FHWA releases new Q&A on funding, accountability

| November 30, 2010

The Federal Highway Administration (FHWA) has released an updated version of its “Federal Funding Accountability and Transparency Act Questions and Answers.”

The original report was released on Oct. 20. The latest update was released on Nov. 24.

The latest questions and answers from FHWA follow:

Q-1: What is required to be reported as part of the Federal Funding Accountability and Transparency Act (FFATA)?

A-1:  FFATA prescribes specific pieces of information to be reported:

  1. The following data about sub-awards greater than $25,000
    1. Name of entity receiving award
    2. Amount of award
    3. Funding agency
    4. NAICS code for contracts / Catalog of Federal Domestic Assistance (CFDA) program number for grants
    5. Program source
    6. Award title descriptive of the purpose of the funding action
    7. Location of the entity (including congressional district)
    8. Place of performance (including congressional district)
    9. Unique identifier of the entity and its parent; and
    10. Total compensation and names of top five executives (same thresholds as for primes)
  2. The Total Compensation and Names of the top five executives if:
    1. More than 80% of annual gross revenues are from the Federal government, and those revenues are greater than $25,000,000 annually; and
    2. Compensation information is not already available through reporting to the U.S. Securities and Exchange Commission (SEC).

According to the Office of Management and Budget (USASpending.gov),” classified information is exempt from the prime and sub-award reporting requirement as are contracts with individuals.”

Q-2: What is the required statement that must be included in all new project agreements, beginning on October 1, 2010?

A-2: The following language must be included in the State remarks section of each new award, or modification of existing award, first authorized after October 1, 2010:

“This agreement is subject to the following award terms: http://edocket.access.gpo.gov/2010/pdf/2010-22705.pdf and http://edocket.access.gpo.gov/2010/pdf/2010-22706.pdf.”

Q-3: Are subrecipients responsible for reporting the required information, or is the prime recipient responsible for reporting for them? (updated 11/24/2010)

A-3: Prime recipients are responsible for reporting information related to subrecipients and will not have the option to delegate reporting of subgrant information to their subrecipients. Subrecipients are responsible for obtaining a Data Universal Numbering System (DUNS) number and providing it to the prime recipient for use in reporting. There is no requirement at this time for any subrecipient to register in the Central Contractor Registration (CCR) database.

Q-4: Are prime recipients responsible for reporting information on their contracts for procurement of property or services?

A-4: No.  In grant and loan programs such as the Federal-aid Highway Program (FAHP), the definition of “subaward” does not extend to procurement of property and services needed to carry out the project or program.   For example, a construction or architectural/engineering firm design contract procured by a State to carry out a Federal-aid highway project would not be subject to the reporting requirements.  Federal agency-administered contracts are subject to separate requirements as contained in the Federal Acquisition Regulation and OMB guidance.

Q-5: There seems to be new uses of existing terminology.  Please define the following: Prime Recipient; Subrecipient; Award; Subaward.

A-5: Based on the definitions in the September 14, 2010 Federal Register Notices announcing the Interim Final Rule on 2 CFR 170 and the final rule on 2 CFR 25, those terms have the meanings described below.

Award: For purposes of 2 CFR Part 170, means a grant or cooperative agreement.   On future dates to be specified by OMB in policy memoranda available at the OMB Web site, award also will include other types of awards of Federal financial assistance subject to the Transparency Act, as defined in § 170.320.  As specifically noted in this paragraph, it does not include technical assistance, which provides services in lieu of money, nor a transfer of title to Federally owned property provided in lieu of money, even if the award is called a grant.  For the FAHP, “award” is generally synonymous with a “project agreement” at the point of obligation of Federal funds.

Entity: Means all of the following, as defined at 2 CFR part 25, subpart C:

a. A Governmental organization, which is a State, local government, or Indian Tribe;  b. A foreign public entity;  c. A domestic or foreign nonprofit organization;  d. A domestic or foreign for- profit organization; and  e.  A Federal agency, but only as a subrecipient under an award or subaward to a non-Federal entity.  An example of a Federal agency in this capacity might be the US Forest Service carrying out a subaward under the Recreational Trails Program.

Executive: Executive means officers, managing partners, or any other employees in management positions.  There are no distinctions for public vs. private entities, or political vs. civil servant status.  The key to reporting is whether or not the basic criteria are met (80% of gross revenues from Federal funds, etc., gross revenues in excess of $25 million, not already available via SEC reporting…)

Prime Recipient: Means an entity that receives funds in the form of a grant, cooperative agreement, or loan directly from the Federal Government.  Note: No definition was provided in either Federal Register Notice noted above for the other definitions.  As such, this definition was derived from a similar use in section 1512 of the American Recovery and Reinvestment Act – Public Law 111-5.

Subrecipient: Means an entity that receives a subaward from the prime recipient under an award; and is accountable to the prime recipient for the use of the Federal funds provided by the subaward.  For the FAHP, this will generally be a local public agency that administers a Federal-aid project, but may also be a non-profit, educational institution, and in some cases, a Federal agency.

