[Federal Register: December 7, 2007 (Volume 72, Number 235)]
[Rules and Regulations]
[Page 69145-69148]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07de07-6]
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DEPARTMENT OF EDUCATION
34 CFR Part 75
RIN 1890-AA15
[Docket ID ED-2007-OCFO-0132]
Direct Grant Programs
AGENCY: Office of the Chief Financial Officer, Department of Education.
ACTION: Final regulations.
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SUMMARY: The Secretary amends the Department's regulations governing
the determination and recovery of indirect costs by grantees. These
amendments address procedural aspects related to the establishment of
temporary indirect cost rates, specify the temporary rate that will
apply to grants generally, and clarify how indirect costs are
determined for a group of applicants that apply for a single training
grant.
DATES: These regulations are effective January 7, 2008.
FOR FURTHER INFORMATION CONTACT: Richard Mueller, U.S. Department of
Education, 830 First Street, NE., room
[[Page 69146]]
21C7, Washington, DC 20202-4450. Telephone: (202) 377-3838 or via the
Internet: Richard.Mueller@ed.gov.
If you use a telecommunications device for the deaf (TDD), you may
call the Federal Relay Service (FRS) at 1-800-877-8339.
Individuals with disabilities may obtain this document in an
alternative format (e.g., Braille, large print, audiotape, or computer
diskette) on request to the contact person listed under FOR FURTHER
INFORMATION CONTACT.
SUPPLEMENTARY INFORMATION: On May 24, 2007, the Secretary published a
notice of proposed rulemaking (NPRM) for these amendments in the
Federal Register (72 FR 29097). In the preamble to the NPRM, the
Secretary discussed on pages 29098 and 29099 the major changes proposed
to the current regulations. These changes are summarized as follows:
Amending Sec. 75.560(c) and (d) to specify the procedures
used to establish a temporary indirect cost rate for any grantee that
does not have a federally recognized indirect cost rate.
Amending Sec. 75.562(c) to clarify that a grantee cannot
include the amount of a sub-award \1\ that exceeds $25,000 in the
modified total direct cost base used to determine and charge its
indirect cost rate.
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\1\ The term ``sub-award,'' as used in the final regulations,
covers both subgrants and contracts made under a grant. However, as
explained in the NPRM, because virtually all of the Department's
discretionary grant programs do not authorize grantees to award
subgrants, we describe the effect of the final regulations only on
contracts awarded by grantees.
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Amending Sec. 75.564(e) to clarify the determination of
indirect costs for a training grant in the context of a grant to a
group of organizations that apply together for a grant under the
procedures in Sec. Sec. 75.127 through 75.129.
These final regulations provide a temporary indirect cost rate to a
grantee that does not have a federally recognized indirect cost rate on
the date the Department awards its first grant. The temporary rate for
such a grantee will be 10 percent of the direct salaries and wages of
the project. These regulations permit the use of a temporary indirect
cost rate under the grant award for the first 90 days after the date
the Department issues the Grant Award Notification. A grantee may
continue to charge indirect costs at the temporary rate after the first
90 days if the grantee submits a formal indirect cost proposal to its
cognizant agency within those 90 days. If, after the 90-day period, a
grantee has not submitted an indirect cost proposal to its cognizant
agency, it must stop using the temporary rate. After that period, the
grantee will not be allowed to charge any indirect costs to its grant
until it obtains a federally recognized indirect cost rate from its
cognizant agency.
These regulations make the Department's practice consistent with
the practice of other Federal agencies and reduce the number of
improper payments that result when applicants budget indirect costs
that are greater than the actual indirect costs the applicant can
expect to recover under Federal cost principles. As explained in the
NPRM, under the Department's prior practice, new grantees of the
Department were not recovering any indirect costs until they negotiated
an indirect cost rate with their cognizant agencies. These regulations
now enable a new grantee to recover indirect costs at the temporary
rate until it negotiates a rate with its cognizant agency or for 90
days if it does not submit its indirect cost rate proposal to its
cognizant agency within the 90-day period.
The regulations also clarify how the modified total direct cost
base is determined when a grant is subject to the eight percent
indirect cost rate limitation for training grants and specify how to
treat sub-awards (contracts) if the indirect cost rate is applied to a
grant made to a group under the procedures in Sec. Sec. 75.127 through
75.129.
Analysis of Comments and Changes
In the NPRM we invited comments on the proposed regulations. We did
not receive any comments. There are no substantive differences between
the NPRM and these final regulations. However, we have reviewed the
regulations since publication of the NPRM and have made the following
technical changes:
We revised Sec. 75.560(d)(3)(i) by deleting the words
``after the date the indirect cost proposal was submitted to the
cognizant agency'' because this description of the period during which
a grantee may recover costs at the negotiated rate is stated in
paragraph (d)(3). The revised paragraph (d)(3)(i) simply states that
the total amount of funds recovered by the grantee under the federally
recognized indirect cost rate is reduced by the amount of indirect
costs ``previously recovered under the temporary indirect cost rate.''
