Feedback on Prior Approval for Equipment Requirement Implementation

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July 18, 2016

TO:                NIFA Capacity Grantees

FROM:         Cynthia Montgomery, Deputy Director
                       Office of Grants and Financial Management

SUBJECT:     Feedback on Prior Approval for Equipment Requirement Implementation

I want to thank you for taking the time to participate in NIFA's June 15 and 16 webinars on the implementation of prior approval for equipment for capacity grantees. I received many thoughtful questions and recommendations and appreciate your willingness to work with NIFA. We have created Q&As, attached to this memorandum, based on the questions we received during the webinars as well as feedback and questions received post-webinars. I hope these will be useful to you as you consider the best implementation path. We extended the deadline for feedback until July 30, so please review the information provided in this memorandum and Q&As and feel free to submit additional feedback and recommendations. There are several issues raised in your feedback I would like to address.  First, I want to address the origin of the prior approval requirement.  The requirement stems from the Uniform Guidance developed by the Office of Management and Budget and codified in 2 CFR part 200.  The Uniform Guidance was published in the Federal Register on December 26, 2014.  USDA's adoption of 2 CFR 200, at 7 CFR part 400, was published in the Federal Register as an Interim Final Rule on December 19, 2014.  The Office of Management and Budget held numerous webinars related to Uniform Guidance implementation.  The Uniform Guidance applies to all federal assistance awards,· regardless of whether they are capacity (formula-based) or competitive.  The prior approval for equipment is required under Subpart E, the cost rinciples, specifically 2 CFR part 200.439.  In the upcoming FY 2017, capacity terms and conditions will contain this requirement.

Second, many of you indicated that your institution has internal processes related to approval and procurement of equipment.  These processes are also required under the Uniform Guidance, as internal controls and to meet the procurement requirements.  However, internal processes do not meet the requirement in the Uniform Guidance that equipment purchases receive prior approval from the awarding agency.  The purpose of prior approval in the Uniform Guidance is to help reduce unallowable expenditures before they occur by requiring it for items that have higher instances of questioned costs.

The PowerPoint, recorded webinar, and transcript of webinar Q&As are posted on the NIFA Website. Please submit any additional feedback or questions on implementation of prior approval requirements to Maggie Ewell by July 30.  I am confident that we will implement a system that is workable for our grantee institutions and our staff to meet the requirements of the Uniform Guidance.  Again, I greatly appreciate your time and willingness to work with NIFA.