 
area, the Subcommittee is pursuing initiatives to promote, as 
appropriate, either common policy, the streamlining of current 
procedures, or the identification of agencies' and institutions' 
``effective practices.'' As information about the initiatives becomes 
available, it is posted at the Subcommittee's Internet site http://rbm.nih.gov.
    The objective of one RBM priority area is greater consistency in 
the format and content of Federal agencies' research grant and 
cooperative agreement awards. Federal agency awarding offices currently 
include different requirements in their awards, use different language 
to state the same requirements, and organize the award content 
differently. The variation in format and content increases both 
administrative effort and costs for recipients of Federal awards. More 
uniformity is possible because most requirements flow from common 
sources in the OMB circulars and in government-wide statutes and 
regulations.
    Within the priority area on award uniformity, the Subcommittee 
identified two initiatives--one that could be achieved in the near term 
and a second that would be a longer-term effort. The proposal in this 
Federal Register notice is the result of the near-term initiative, 
which is to broaden use of the core set of terms and conditions 
developed by the FDP for research and research-related grants. The 
longer-term initiative relies on work being carried out by the Pre-
Award Work Group under Public Law 106-107 to develop standard award 
format and content for all Federal grants and cooperative agreements.
    This near-term initiative will broaden use of the core set of terms 
and conditions developed by the FDP:
     From Federal agencies that participate in the FDP to all 
Federal agencies that make research and research-related awards (each 
Federal agency must determine which of its programs are ``research-
related'' for purposes of using the terms and conditions).
     From the ten awarding offices in agencies that currently 
participate in the FDP to all awarding offices in those agencies.
     From research and research-related awards received by 
universities and nonprofit organizations that participate in the FDP to 
research and related awards received by all such institutions.

II. Terms and Conditions--General Approaches

    While Federal agencies organize their grant and cooperative 
agreement awards differently, there are three elements that they 
include in some form. One element is what some agencies call the award 
notice, which includes basic information such as the name of the 
recipient organization, the amount of Federal funding under the award, 
any required cost sharing, the beginning and end dates for Federal 
support, and the title of the project. Because this information is 
specific to a particular award, an awarding agency transmits it to the 
recipient each time an award is made.
    The other two elements of the award are the administrative 
requirements and the national policy requirements with which recipients 
must comply, which together comprise the award terms and conditions. 
Examples of administrative

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requirements are: Standards that a recipient's financial management, 
property management, and procurement systems must meet; performance 
reporting requirements; and rules for use and disposition of supplies 
and equipment. OMB Circular A-110 (2 CFR part 215) is the government-
wide source of administrative requirements for an academic or other 
nonprofit research institution. An award's administrative terms and 
conditions therefore must implement that circular. In some cases, 
awards under a particular program may impose additional administrative 
requirements due to the nature of the program or its authorizing 
statute. In a relatively few instances, there also may be award-
specific administrative requirements due to the nature of a particular 
project.
    National policy requirements arise from Federal statutes, 
Presidential executive orders, or regulations with government-wide 
effect, such as prohibitions against discrimination. Most apply broadly 
to many or all Federal programs, though some apply only to specific 
agencies or programs. National policy requirements are included in 
award terms and conditions to help ensure post-award compliance, 
notwithstanding any pre-award assurances of compliance an agency 
requires applicants to submit.
    Usually, an awarding office has a set of general terms and 
conditions that apply to a broad class of awards, which may be all of 
the awards that office makes or, in some cases, all of the awards the 
office makes under a particular program. An awarding office's general 
terms and conditions include the government-wide, as well as agency-
specific, administrative requirements and national policy requirements 
described above, and also may include program-specific requirements. 
Agencies often do not transmit the general terms and conditions with 
each award, instead incorporating them by reference in the award notice 
(e.g., by reference to an Internet site where the agency or office 
maintains its general terms and conditions). In that case, the agency 
only needs to transmit with the award notice any award-specific terms 
and conditions that are required to supplement the general terms and 
conditions.

