Dismas Locaria, a partner in Venable's Government Contracts Practice, recently hosted a webinar to address hot-button topics for nonprofit grant recipients. He took a look back at 2021, with a focus on Paycheck Protection Program (PPP) loan forgiveness, the China Initiative, and other regulatory updates. He also answered questions from participants who want to know more about what to expect in 2022.
Q. With respect to infrastructure-related funding, will nonprofits be eligible for funding set-asides based on an organization's profile (e.g., female leadership, minority representation, etc.)?
A. Typically, the answer is no. These profiles are not traditionally viewed or considered in the grant context. However, this is going to be something to keep an eye out for, as the current administration is more focused on these concepts than the previous one. Keep in mind that in the private foundation sector, these distinguishing profile features carry more weight. I have seen many funding opportunities from foundations and other private organizations that are specifically seeking to fund and support women- or minority-led/managed organizations.
Q. With the increased focus on climate change, any thoughts on whether Environmental, Social, and Governance (ESG) goals may be a consideration with respect to grants?
A. Again, not typically, but it's a good idea to get in front of the agencies issuing programmatic funds to see if you can help shape their priorities. This current administration is more inclined to consider ESG goals in funding applications.
Q. How do we cover costs under a minimum wage hike?
A. The hike is going to be applicable only if there is a provision included in your contract or cooperative agreement to comply with the new executive order. In a cooperative agreement, it's a cost-reimbursable vehicle, where you pass those costs directly to the government. This may put tension on your ceiling and program demands, but it should be fully reimbursed. I would examine how the increase might impact your budget and, if needed, seek to reallocate funds with your agreement officer. Ultimately, for those with cooperative agreements, the new wage increase should not be too much of a strain if you plan for it.
On the contracting side, do not accept a modification until you consult with your contracting officer to cover the costs added by the government. Regardless, for changes like this, you are entitled to request an equitable adjustment (REA). Make sure to capture/document these costs and present them to the government through an REA and, if necessary, a claim if the REA is denied.
Q. Do you anticipate increased practices supporting data privacy and protection, aside from the Health Insurance Portability and Accountability Act (HIPAA)?
A. From a grant perspective, cybersecurity is a pressing issue and a growing area of concern. For example, the Department of Defense (DOD) is rolling out a Cybersecurity Maturity Model Certification (CMMC). With respect to HIPAA, I see this as an increasing area of concern, and I expect change on the horizon in the next five years. I don't see implementation anytime soon, however. It is a significant cost burden for grant recipients to overhaul their IT and cybersecurity systems. Pushing this for contractors has already been in the works through the CMMC program, which currently applies only to DOD contractors. This may eventually be applied to commercial contractors through efforts by the General Services Administration (GSA) programs, but even that is probably more than a few years out.
Q. Given the prevalent use of social media and the internet of things, should there be any concern that there may be an expectation of grantees securing cybersecurity insurance on top of business insurance?
A. Grantees should consider cyber insurance as an increasingly better business decision and include that in their indirect rates, although we likely won't see this expectation pushed by the government anytime soon. On the other hand, cyber is a more indirect means of acquiring information (versus a more direct channel, like economic espionage). We may start seeing more prevalence through research and development projects and/or via third-party actors trying to protect research projects and assets.