CASRAI Dictionary

Tag: uniform guidance 2 cfr 200

  • 2 CFR 200 Cost Principles: What Changes Under the 2026 OMB Rule

    On 29 May 2026, the US Office of Management and Budget (OMB), joined by federal award-making agencies, published a proposed rule in the Federal Register substantially rewriting 2 CFR Part 200 — the government-wide Uniform Guidance governing federal grants and cooperative agreements. Inside that broader overhaul sits a narrower, technical change: a rewrite of the 2 CFR 200 cost principles in Subpart E, the section that decides which costs a university, hospital, non-profit, or state agency may lawfully charge to a federal award. For research administrators, the operative question is not whether reporting formats change — it is whether costs an institution has always treated as allowable will still be allowable after the proposed effective date of 1 October 2026.

    What the 2 CFR 200 Cost Principles Actually Require

    Subpart E of 2 CFR Part 200 sets out the framework recipients must apply when deciding whether a cost can be charged — directly or indirectly — to a federal award. Under §200.403 and related sections, a cost is only allowable if it is:

    • Reasonable — it does not exceed what a prudent person would incur under the same circumstances, judged against market prices, sound business practice, and award terms.
    • Allocable — it is incurred specifically for the award, or benefits the award and other work in proportions that can be reasonably estimated.
    • Consistently treated — like costs must be treated alike across federally and non-federally funded activities.
    • Conforming — the cost must comply with limitations in Subpart E itself, in agency-specific implementations such as 2 CFR Part 300 (HHS’s codification of the Uniform Guidance), or in the award’s terms.

    Subpart E also lists over 50 “selected items of cost” — from advertising to travel, equipment, and compensation — each with its own rule. This is the list the 2026 proposed rule edits most directly.

    The 2026 OMB Proposed Rule: What Changes for Allowability

    OMB frames the May 2026 proposal around three objectives: improving transparency, accountability, and oversight of federal funds; clarifying the regulatory status of the 2 CFR text as an OMB rule; and reducing recipient burden. In Subpart E, these goals pull in different directions — some provisions loosen documentation, others tighten what can be charged at all. Comments are due 13 July 2026, ahead of a proposed effective date of 1 October 2026, the start of federal fiscal year 2027.

    The most consequential Subpart E changes in the current draft include:

    • Publication costs would become unallowable unless required by statute or approved in advance by the awarding agency case-by-case.
    • Advertising and public relations costs would become presumptively unallowable, narrowing existing exceptions for recruitment and procurement.
    • Conference attendance costs would only be allowable where expressly approved by the agency and written into award terms.
    • Fundraising and investment management costs would require prior written agency approval rather than the current general prohibition with narrow carve-outs.
    • Fixed-amount awards and subawards would be eliminated; OMB argues they “limit transparency and hinder effective oversight” versus cost-reimbursement structures.
    • A related change to §200.300 (Statutory and National Policy Requirements) would bar federal funds from being used to “fund, promote, encourage, subsidize, or facilitate” DEI or DEIA policies found to violate federal anti-discrimination law — adjacent to, but legally distinct from, the Subpart E allowability tests.

    Despite Executive Order 14332 directing OMB to curb indirect cost recovery on discretionary grants, the proposal does not alter the indirect-cost-rate negotiation system: FY2026 appropriations riders required specified agencies to keep applying negotiated rates as they stood in FY2024. That leaves the 15% de minimis indirect cost rate — raised from 10% in the October 2024 revision, alongside a $10,000 equipment threshold (up from $5,000) and a $1,000,000 Single Audit threshold (up from $750,000) — unchanged for now.

    Allowable vs Unallowable Costs: Current Guidance vs the 2026 Proposal

    The table below summarises how treatment shifts for the categories most affected by the 2026 draft. Treat this as directional, not final — the rule remains open for comment and can change before any effective date.

    Cost category Current treatment (2024 Uniform Guidance) Proposed treatment (2026 draft rule)
    Publication costs Generally allowable as a direct or indirect cost Unallowable unless statute-required or agency pre-approved
    Advertising / public relations Allowable for specified purposes (recruitment, procurement, outreach) Presumptively unallowable; narrow exceptions only
    Conference attendance Allowable if reasonable, necessary, and documented Allowable only with express prior agency approval in award terms
    Fundraising / investment management Generally unallowable, with limited carve-outs Requires prior written agency approval
    Fixed-amount awards Available as alternative to cost-reimbursement awards Eliminated on transparency grounds
    Indirect cost (de minimis) rate 15%; agencies barred from imposing a lower rate absent statute Unchanged pending FY2026 appropriations riders

    Cost Principles: Direct Answers to Common Questions

    What are the 4 cost principles?

    The four cost principles applicable to sponsored awards under 2 CFR 200 are that costs must be reasonable, allocable, allowable, and consistently treated. These tests apply not only to federal funds but also to any cost share or in-kind contribution tied to the award.

    What are the three elements of 2 CFR Part 200?

