September 2015

Federal Grant and Contract News for Nonprofits - September 2015

4 min

With FY2016 nearly upon us, nonprofit federal grantees have much to keep in mind. Not only is FY2016 the first full year of the implementation of the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance or Super Circular), another important change is nearly afoot. As we have commented in this newsletter on many occasions recently, nonprofit federal grantees are being asked to adhere to a more "contract-like" environment, and, in this instance, nonprofits receiving federal grants and cooperative agreements‎ will be treated identically to federal contractors. Specifically, beginning on January 1, 2016, federal grantees will become part of the federal government's Federal Awardee Performance and Integrity Information System (FAPIIS), an integrity and performance system that includes (and provides publicly) data related to the integrity and performance of entities receiving federal grants and cooperative agreements.

Background on FAPIIS

FAPIIS was created to satisfy requirements imposed by Section 872 of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 (Pub. L. 110-417) (Section 872). The FAPIIS database integrates information from a number of other current and former federal databases related to contractor integrity and performance, such as the Past Performance Information Retrieval System and the Contractor Performance Assessment Reporting System, as well as the System for Award Management (SAM) (formerly the Central Contractor Registration and the Excluded Parties List System), which includes present responsibility determinations.

Section 872 also imposed mandatory reporting requirements on contractors. For example, for every proposal relating to a government contract with a value expected to exceed $500,000, contractors are required to report certain criminal or civil violations, administrative actions, or settlements of such matters that have occurred within the last five years. See FAR 9.104-7(b); FAR 52.209-7(c). Further, contractors that held government contracts in excess of $10 million are deemed to have represented that the information they entered into FAPIIS via SAM is current, accurate, and complete as of the date of submission of their offer.

Impact of Section 872 to Federal Grantees

Although the original regulations implementing Section 872 limited the implementation of FAPIIS to federal contractors, on July 22, 2015, the U.S. Office of Management and Budget (OMB) issued final guidance to federal agencies for the reporting and use of information concerning the integrity and performance of federal grant and cooperative agreement recipients. As a consequence, beginning January 1, 2016, federal grant and cooperative agreement recipients will be held to requirements and exposure similar to those of federal contractors. Some of the requirements include the following:

  • Federal awarding agencies are required to report information about any termination of an award due to a material failure to comply with the award terms and conditions; any administrative agreement with a recipient to resolve a suspension or debarment proceeding; and any finding that a recipient is not qualified to receive a given award, if the finding is based on criteria related to the recipient's integrity or prior performance under federal awards.
  • Recipients that have federal contract, grant, and cooperative agreement awards with a cumulative total value greater than $10,000,000 are required to:
    • Provide information about certain civil, criminal, and administrative proceedings that reached final disposition within the most recent five-year period and that were connected with the award or performance of a federal award; and
    • Disclose semiannually certain information about these criminal, civil, and administrative proceedings.
  • Federal awarding agencies, prior to making an award to a recipient, must determine whether the recipient is qualified to receive the particular award. In making the determination, the federal awarding agency must take into consideration any information about the entity that is in the designated integrity and performance system.
  • Notice of funding opportunities and federal award terms and conditions must inform recipients that they may submit comments about any information that the federal awarding agency reported to the system about that recipient, for consideration by the federal awarding agency in making future federal awards to the recipient.

Practical Tips and Guidance

The recent final guidance imposes a number of ongoing requirements upon federal grant and cooperative agreement recipients that are independent of their specific obligations under their current awards. Accordingly, nonprofit grantees must:

  • Know and understand the specific parameters of their reporting obligation and have mechanisms in place so the nonprofit can be certain it is providing complete, accurate, and timely information;
  • Ensure that the grant or cooperative agreement includes a well-defined scope of work and appropriate performance milestones to avoid negative performance evaluations;
  • Establish a communications plan for communicating to the federal government unanticipated factors that affect performance and document the government's response;
  • Carefully monitor and address subrecipients' failure to perform;
  • Take prompt action to respond to any negative comments/information included in FAPIIS by federal awarding agencies; and
  • Keep in mind that much of the information contained in FAPIIS is publicly available, which may engender questions, concerns, and/or reactions from non-federal entities (e.g., donors, competitors, watchdog groups, other current or potential grant-making agencies or foundations).

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The imposition of FAPIIS on federal grant and cooperative agreement recipients is yet another example of the evolution of federal grants and cooperative agreements to a more contract-like setting.