Subaward: Means a legal instrument to provide support for the performance of any portion of the substantive project or program for which a prime recipient received this award and that the prime, as the recipient, awards to an eligible subrecipient.  The term does not include procurement of property and services needed to carry out the project or program (for further explanation, see Sec. ll.210 of the attachment to OMB Circular A–133, ‘‘Audits of States, Local Governments, and Non-Profit Organizations”). An example would be an agreement between the State DOT as prime recipient and the local government as subrecipient.

State: means (a) Any State of the United States; (b) The District of Columbia; (c) Any agency or instrumentality of a State other than a local government or State-controlled institution of higher education; (d) The Commonwealths of Puerto Rico and the Northern Mariana Islands; and (e) The United States Virgin Islands, Guam, American Samoa, and a territory or possession of the United States.

Q-6: For purposes of FFATA, is the State DOT always the “prime recipient”?

A-6: For the FAHP, the State DOT will be the prime recipients in most, but not all, instances.  There are other direct recipients of FAHP funds, such as entities administering the Recreational Trails Program (RTP), for example.

Q-7:  Is “award” synonymous with an obligation on a Federal-aid project agreement, or apportionment to a State at the highest level?

A-7: As noted above in the definitions, an award, for purposes of FFATA reporting, occurs when Federal funds are obligated on a project agreement or cooperative agreement.  At a later date to be announced by OMB, the definition of award will be expanded to include other types of Federal financial assistance.

Q-8: How does FFATA reporting work for projects authorized under Advance Construction?

A-8:  Authorization of Advance Construction establishes eligibility and reserves the right for the State to request Federal funds at a later date.  The date Federal funds are obligated, via “conversion”, is the date required entry into FFATA Subaward Reporting System (FSRS) is triggered.

Q-9:  What are the thresholds for FFATA reporting?

A-9:  For new Federal grants or cooperative agreements on or after October 1, 2010, if the initial award is $25,000 or more, reporting of subaward information is required. If the initial award is below $25,000 but subsequent award modifications result in a total award of $25,000 or more, the award is subject to the reporting requirements, as of the date the award exceeds $25,000. If the initial award is $25,000 or more, but funding is subsequently deobligated such that the total award amount falls below $25,000, the award continues to be subject to the reporting requirements of the Transparency Act.

Each action that obligates $25,000 or more in Federal funds must be reported.

If a single action obligates funding from multiple programs, the data submitted for that action would include the CFDA number for the program that is the predominant source of the Federal funding.

Q-10: Does it matter which phase of work is being obligated?

A-10: The criteria for reporting does not take into consideration the phase of a project, but rather depends on the dollar threshold, and only encompasses new awards provided on or after October 1, 2010, or amendments thereto.

Q-11: What constitutes a subaward?  Is it both state-administered and locally administered project agreements, and just the latter category?

A-11:  A subaward is administered by a subrecipient, who is accountable to the prime recipient for use of the Federal funds under the award.   As described in Sec. 11.210 of the attachment to OMB Circular A-133, this accountability would include responsibility for programmatic decision making, adherence to applicable Federal program compliance requirements, and uses Federal funds to carry out the Federal program.  As such, any LPA project, carried out by the State DOT on  behalf of an LPA where the State DOT is actively rendering decisions and in control of the project,  and not simply serving as a resource to the LPA, would not be classified as subaward for purposes of the Transparency Act.

Q-12:  How will the Federal agency reporting process work?

A-12:  FHWA will report prime award information in the Federal Assistance Awards Data System (FAADS PLUS).  This will be accomplished through existing processes and systems and will not require modifications to FMIS or other financial management systems.  Information reported by FHWA will be used to pre-populate the new FFATA Subaward Reporting System (FSRS).

Q-13: How will prime recipients report this information?

A-13: Prime recipients will use the FSRS.  The tool will pre-populate, to the maximum extent possible, recipient information from existing processes and systems, including the Central Contractor Registration System (CCR) to reduce the burden associated with this new FFATA reporting.  All Federal contractors and prime grant recipients are required to register in CCR.

Q-14: Is FSRS required for all State agencies administering Federal funds as prime recipients?

A-14: Yes, FFATA reporting in FSRS is required for all prime recipients of Federal financial assistance that meet the definitions as contained in the FFATA.

Q-15: When is the subrecipient information reported?

A-15: The prime recipient will have until the end of the month plus one additional month after an award or sub-award is obligated to fulfill the reporting requirement.  For example, if a sub-award was made on October 15, 2010, the prime recipient has until November 30, 2010 to report the sub-award information.

Q-16: What happens if a state’s total operating and capital budget is larger than their Federally-funded program?  Is executive compensation reporting still necessary?

A-16: If less than 80% of the recipient’s gross revenues from the prior fiscal year were from Federal funds, the executive compensation reporting requirement for a recipient and/or subrecipient does not apply.  Current OMB guidance indicates the gross revenue test is measured at the State agency (i.e. – State DOT) level, not State government as a whole.

Q17: Does FFATA apply to academic institutions, as well?

A-17: As long as awards or subawards that are made to them are either in the form of grants or cooperative agreements, then yes, FFATA applies to them, as well.

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