    2 CFR Part 200 combines three components in one regulation: Uniform Administrative Requirements for pre- and post-award management, Cost Principles in Subpart E governing allowability, and Audit Requirements in Subpart F, which sets the Single Audit threshold and reporting obligations.

    What is the 2 CFR 200 standard?

    2 CFR Part 200, commonly called the Uniform Guidance, is the OMB-issued, government-wide rulebook for federal financial assistance. It prescribes how awards are made, how recipients must account for funds, how costs must be treated, and when audits are required — applied across nearly all federal grant-making agencies.

    Under what circumstances does 2 CFR 200 consider a cost reasonable?

    A cost is reasonable if it does not exceed what a prudent person would incur under the same circumstances at the time the spending decision was made. Reviewers weigh market prices, sound business practice, award terms, and deviation from established institutional policy.

    Implications for Research Administrators and Institutions

    Institutions should not wait for a final rule to begin preparing:

    • Audit PI-facing guidance. Flag any internal policy or budget template that assumes automatic allowability of conference travel, publication charges, or advertising spend before 1 October 2026.
    • Submit comments by 13 July 2026. The 45-day comment period is the main channel through which universities, hospitals, and non-profits — often via associations such as COGR, NCURA, or SRAI — can flag unintended compliance burdens before finalisation.
    • Distinguish Subpart E from §200.300. The DEI/DEIA restriction sits in statutory and national policy requirements, not the cost-allowability tests in Subpart E, and follows a different legal standard and appeal pathway.

    These distinctions matter for the broader research administration compliance function, where allowability determinations increasingly intersect with award terms, indirect cost negotiation, and audit preparation. Grant-compliance terminology used throughout this analysis — allowability, allocability, de minimis rate — is catalogued alongside related research-integrity and funding terms in the CASRAI Dictionary.

    What Happens Next

    The 2 CFR 200 cost principles have changed before — the October 2024 revision raised the de minimis indirect cost rate and equipment threshold — and they are set to change again. What distinguishes the 2026 proposal is its narrower target: rather than adjusting thresholds, it tightens the allowability tests themselves for specific cost categories, shifting several from “generally allowable” to “allowable only with prior written agency approval.” Until the comment period closes and OMB issues a final rule, institutions should treat the current Subpart E text as controlling while building the internal review processes the proposal will likely require. For most research offices, the practical impact will be measured in how many budget lines now need agency sign-off before they can be spent.

  • OMB Uniform Guidance 2026 Overhaul: What Research Offices Should Flag Before the Comment Deadline

    OMB’s omb uniform guidance 2026 overhaul is now a formal proposed rule, not a rumour circulating through listservs. Published in the Federal Register on 29 May 2026 as document 2026-10817 (tracked under docket OMB-2026-0034), the proposal would rewrite 2 CFR Parts 200 and 300 — the framework governing the large majority of academic, non-profit and state federal awards — and rename it the “Uniform Grants Regulation.” The public comment window closes on 13 July 2026, days from now, with a targeted effective date of 1 October 2026, the start of federal fiscal year 2027. For sponsored-programmes offices, general counsel and research administrators, the compressed 45-day comment period means institutions that have not yet reviewed the text are already behind.

    OMB’s three stated objectives for the rewrite

    OMB has organised the proposal around three explicit objectives, set out in the preamble to the Federal Register notice:

    • Transparency, accountability and oversight — expanding federal agencies’ visibility into recipient risk, subaward reporting, conflicts of interest and termination decisions.
    • Regulatory clarity — converting 2 CFR Subtitle A from non-binding “guidance” into a document with regulatory effect in its own right, so future OMB amendments apply government-wide without separate agency rulemakings.
    • Reduced recipient burden — measures such as encouraging multi-year awards, mandating that funding opportunities post to Grants.gov, and using pre-application statements of interest to screen out low-probability applicants before a full proposal is required.

    Much of the substantive detail traces back to Executive Order 14332, “Improving Oversight of Federal Grantmaking” (7 August 2025), which directed OMB to build termination-for-convenience authority and mandatory senior-appointee review into the Uniform Guidance. The 2026 proposal is OMB’s formal vehicle for codifying that order, together with several 2025 executive orders addressing DEI, gender ideology and merit-based opportunity.

    What changes for award recipients

    The proposed rule touches nearly every phase of the award lifecycle. Recipients should not assume that practices considered compliant under the current text will automatically satisfy the revised one — several provisions are new law, not restatements.