We believe these changes make the paragraph easier to understand.
We added a note following Sec. 75.562(c)(1) to clarify
that, for any grantee that did not have a federally recognized indirect
cost rate on the date its training grant was awarded, the indirect
costs recovered under the training grant limitation in Sec.
75.562(c)(1) are also subject to the limitations in Sec. 75.560(d)(3).
Also, as a result of our internal review, we have concluded that
changes similar to those reflected in these final regulations also
should be made to 34 CFR part 76, which applies to State-administered
programs of the Department. Therefore, soon we intend to propose
changes to part 76 that are consistent with the changes in these
regulations.
Transition Issues
Because the regulations authorizing a specified temporary indirect
cost rate confer a benefit on new grantees, the Secretary has
discretion to apply the regulations to grants made before the effective
date of these regulations. Under the final regulations, a grantee must
submit a formal indirect cost proposal to its cognizant agency within
90 days after the date the Department issues the Grant Award
Notification (GAN). However, we are aware that some new grantees are
currently in the first budget period of their grants and do not have
Federally recognized indirect cost rates. These grantees would benefit
from being able to use the temporary indirect cost rate as soon as
these regulations become effective in 30 days. Accordingly, any grantee
that was or is issued a GAN before these regulations become effective
on January 7, 2008, is in the first budget period of its grant, and did
not have a federally recognized indirect cost rate on the date the GAN
was issued, may begin using the temporary indirect cost rate starting
on the effective date of these regulations and will have until April 7,
2008 (90 days after the effective date of these final regulations) to
submit a formal indirect cost proposal to its cognizant agency. If a
grantee submits an indirect cost proposal within the 90 days after the
regulations become effective, it may continue charging at the temporary
rate until it obtains a federally recognized indirect cost rate. The
Secretary takes this action so that new grantees may benefit from these
amendments as soon as possible.
Finally, Sec. 75.562(c)(2) requires grantees to exclude all
contract costs in excess of $25,000 from the base used to calculate the
total indirect cost recovery under a training grant. This exclusion
will apply to the first training grant (new or continuation) made to a
grantee after the date these regulations become effective.
Executive Order 12866
We have reviewed these final regulations in accordance with
[[Page 69147]]
Executive Order 12866. Under the terms of the order we have assessed
the potential costs and benefits of this regulatory action.
The potential costs associated with the final regulations are those
resulting from statutory requirements and those we have determined to
be necessary for administering the Department's Direct Grant programs
effectively and efficiently.
In assessing the potential costs and benefits--both quantitative
and qualitative--of this regulatory action, we have determined that the
benefits would justify the costs.
Summary of potential costs and benefits.
These regulations impose no additional burdens on applicants for
discretionary grants or recipients of those grants. The regulations
merely specify the rate at which grantees can recover indirect costs
during a temporary period when the grantee does not have an indirect
cost rate recognized by the Federal Government and establish procedural
requirements regarding temporary indirect cost rates. While these final
regulations prohibit a grantee from recovering indirect costs if the
grantee has not submitted its indirect cost proposal within the 90 days
after the date the Department issues the GAN, the burden and timing of
submitting an indirect cost rate proposal under the procedures in the
Federal cost principles do not change at all.
Paperwork Reduction Act of 1995
These regulations do not contain any information collection
requirements.
Intergovernmental Review
These regulations affect Direct Grant programs of the Department
that are subject to Executive Order 12372 and the regulations in 34 CFR
part 79. One of the objectives of the Executive order is to foster an
intergovernmental partnership and to strengthen federalism. The
Executive order relies on processes developed by State and local
governments for coordination and review of proposed Federal financial
assistance.
This document provides early notification of our specific plans and
actions for these programs.
Assessment of Educational Impact
In the NPRM we requested comments on whether the proposed
regulations would require transmission of information that any other
agency or authority of the United States gathers or makes available.
Based on the response to the NPRM and on our review, we have
determined that these final regulations do not require transmission of
information that any other agency or authority of the United States
gathers or makes available.
Electronic Access to This Document
You may view this document, as well as all other Department of
Education documents published in the Federal Register, in text or Adobe
Portable Document Format (PDF) on the Internet at the following site:
http://www.ed.gov/news/fedregister.
To use PDF you must have Adobe Acrobat Reader, which is available
free at this site. If you have questions about using PDF, call the U.S.
Government Printing Office (GPO), toll free, at 1-888-293-6498; or in
the Washington, DC, area at (202) 512-1530.
Note: The official version of this document is the document
published in the Federal Register. Free Internet access to the
official edition of the Federal Register and the Code of Federal
Regulations is available on GPO Access at: http://www.gpoaccess.gov/nara/index.html.
(Catalog of Federal Domestic Assistance Number does not apply.)
List of Subjects in 34 CFR Part 75
Administrative practice and procedure, Education Department, Grant
programs--education, Grant administration, Performance reports,
Reporting and recordkeeping requirements, Unobligated funds.
