Last week, the National Aeronautics and Space Administration (NASA) adopted as final its new regulatory framework implementing the “Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards,” referred to by many as the “Super” or “Omni” Circular. The Office of Management and Budget (OMB) issued the Super Circular in late December 2013 – in its own words, “[t]o deliver on the promise of a 21st-Century government that is more efficient, effective and transparent” – and shook up the world of grants and cooperative agreements by replacing the cobweb of cross-referencing OMB Circulars that governed grant management. NASA, along with many other federal agencies, issued its updated regulations implementing the Super Circular in December 2014 as an interim rule and requested comments from the public. It received none, and last Friday, after undergoing some internal clerical revisions, NASA’s new regulatory framework became final. Below are some brief takeaways:
The regulatory framework governing grants and cooperative agreements now more closely mirrors the structure of federal contract regulations under the Federal Acquisition Regulation (FAR) and FAR supplements. Emulating the federal contracts regulatory framework, under which agencies generally follow the FAR and supplement where necessary with agency specific regulations (e.g., NASA FAR Supplement (NFS)), the Super Circular consolidates generally applicable grant and cooperative agreement regulations into Title 2, Part 200, of the Code of Federal Regulations, which agencies then supplement in their respective Parts under Title 2 (e.g., Part 1800, for NASA).
Grantees and cooperative agreement awardees must carefully review the certifications that are now required at award. In another similarity to the federal contracts framework, the new NASA grants regulations require grant and cooperative agreement recipients to make a number of certifications and assurances on award. Awardees must certify compliance with federal nondiscrimination laws, agree to report lobbying activities, and certify that neither they nor their principals are debarred, suspended, or recently convicted of civil fraud in connection with public funds or antitrust violations. Awardees must further certify on award that they have not, within the last three years, had a federal, state or local transaction terminated for cause or default.
Grants and cooperative agreements are now audited for cost accounting compliance, much like federal contracts. Subparts E and F of the Super Circular provide a cost accounting and auditing framework that will be familiar to those who have performed federal contracts in the past. For example, under the cost principles laid out in Subpart E, costs are allowable under federal grant awards if they are: (1) reasonable, (2) allocable, (3) consistent with generally accepted accounting principles and the awardee’s uniform accounting policies and procedures, (4) consistent with any other limitations in the regulations, and (5) adequately documented. Subpart F mandates audits for Awardees expending $750,000 or more in federal grant or cooperative agreement awards in a year. For-profit organizations, who may have previously established practices to comply with federal cost accounting requirements, are not required to establish a new system for grants and cooperative agreements; instead, awards received by these commercial organizations are still governed by FAR Parts 30 and 31 and the Cost Accounting Standards in 48 C.F.R. part 99. However, non-profit organizations seeking grants or cooperative agreements with NASA must familiarize themselves with the full extent of the new cost accounting requirements and establish appropriate accounting procedures.
Patent rights for small businesses that develop intellectual property under NASA grants or cooperative agreements are still governed by existing Bayh-Dole Act regulations, while other commercial firms are subject to a complex, NASA-specific “New Technology” clause. Over six columns in the federal register publication of the new NASA grant regulations are devoted to the “New Technology” clause, which is to be inserted into all awards with commercial firms that are not classified as small businesses. Such awardees must establish procedures to identify inventions and discoveries made through performance of the grant or cooperative agreement, and they must report these inventions and discoveries at regular intervals throughout performance. NASA presumptively takes title to any reported patentable invention, though the awardee may submit a written statement providing evidence supporting its claim to title instead.
Rights in data developed under grants and cooperative agreements may be specifically tailored by the parties to fit the circumstances and the awardee’s need to protect proprietary information. The new NASA grant regulations provide a “Rights in Data” clause that is to be included in all awards, including those with large commercial organizations. However, the language prescribing this clause states that the grant officer may revise the language to fit the particular circumstances of the program and the recipient, so long the relevant NASA Center’s Patent Counsel concurs. If left unaltered, the clause provides the government a royalty-free, nonexclusive and irrevocable license to use, reproduce, and distribute the data to the public.
These are just a sample of the many provisions included in the new NASA grant regulations codified in 2 C.F.R. part 1800. With the federal government providing over $600 billion annually in federal grants, cooperative agreements, and other assistance payments, administrative and cost management regulation have become a focal point of recent attempts to reign in excess spending. The Super Circular and supplemental regulations place federal grantees under the microscope of award oversight, and organizations pursuing or performing federal grants with NASA and other agencies must carefully review the new regulations to fully understand their obligations and rights under federal awards.