    Section Current position Proposed change
    §200.205 – merit review Agency-run scientific/programmatic merit review Senior political appointee conducts “pre-issuance review” of every discretionary award; peer review recommendations are advisory only
    §200.340 – termination Termination chiefly for noncompliance Broad discretionary termination if an award “does not effectuate…the national interest as they exist at the time of termination”; new 90-day suspension authority
    §200.202(e) – R&D awards No domestic-entity restriction “Domestic-first framework” generally limits research and development awards to US-organised entities
    §200.220 (new) – foreign collaboration No equivalent provision Prohibits using federal funds, including indirect cost allocations, for collaboration with “covered foreign countries or entities”
    §200.461 – publication costs Generally allowable Unallowable unless required by statute or approved in advance by the agency
    §200.432 – conference costs Allowable Allowable only if expressly pre-approved in the award’s terms and conditions
    §200.333 – fixed-amount awards Permitted with agency approval Eliminated entirely, in favour of cost-reimbursement structures

    Other proposed changes worth flagging: mandatory E-Verify participation (§200.303(f)); a new requirement that recipients disclose employees who worked at the awarding agency within the prior two years (§200.112–.113); an expanded risk-assessment framework at §200.206(b) that lets agencies weigh an applicant’s Section 117 foreign-gift-disclosure compliance and “questionable practices” history; and a new subrecipient clause (§200.332(i)) obliging pass-through entities to ensure subrecipients do not “significantly damage the reputation” of the funding agency. Notably, OMB has explicitly declined to reopen indirect cost rate methodology in this rulemaking, though the pre-issuance review principle favouring “institutions with lower indirect cost rates” applies indirect downward pressure regardless.

    This is the third revision to the framework since its 2013 consolidation: OMB made administrative updates in August 2020, then a substantive 2024 revision (effective 1 October 2024) that raised the single-audit threshold from $750,000 to $1,000,000. The 2026 proposal is materially broader in scope than either predecessor, extending well beyond audit and cost mechanics into award termination, political review and non-discrimination policy — territory the Uniform Guidance has not previously occupied.

    Common questions about the 2026 Uniform Guidance rewrite

    What is the uniform guidance of 2 CFR 200?

    2 CFR Part 200, informally the Uniform Guidance, is the government-wide framework setting administrative requirements, cost principles and audit requirements for federal grants, cooperative agreements and other financial assistance. Consolidated from eight separate OMB circulars in 2013, it governs how universities, non-profits, states and tribal governments manage federal award funds.

    When did the uniform guidance change?

    OMB has revised the Uniform Guidance three times since 2013: minor administrative updates in August 2020; a substantive revision effective 1 October 2024 that raised the single-audit threshold to $1,000,000; and the sweeping rewrite proposed on 29 May 2026, targeting an effective date of 1 October 2026.

    What is the purpose of Subpart F of the Uniform Guidance in 2 CFR Part 200?

    Subpart F sets the audit requirements for non-federal entities, including the single audit obligation triggered once an organisation spends federal award funds above the statutory threshold. It defines auditee and auditor responsibilities, reporting deadlines and the criteria agencies use to assess an institution’s financial management and internal controls.

    What is the new uniform guidance threshold?

    The most recent confirmed threshold change raised the single-audit trigger from $750,000 to $1,000,000 in annual federal expenditure, effective for fiscal years ending on or after 30 September 2025. The 2026 proposed rewrite does not revisit this figure; it concentrates instead on oversight, termination authority and cost-principle changes.

    How institutions can still comment, and what happens next

    The comment window is short by design: OMB set a 45-day period specifically so that, in its words, “only a single set of government-wide requirements” applies to awards made during fiscal year 2027. Comments may be filed through Regulations.gov against docket OMB-2026-0034 or attached directly to the Federal Register listing for document 2026-10817. As of mid-June 2026 the docket had already drawn more than 14,800 public comments, reflecting the scale of institutional concern.

    Two procedural points matter for anyone drafting a submission before 13 July:

    • Grant-related rulemakings are generally exempt from the Administrative Procedure Act’s requirement that agencies individually respond to every “significant comment,” so OMB may group responses thematically in the final rule’s preamble rather than address each submitter.
    • An agency’s obligation to consider comments in judicial review is limited to the issues those comments actually raise — a specific, well-evidenced submission on a provision an institution intends to challenge later is more likely to preserve that argument than a general objection.

    Research-administration associations, including NCURA and ARMA, are coordinating member briefings and template comment language, and institutions weighing individual versus coalition submissions should consider filing both: a joint comment through a sector body carries collective weight, while an institution-specific comment on provisions with unique operational impact (large multi-year awards, extensive international collaboration, heavy publication or conference spend charged to awards) creates its own record.

    Whether or not the rule is finalised as drafted by 1 October 2026, institutions should not wait for that date to begin preparing. The executive orders underlying most of the proposed provisions — on grantmaking oversight, DEI, and foreign collaboration — are already in effect and already shaping agency behaviour in individual award decisions. Convening a cross-functional review involving the office of research, general counsel, sponsored programmes and research administration compliance staff now, before the final rule lands, is the practical way to avoid a scramble in early October. Given the volume of comments already filed and the litigation risk flagged by multiple legal analyses of the proposal, a modified final rule — rather than the text exactly as proposed — is a realistic outcome, but the direction of travel toward tighter political oversight and narrower allowable costs is unlikely to reverse.