Dated: December 4, 2007.
Margaret Spellings,
Secretary of Education.
0
For the reasons discussed in the preamble, the Secretary amends part 75
of title 34 of the Code of Federal Regulations as follows:
PART 75--DIRECT GRANT PROGRAMS
0
1. The authority citation for part 75 continues to read as follows:
Authority: 20 U.S.C. 1221e-3 and 3474, unless otherwise noted.
0
2. Section 75.560 is amended by revising paragraphs (b) and (c),
redesignating paragraph (d) as paragraph (e), and adding a new
paragraph (d) to read as follows:
Sec. 75.560 General indirect cost rates; exceptions.
* * * * *
(b) A grantee must have obtained a current indirect cost rate
agreement from its cognizant agency, to charge indirect costs to a
grant. To obtain an indirect cost rate, a grantee must submit an
indirect cost proposal to its cognizant agency within 90 days after the
date the Department issues the Grant Award Notification (GAN).
(c) If a grantee does not have a federally recognized indirect cost
rate agreement, the Secretary may permit the grantee to charge its
grant for indirect costs at a temporary rate of 10 percent of budgeted
direct salaries and wages.
(d)(1) If a grantee fails to submit an indirect cost rate proposal
to its cognizant agency within the required 90 days, the grantee may
not charge indirect costs to its grant from the end of the 90-day
period until it obtains a federally recognized indirect cost rate
agreement applicable to the grant.
(2) If the Secretary determines that exceptional circumstances
warrant continuation of a temporary indirect cost rate, the Secretary
may authorize the grantee to continue charging indirect costs to its
grant at the temporary rate specified in paragraph (c) of this section
even though the grantee has not submitted its indirect cost rate
proposal within the 90-day period.
(3) Once a grantee obtains a federally recognized indirect cost
rate that is applicable to the affected grant, the grantee may use that
indirect cost rate to claim indirect cost reimbursement for
expenditures made on or after the date the grantee submitted its
indirect cost proposal to its cognizant agency or the start of the
project period, whichever is later. However, this authority is subject
to the following limitations:
(i) The total amount of funds recovered by the grantee under the
federally recognized indirect cost rate is reduced by the amount of
indirect costs previously recovered under the temporary indirect cost
rate.
(ii) The grantee must obtain prior approval from the Secretary to
shift direct costs to indirect costs in order to recover indirect costs
at a higher negotiated indirect cost rate.
(iii) The grantee may not request additional funds to recover
indirect costs that it cannot recover by shifting direct costs to
indirect costs.
* * * * *
0
3. Section 75.562 is amended by revising paragraph (c) to read as
follows:
Sec. 75.562 Indirect cost rates for educational training projects.
* * * * *
(c)(1) Indirect cost reimbursement on a training grant is limited
to the recipient's actual indirect costs, as determined in its
negotiated indirect cost rate agreement, or eight percent of a modified
total direct cost base, whichever amount is less.
[[Page 69148]]
Note to paragraph (c)(1): If the grantee did not have a
federally recognized indirect cost rate agreement on the date the
training grant was awarded, indirect cost recovery is also limited
to the amount authorized under Sec. 75.560(d)(3).
(2) For the purposes of this section, a modified total direct cost
base consists of total direct costs minus the following:
(i) The amount of each sub-award in excess of $25,000.
(ii) Stipends.
(iii) Tuition and related fees.
(iv) Equipment, as defined in 34 CFR 74.2 and 80.3, as applicable.
Note to paragraph (c)(2)(iv): If the grantee has established a
threshold for equipment that is lower than $5,000 for other
purposes, it must use that threshold to exclude equipment under the
modified total direct cost base for the purposes of this section.
(3) The eight percent indirect cost reimbursement limit specified
in paragraph (c)(1) of this section also applies to sub-awards that
fund training, as determined by the Secretary under paragraph (b) of
this section.
(4) The eight percent limit does not apply to agencies of State or
local governments, including federally recognized Indian tribal
governments, as defined in 34 CFR 80.3.
(5) Indirect costs in excess of the eight percent limit may not be
charged directly, used to satisfy matching or cost-sharing
requirements, or charged to another Federal award.
* * * * *
0
4. Section 75.564 is amended by revising paragraph (e) to read as
follows:
Sec. 75.564 Reimbursement of indirect costs.
* * * * *
(e)(1) Indirect costs for a group of eligible parties (See
Sec. Sec. 75.127 through 75.129) are limited to the amount derived by
applying the rate of the applicant, or a restricted rate when
applicable, to the direct cost base for the grant in keeping with the
terms of the applicant's federally recognized indirect cost rate
agreement.
(2) If a group of eligible parties applies for a training grant
under the group application procedures in Sec. Sec. 75.127 through
75.129, the grant funds allocated among the members of the group are
not considered sub-awards for the purposes of applying the indirect
cost rate in Sec. 75.562(c).
* * * * *
[FR Doc. E7-23817 Filed 12-6-07; 8:45 am]
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