III. The Proposed Core Set of Terms and Conditions--The FDP Approach

    The core terms and conditions developed by the FDP work differently 
from the general approach described in the previous section, in that 
there is a core set that all of the FDP participating agencies use 
along with a separate set of agency-specific terms and conditions for 
each agency. The core set includes both uniform administrative 
requirements and national policy requirements.
    The administrative requirements are designed as a model 
implementation of OMB Circular A-110 (2 CFR part 215), and they:
     Provide a standard organization of the administrative 
requirements that parallels the order of presentation in the circular.
     Provide standard language for administrative requirements 
for which the circular sets a single government-wide approach, rather 
than alternative approaches among which an agency may select.
     Include default provisions, with standard language, for 
administrative requirements for which there are agency options. For 
example, OMB Circular A-110 (2 CFR part 215) provides multiple options 
for disposition of program income a recipient might earn--an agency can 
specify that a recipient is to use: (1) An additive method, using the 
income to increase the total funding for the project supported by the 
award; (2) a deductive method, keeping the amount of support the same 
and reducing the amount of Federal funding to be used; or (3) a method 
that uses the income to help meet the recipient's cost sharing 
requirement. The administrative requirements in the FDP core terms and 
conditions include language in the program income article to specify 
use of the additive method. An agency that needs to override that 
default can do so by specifying a different option in its agency-
specific or award-specific terms and conditions.
    The administrative requirements may be viewed in one of two ways on 
the Internet at http://rbm.nih.gov. One of the posted documents shows 
the core set's administrative terms and conditions. The other document 
shows each article of the administrative requirements in a side-by-side 
presentation with the section of OMB Circular A-110 (2 CFR part 215) 
that is the basis for that article. The second document is designed to 
assist users who are not familiar with the language of the circular.
    The national policy requirements in the core set of terms and 
conditions also may be viewed at http://rbm.nih.gov. They are presented 
within a table that includes information on the types of awards, types 
of recipient organizations, and specific situations to which each 
requirement applies. Each award term, in the left-hand column of the 
table, includes citations for the agencies' regulations pertinent to 
the particular national policy requirement.
    In the future, OMB in conjunction with OSTP plans to maintain--or 
designate a Federal agency or interagency group to maintain--the core 
set of administrative and national policy requirements in an RBM Tool 
Kit at http://rbm.nih.gov, perhaps with links to additional sites such 
as OMB, OSTP, and the NSTC. When the terms and conditions are amended, 
previous versions would be maintained in the archives at the RBM site 
for access by recipients with awards pre-dating the amendment. Each 
version would bear a version date for clarity.
    At the same Internet site, OSTP plans to maintain a list of the 
research or research-related programs that obtained approval, under 
Section 5.b of the proposed policy directive, for an exception from the 
requirement to use the government-wide core set of terms and 
conditions. With a centrally maintained list, an academic or nonprofit 
research institution can verify whether an award that does not include 
the standard terms and conditions falls within an approved exception. 
To enable OMB to maintain the list, Section 5.c of the proposed policy 
directive would require agencies to notify OMB when they approve 
exceptions.
    As we expand the use of the core set of terms and conditions to 
more agencies, awarding offices, and programs, it is possible that some 
offices may need to augment the core set with program-specific or 
award-specific terms and conditions, in addition to any agency-wide 
supplement. A particular program, for example, may not need the article 
in the terms and conditions that specifies procedures a recipient must 
follow when research results unexpectedly raise questions about a need 
to classify the results for national security reasons. A program office 
that did not need that article could include an agency-specific or 
program-specific term to override the requirement. The proposed policy 
directive would allow that flexibility, which is essential to some 
programs; however, to maintain maximum uniformity Section 4.b of the 
proposed directive includes language that would instruct agencies to 
minimize supplementation of the core set.

IV. Invitation To Comment

    We welcome your input on any aspect of the proposed policy provided 
below, and the core set of terms and conditions posted on the Internet 
at http://rbm.nih.gov. (Please note the final policy will include the 
core set of terms and conditions as an attachment, as stated in the 
``Background'' section. However, those are not included in this

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notice, but rather are available at the Web site noted above.) 
Questions that you may wish to address include:
     Are the terms and conditions easy to use and understand?
     With the general terms and conditions posted on the 
Internet, would you be able to readily determine which terms and 
conditions apply to a specific award?
     Where OMB Circular A-110 (2 CFR part 215) gives agencies 
options for addressing particular administrative requirements, does the 
core set of terms and conditions include default provisions appropriate 
for research and research-related grants?
     Are there other national policy requirements that should 
be included in the core set of terms and conditions?
     Is the proposed policy directive clear and unambiguous, or 
does it need further detail?

    Dated: January 25, 2005.
Linda M. Springer,
Controller, Office of Management and Budget.

Kathie L. Olsen,
Associate Director for Science, Office of Science and Technology 
Policy.

