The Federal Government Is in the Process of a Major Rewrite of Grant Award and Administration Rules
- Author: Bryan Miller
- Posted: 2024-12-05
In other words, the new approach taken in the rules is for results-oriented accountability on the part of grantees. Those who are hoping to obtain a government grant need to know what is involved after the grant is given. Their past history of performance and their audit results may be looked at during the grant-awarding process.
Grantees can find the federal government's grant requirements in Part 2 of the Code of Federal Regulations. The last major rewrite of this part of the CFR occurred back in 2014. Now, the Office of Management and Budget has proposed a new rewrite that it is in the process of finalizing. The Government Performance and Results Act of 1993 mandated a move towards a results-oriented approach by the federal government. The latest rules are another step in this process.
Increased Focus on Performance Goals
The first major change comes in the areas of the requirements of the agency to define performance goals. The way that potential grantees know what the government wants is that the government includes its expectations in the Funding Opportunity Announcement (FOA). Now, the government can only perform programs when it has clear goals laid out ahead of time that it communicates to grantees. Before applications are submitted, potential grantees will know the metrics and the performance expectations because the government will inform them in clear terms. There is some concern that this will encroach on the grantees' ability to provide an innovative approach. Oftentimes, the government awards grants because it wants people to innovate, and a more prescriptive approach can confine grantees to a more regulated approach.
The Merit Review Process Will Be Strengthened
Grantees can expect that their proposal will go through a process called the merit review before the grant is awarded. This became a requirement in a previous rewrite of the grant rules. The government wants to know that it is giving money to a project that has a chance of success. Under the new rules, all discretionary grant awards (meaning those not mandated by statute to a certain awardee) must go through the merit review process. Further, the merit review will now take a close look at more aspects of the grantee's operation. Their administrative and financial management functions will now receive scrutiny in the merit review process. Previously, the government looked at that more in the audit process, examining performance during grants. The organization's past performance can now be make-or-break when it comes to securing a grant.
The Government Can Now Terminate Grants for Convenience
In the past, the federal government was only able to terminate an existing award based on the fact that the awardee was not performing. In the realm of contract law, this would be known as a termination for default. However, the government did not have the ability to terminate the award for other reasons. The government does have the ability to terminate a contract because it no longer needs the good that it is procuring. This is known as a termination for convenience.
Now, the government will have the ability to terminate a grant for convenience. Of course, the government will need to pay reasonable termination costs based on expenses that the grantee has awarded. Nonetheless, the grantee needs to be prepared for the fact that the government could terminate the award during the performance.
Those who enter into financial assistance agreements where they receive grants from the federal government need to study the terms of these new rules. They will change how grants are awarded and administered. Grantees do not want to be taken by surprise when the rule change is finalized. They will need to perform as an organization if they want continued awards from the federal government.
