Government Grant and Contract News for Nonprofits – June 2018

5 min

The past month has been interesting in the federal grant space. Several nonprofits scored another major victory in their challenge to termination actions taken by the U.S. Department of Health and Human Services (HHS). The Office of Management and Budget (OMB) has increased the micro-purchase and simplified acquisition thresholds under the Uniform Guidance. SAM.gov continues to work through its security issues, creating yet another process for maintaining your account and ability to do business with the federal government. Finally, for those who are new or inexperienced in the federal grant space, the Congressional Research Service has released its annual Resources for Grantseekers, a great resource for those thinking about or just getting started in the federal grant space.

Teen Pregnancy Prevention Program Lawsuits and Aftermath

On June 1, 2018, the U.S. District Court for the District of Columbia handed down another decision that the HHS had inappropriately and unlawfully terminated the grants of several Teen Pregnancy Prevention Program (TPPP) recipients. Previously, federal courts in several related cases, including a case before the same judge (Judge Jackson) as in this case, found that HHS had illegally terminated the TPPP grants. One court simply explained that the termination was done "without explanation and in contravention of its own regulations, HHS's action easily qualifies as an arbitrary and capricious act under the [Administrative Procedures Act]." King County v. Azar, No. 2:18-cv00242 (W.D. Wash. May 29, 2018).

In the most recent case, a class action lawsuit, Judge Jackson found that the "legal claims [were] indistinguishable from the dispute that this Court recently considered and resolved in Policy and Research, LLC v. HHS." No. 1:18-cv-00346 (D.D.C. May 11, 2018). The only new issue raised in this case was an argument presented by the government that the equitable doctrine of laches barred the class members from obtaining similar relief. Judge Jackson rejected this argument and ordered HHS "to accept and process any noncompeting continuation applications that the class members submit as if the agency had not undertaken to shorten these grantees' federal awards." In turn, HHS has since issued notice of awards to these former litigants and now applicants and recipients. However, HHS has specifically noted in its notice of award that it is only doing so "[p]ursuant to court orders [and] HHS does not agree with the court decisions and reserves the right to appeal."

HHS's defiant language in the notice of award is certainly something this practitioner has never before seen in this sort of agreement document, and it will be interesting to see what if any legal and/or practical impediments HHS imposes on these grantees over the coming year. Nevertheless, there is no question that the district court decisions were notable victories for the nonprofit grant community, which is typically subject to the wide and sometimes whimsical discretion of the funding agency. Importantly here, the TPPP grants were devoid of termination for convenience language, which may not be the case with most grants (and certainly not contracts). However, these decisions do provide some protection with the elimination of programs based simply on political or policy urges.

Key Threshold Increases

On June 21, 2018, the OMB, in accordance with recent statutory changes set forth in the National Defense Authorization Acts for Fiscal Years 2017 and 2018, raised the threshold for micro-purchases under a federal financial assistance award to $10,000 and raised the threshold for simplified acquisitions to $250,000.

Through these increases, which were effective for grantees on the day of the memo, OMB is enlarging for nonprofit grantees the amount of contracting that may be done under a federal grant without meeting the myriad of formal competition requirements. Indeed, for purchases below the micro-purchase threshold, no competition is necessary, and for purchases below the simplified acquisition threshold, grantees need only review a sufficient number of quotes to make an informed and most advantageous determination. For more information on procurement requirements for grant recipients, click here.

Importantly, while OMB's memorandum also pertains to the thresholds under the Federal Acquisition Regulation (FAR), they are not effective until the FAR is amended to incorporate these new thresholds.

SAM.gov Update

Last month, we provided information on security updates to SAM.gov, including the need to manually submit a notarized letter, which was causing a backlog of several months to make even minor changes to your SAM registration. In an effort to rectify the manual process and resulting backlog, but maintain tighter security of SAM.gov, the General Services Administration (GSA) is implementing multi-factor authentication for SAM.gov users. This multi-factor authentication will be effective on June 29, 2018. To prepare, all SAM.gov users should ensure they know the email associated with their SAM.gov username and passwords and have access to that email prior to June 29. On June 29, 2018, SAM.gov users will be prompted to create a Login.gov account, which will require users to have access to the email address associated with their SAM.gov accounts.

The GSA is continuing to require SAM.gov accounts to have an Entity Administrator notarized letter on file. However, the notarized letter will no longer need to be on file before registration is activated. This change in the notarized letter process is effective on June 11, 2018 for entities registered for the purpose of Federal Assistance only and effective for all entities on June 29, 2018.

Additional information concerning these changes to SAM.gov registration is available here, and a helpful step-by-step guide for understanding the new SAM.gov login process can be found here.

Resources for Grantseekers

On June 13, 2018, the Congressional Research Service released its Resources for Grantseekers. The aim of this report is to "describe[] key sources of information on government and private funding, and outlining eligibility for federal grants." This report is a key guide for nonprofits that may have recently entered the federal grant space or are considering it. In particular, this report provides information on key federal sources, contacts at both the federal and state levels, and information on grant proposal writing. For those who are new to or considering seeking a federal award, this is a must-read!