What Policy Simultaneously Improves Performance, Transparency, and Oversight for Federal Awards?

On December 26, 2013, OMB published final guidance in 2 C.F.R 200 titled Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards to improve the effectiveness and efficiency of Federal financial assistance.  This guidance delivers on President Obama’s second term management agenda and his first term directives under Executive Order 13520, the February 28, 2011 Presidential Memorandum, and the objectives laid out in OMB Memorandum M-13-17 to better target financial risks and better direct resources to achieve evidence-based outcomes. The policy simultaneously improves performance, transparency, and oversight for Federal awards.

But the next question is, “By how much?”

To answer this question, today OMB is issuing new metrics to measure the impact of the Uniform Guidance.  We will use data collected annually in the Federal Audit Clearinghouse as well as information from Federal agencies and other partners to measure these policies against key benchmarks, and evaluate the need for future reforms. 

Since the Uniform Guidance was published this past December, we have reached out to stakeholders through webcasts, Frequently Asked Questions, and numerous conversations, all while working closely with Federal agencies to develop their implementing regulations.  From this engagement, we believe the Uniform Guidance could transform the landscape of the more than $600 billion awarded annually in Federal financial assistance.

We believe these new policies could save the Federal government more than $50 million per year in audit expenses, allow recipients to end burdensome and obsolete reporting practices, and allow previously administrative dollars to be re-programed to support better program performance.

For example:

• For universities, this could mean more dollars to put towards the basic research that underpins innovation throughout the world.
• For small nonprofits, the simplifications could remove barriers to entry and open competition for Federal awards to more new entrants than ever before.
• For state, local, and tribal governments, this could mean more flexibility to develop efficient, evidence-based programs that best provide citizens with the services they most need.  

Further, this policy could improve oversight of these awards by increasing transparency through publication of audit reports, requiring recipients to have strong internal controls, and requiring Federal agencies to review risk prior to making an award.

This reform delivers on the President’s directives to reduce both improper payments and administrative burden.  Most importantly of all, we think the Council on Financial Assistance Reform's process was inclusive of all stakeholders and responsive to their suggestions. The metrics we are issuing today will allow us to gather hard data to measure these impacts.

The Uniform Guidance will become effective on December 26, 2014 upon publication of Federal agency implementing regulations, but we are not going to wait until then to begin the conversation. Please join Deputy Director for Management Beth Cobert, myself, the COFAR and partners as we discuss the potential impact of the reform with non-Federal stakeholders during our upcoming webcast this Thursday October 2^nd, from 1:00-3:00pm, accessible with no RSVP necessary at www.cfo.gov/COFAR.

To learn more about the Uniform Guidance, please visit the Council on Financial Assistance Reform's website, and check out the most recent Frequently Asked Questions Document.

David Mader is the Controller at the Office of Management and Budget.