RGCI - Grant Regulations are Going to be Updated Soon – Get Your Comments Ready

Suppose your company is working on a grant or cooperative agreement or planning to submit a proposal in response to a funding opportunity announcement. In that case, the regulations that apply will be Code of Federal Regulations (CFR) Title 2 Grants and Agreements. The problem is, when you receive a grant, generally, the award agreement says to comply with 2 CFR. There are no specific clauses or wording; basically, you are responsible for reading the entire regulation to see what applies to your award. 2 CFR includes inconsistent language and terms.

Well, there is some good news. The Office of Management and Budget has published a pre-publication of proposed guidance on September 21, 2023, that will be included in the Federal Register. Once it is published in the Federal Register, public comments can be submitted within 60 days of the publication. OMB did include a qualification that as they finalize the proposed guidance for publication, there may be additional changes.

Generally, OMB reviews regulations on average every five years and makes revisions. OMB states the proposed revisions in the pre-publication guidance were made to:

  • Incorporate statutory requirements.
  • Reduce the burden on agencies and recipients.
  • Clarify sections that have been interpreted in different ways.
  • Update sections in plain language (i.e., address inconsistent use of terms).

Based on our review, the proposed revisions appear to be positive by either increasing thresholds, reducing approvals, or using more consistent language throughout the regulations. The document includes many changes, but listed below are some of the proposed changes:

  • Increase the single audit threshold from $750,000 to $1,000,000.
  • Increase the threshold for equipment and supplies from $5,000 to $10,000.
  • Raise the de minimis rate from 10 percent to 15 percent.
  • Update “Modified Total Direct costs” to exclude sub-award costs above $50,000 from $25,000.
  • Use the terms “recipient” and “subrecipient” in place of “non-Federal entity.
  • Revise OMB designated “government-wide systems” to mention the appropriate systems (SAM.gov, USASpending.gov, The Contractor Performance Assessment Reporting System (CPARS), or Grants.gov.
  • Revise other sections of regulations to align with the specific act or expand guidance:
  • Proposed changes to revise or add definitions:
    • Change “Federal awarding agency” to Federal agency.”
    • Include new definitions:
  • Continuation funding
  • For-profit organization
  • Key personnel
  • Participant
  • Prior approval
    • Change “small purchases” to “simplified acquisitions.”
  • Removes ten items from the prior written approval requirements to reduce Federal agency and recipient burden.
  • Remove the requirement in 419 for an Institute of Higher Education that receives an aggregate total of $50 million or more in Federal awards subject to subpart E to submit a disclosure statement form (DS-2) on cost accounting standards – IHEs would still be required to comply with the CAS standards just not submit a DS-2.

OMB is requesting comments on these revisions once it is published as a proposed rule on the Federal Register. In addition, OMB also welcomes additional comments from the public on the following topics for consideration in possible additional revisions in the future:

  • Establishing specific audit requirements for for-profit entities, which are not subject to the requirements of Subpart F.
  • Incorporating the requirements of National Security Presidential Management (NSPM) 33 on research security requirements.
  • Providing additional guidance in 2 CFR concerning the relationship of specific aspects of the guidance to loans and loan guarantees.
  • Establishing mechanisms to automatically adjust certain thresholds due to inflation or other triggering events (where permitted by law).
  • Removing additional prior approval requirements.
  • Challenges related to negotiating indirect costs, working with cognizant agencies, or any other topics related to indirect costs.
  • Expanding the guidance in Subpart F to include more specific requirements on the scope of an audit (“proper perspective”) so that agencies have additional contextual information to guide them in resolving audit findings.


If you have a grant or cooperative agreement, you understand how complicated the 2 CFR regulations are. While OMB’s pre-proposal guidance addresses some of the common problem areas, we recommend companies review the changes and submit comments to further clarify any of the proposed changes and request additional guidance in areas you have had issues with. Companies will have 60 days to submit comments once the proposed rule is published in the Federal Register.

Redstone GCI assists contractors throughout the U.S. and internationally with understanding the Grant requirements under 2 CFR 200. This includes assisting with accounting policies and procedures, classification of contracts/sub-awards, risk assessments, invoice processing, or training. We would be happy to be part of your team.

2 CFR 200 Consulting Services Brochure DOWNLOAD NOW

Written by Lynne Nalley, CPA

Lynne Nalley, CPA Lynne is a Director with Redstone Government Consulting, Inc. providing government contract consulting services to our clients primarily related to Commercial Item Determinations and support, Cost Accounting Standards, DFARS Business System Audits, Proposals, and Incurred Cost. Prior to joining Redstone Government Consulting, Lynne served in several capacities with DCAA and DCMA for over 35 years. Professional Experience Lynne began her career working with DCAA in the Honeywell Resident Office, Clearwater, FL in 1984. Lynne’s experience included various positions which involved conducting or reviewing forward proposals or rate audits, financial capability audits, progress payments, accounting and estimating systems, cost accounting standards, claims and disclosure statement reviews. She is an expert in FAR, DFARS, CAS and testified as an expert witness. Lynne assisted in drafting the commercial item guidance for DCAA Headquarters. Lynne was assigned as a Regional Technical Specialist where she provided guidance to 20 field offices on highly complex or technical issues relative to forward pricing, financial capability or progress payment issues. As an Assistant for Quality, she was involved in reviewing and ensuring audit reports were in compliance with policy and GAGAS as well as made NASBA certified presentations to the staff including but not limited to billing reviews, CAS, unallowable cost and progress payments. To enhance her experience in government contracting, Lynne accepted a position with DCMA in 2015 as part of the newly organized DCMA Cadre of Experts in the Commercial Item Group. This included performing reviews of prime contractor’s assertions and/or commercial item determinations as well as performing price analyses. Lynne was a project lead and later became a lead analyst where she engaged with the buying commands on requests and reviewed price analysis reviews performed by a team of 5 analysts. She also assisted the DCMA CPSR team relative to commercial items and co-instructed the Commercial Item Training presented to DCMA. Education Lynne earned a Bachelor of Science Degree in Accounting from the University of Central Florida. Certifications State of Florida Certified Public Accountant State of Alabama Certified Public Accountant Defense Acquisition Workforce Improvement Act (DAWIA) Level III- Auditing DAWIA Level III – Contracting

About Redstone GCI

Redstone GCI is a consulting firm focused on fulfilling the needs of government contractors in all areas of compliance. With a singular mission to help contractors through the multiple layers of “red tape,” we allow contractors to focus on what they do best – support their mission with the U.S. Government. We are home to a group of consultants made up of GovCon industry professionals, CPAs, attorneys, and retired government audit and acquisition professionals.

Our focus and knowledge of audit and compliance functions administered by DCAA and DCMA will always be at the heart of what we do. However, for the past decade, we’ve strategically grown to support other areas of the government contractor back-office with that same level of focus and expertise. We’ve added expertise in contracts management, subcontract administration, proposal pricing, various software systems, HR and employment law, property administration, manufacturing, data analytics/reporting, Grant specialists, M&A, and many other areas. When we see a trend in the needs of contractors, we act to ensure we can provide the best expertise in the market to fulfill those needs.

One thing our clients can be certain of is that with the Redstone GCI Team in your corner, there is no problem too big and no issue too technical for our team to tackle.

Topics: Government Regulations, Cost Accounting Standards (CAS), Grants & Cooperative Agreements (2 CFR 200)