To the Heads of Executive Departments and Establishments

    Subject: Interim Standard Terms and Conditions for Research Grants.
    1. Purpose. This policy letter establishes a core set of terms and 
conditions as the government-wide standard for research grants. The 
standard is for use by Executive Branch departments and agencies on an 
interim basis, pending completion of an ongoing effort to develop a 
standard for all Federal grant and cooperative agreement awards.
    2. Authority. This policy letter is a result of the regular review 
of the Government-university research partnership under Executive Order 
13185. It also is a part of the implementation of the Federal Financial 
Assistance Management Improvement Act of 1999 (Public Law 106-107).
    3. Background. Begun as the Florida Demonstration Project in the 
1980's, the Federal Demonstration Partnership (FDP) is a cooperative 
initiative among ten Federal awarding offices and 92 academic and 
nonprofit institutions that receive Federal research awards. The FDP's 
purpose is to streamline administrative procedures associated with the 
award and administration of research funding. In the late 1990's, the 
FDP developed terms and conditions that are a model implementation, 
specifically for research grants, of the 1993 issuance of OMB Circular 
A-110, ``Uniform Administrative Requirements for Grants and Agreements 
With Institutions of Higher Education, Hospitals, and Other Non-Profit 
Organizations.'' (OMB Circular A-110 is now located in Title 2 Code of 
Federal Regulations, Part 215.) The ten Federal awarding offices have 
been using the FDP terms and conditions for research grants to the non-
Federal institutions participating in the FDP.
    Another effort to develop standard terms and conditions began after 
the enactment of Pub. L. 106-107. That Act requires the Office of 
Management and Budget (OMB) to direct, coordinate, and assist Executive 
Branch departments and agencies in establishing an interagency process 
to streamline and simplify Federal financial assistance procedures for 
non-Federal entities. Twenty-six Executive Branch agencies currently 
participate in interagency initiatives to implement Pub. L. 106-107. 
One of the initiatives is to develop standard terms and conditions, to 
the extent practicable, for all Federal awards of grants and 
cooperative agreements to governmental and nonprofit organizations, 
including research awards.
    Pending the completion of the Pub. L. 106-107 initiative, which is 
a long-term endeavor, some near-term benefits can be obtained on an 
interim basis by expanding the use of the FDP's grant terms and 
conditions to more Federal awarding offices and more research 
recipients. To enable that expanded use, the Research Business Models 
(RBM) Subcommittee of the National Science and Technology Council's 
Committee on Science made minor modifications to the terms and 
conditions developed originally for FDP participants. The result--the 
terms and conditions attached to this policy letter--are appropriate 
for all Federal agencies' research grants to academic and nonprofit 
institutions.
    4. Policy. a. The standard terms and conditions maintained by OMB 
and the Office of Science and Technology Policy (OSTP) under paragraph 
5.b.i of this directive are the government-wide core set to be used by 
agencies for grants awarded to institutions of higher education, 
hospitals, and other non-profit organizations under basic and applied 
research and research-related programs.
    b. Agencies may supplement the core set of terms and conditions 
with agency-specific, program-specific, or award-specific terms and 
conditions. Agencies are to minimize supplements, limiting these to 
terms and conditions that are required by a statute or:
    i. Consistent with OMB Circular A-110; and
    ii. Necessary for programmatic purposes or good stewardship of 
Federal funds.
    c. Agencies are encouraged to extend the use of the attached grant 
terms and conditions to cooperative agreements and other forms of 
financial assistance, to the extent practicable.
    5. Responsibilities. a. Each Executive Branch department and agency 
must:
    i. Issue any needed direction to offices that award research 
grants, in order to establish the attached terms and conditions as the 
core set for those offices' awards.
    ii. Designate policy level officials, (1) authorized to grant 
exceptions from the requirement to use the attached core set if a 
departmental or agency office, or program, can demonstrate the need for 
an exception; and (2) responsible for notifying the OMB in writing 
about the scope of exceptions approved by the department or agency and 
the reasons for them.
    b. OMB and OSTP will maintain--or designate a Federal agency or 
interagency group to maintain--at a government-wide Internet site 
(either the RBM Web site, currently at http://rbm.nih.gov, or a site to 
be named) and with additional links to OMB, OSTP, and the National 
Science and Technology Council:
    i. The core set of terms and conditions, including uniform 
administrative requirements and national policy requirements.
    ii. A list of agency programs and offices that have been granted 
exceptions, under paragraph 5.a.ii of this directive, from the 
requirement to use the core set of terms and conditions.
    6. Information Contact. Direct any questions regarding this policy 
letter to Elizabeth Phillips, Office of Federal Financial Management, 
(202) 395-3993.
    7. Effective Date. The policy letter is effective 30 days after 
issuance. All implementing actions other than regulatory revisions must 
be completed by the Executive departments and agencies within 6 months 
of the effective date; any regulatory revisions must be completed 
within 18 months.

[FR Doc. 05-1643 Filed 1-27-05; 8:45 am]
BILLING CODE 3110-01-P