|DATE:||March 18, 2015|
|POLICY MEMO:||SP30 CACFP16 SFSP18-2015|
|SUBJECT:||Office of Management and Budget Super-Circular - 2 CFR Part 200|
Special Nutrition Programs
Child Nutrition Programs
Recent communications between the Food and Nutrition Service (FNS) and state agency program staff during procurement trainings and management evaluations conducted in fiscal year (FY) 2014-2015 indicated a need for guidance on competitive procurement standards. These standards are located at: National School Lunch Program (NSLP) 7 CFR Part 210.21; Special Milk Program (SMP) 7 CFR Part 215.14a; School Breakfast Program (SBP) 7 CFR Part 220.16; Summer Food Service Program (SFSP) 7 CFR Part 225.17; Child and Adult Food Program (CACFP) 7 CFR Part 226.22 and the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards at 2 CFR Part 200.317-326 (formerly in 7 CFR Parts 3016.36 and 3019.40-48).
The Office of Management and Budget (OMB) published the Super-Circular at 78 FR 78590 on Dec. 26, 2013 for USDA and other federal grant-making agencies. Section 200.10(a) requires federal agencies to implement the policies and procedures set out in the Super-Circular by promulgating regulations effective Dec. 26, 2014. USDA published such regulations at 2 CFR Parts 400, 415, 416, et al. (79 FR 75981, Dec. 19, 2014). They will replace existing rules at 7 CFR Parts 3015, 3016, and 3019, 3052, and cost principles addressed in 2 Parts 220 (A-21), 225 (A-87), and 230 (A-122).
OMB intends that the new rules be applied prospectively rather than retro-actively. Therefore, the new rules apply to new federal awards made on or after Dec. 26, 2014. OMB also published a set of Frequently Asked Questions (FAQ) on the SuperCircular on Aug. 29, 2014. Below are some specifics regarding the Super-Circular’s effective date for programs administered by the Food and Nutrition Service (FNS).
Formula and Entitlement Programs
While entitlement programs such as the National School Lunch Program and the Child and Adult Care Food Program operate continuously, funds are appropriated and grants awarded for them on an annual basis. Accordingly, the period of performance for these grants coincides with the federal fiscal year. Fiscal year 2015 awards took effect Oct. 1, 2014, while the old rules were still in effect; therefore, those rules will continue to apply until the close of business on Sept. 30, 2015. The quarterly allotments issued to state agencies under FNS programs are not “funding increments” within the meaning of OMB’s FAQ because they do not, in and of themselves, provide FNS with opportunities to change award terms and conditions.
New discretionary project grants may be awarded and existing ones amended at any point in a fiscal year. The award of a new grant after Dec. 26, 2014 will trigger the SuperCircular’s applicability. A funding increment accompanied by a grant amendment that materially changes a grant’s terms and conditions will also instigate the use of the new rules, since such an amendment would be nearly equivalent to a new grant.
Subpart F (Audit Requirements) of the Super-Circular is the one exception to this implementation schedule. According to subsection 200.110(b), Subpart F “will apply to audits of fiscal years beginning on or after Dec. 26, 2014.” Most can be expected to cover either calendar year 2015 or auditee fiscal year beginning July 1, 2015. Audits of earlier fiscal years will continue to be made under 7 CFR Part 3052 (USDA’s codification of OMB Circular A-133), Audits of States, Local Governments and Non-Profit Organizations). Therefore, you should expect the first audits under Subpart F to be made in 2016. The delayed implementation of Subpart F will avoid requiring auditors to begin audits of fiscal years starting in 2014 under this part, then switch rules and complete the audits under the Super-Circular.
Item 110-7 of the OMB FAQ (Effective Dates and Incremental Funding) states that “[t]he new rules apply as of the federal award date (see 200.39) to new awards and, for agencies that consider incremental funding actions on previously made awards to be opportunities to change award terms and conditions, the first funding increment issued on or after Dec. 26, 2014.” We have not yet resolved questions on what this means or how it might affect FNS programs. We will provide further guidance on this issue at a later date.
The set of Frequently Asked Questions on the Super-Circular is available at the following link: https://cfo.gov/wp-content/uploads/2014/08/2014-08-29-Frequently-AskedQuestions.pdf.
FNS regional offices should share this information with the appropriate state agency personnel. State agencies should direct any questions to their respective FNS regional offices.
Sarah E. Smith Holmes
Program Monitoring and Operational Support Division
Child Nutrition Programs