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Federal Circulars and Acquisition Regulations

The Office of Management and Budget (OMB) operates in many ways as a fiscal/administrative coordinating agency for other administrative agencies of the Federal government. Much of the interaction between the university community and the various Federal agencies is controlled, sometimes in great detail, by directives published in OMB circulars. The circulars most important to this agency-university interaction are discussed briefly here. A number of them may be accessed from the Office of Research website.

OMB Circular A-21: Cost Principles for Educational Institutions
This Circular gives the cost principles for the charging of costs to sponsored program agreements with the educational institutions. Here's a link to Circular A-21 in the Award Management section of our website. The following is an excerpt from the introductory portion of the document:

A.1. OBJECTIVES. This Attachment provides principles for determining the costs applicable to research and development, training, and other sponsored work performed by colleges and universities under grants, contracts, and other agreements with the Federal Government. These agreements are referred to as sponsored agreements. A.2.C. The dual role of students engaged in research and the resulting benefits to sponsored agreements are fundamental to the research effort and shall be recognized in the application of these principles. A.2.F. Cognizant Federal agencies involved in negotiating facilities and administrative (F&A) cost rates and auditing should assure that institutions are generally applying these cost accounting principles on a consistent basis. Where wide variations exist in the treatment of a given cost item among institutions, the reasonableness and equitableness of such treatments should be fully considered during the rate negotiations and audit.

A.3. APPLICATION. These principles shall be used in determining the allowable costs of work performed by colleges and universities under sponsored agreements. The principles shall also be used in determining the costs of work performed by such institutions under subgrants, cost-reimbursement subcontracts, and other awards made to them under sponsored agreements. They also shall be used as a guide in the pricing of fixed-price contracts and subcontracts where costs are used in the determining the appropriate price.

OMB Circular A-110: Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and other Non-Profit Organizations.

This Circular provides uniform administrative requirements for sponsored program grants and agreements (not contracts) from the Federal government. The Circular itself is a template that agencies are expected to use in most matters; however agencies publish their own implementations of A-110 and the details can vary from agency to agency. Here's a link to Circular A-110 in the Award Management section of our website.

The introductory paragraph to the Circular is as follows:
___.1 Purpose. This Circular sets forth standards for obtaining consistency and uniformity among Federal agencies in the administration of grants to and agreements with institutions of higher education, hospitals, and other non-profit organizations. Federal awarding agencies shall not impose additional or inconsistent requirements,except as provided in Sections ___.4, and ___.14 or unless specifically required by Federal statute or executive order. Non-profit organizations that implement Federal programs for the States are also subject to State requirements.

OMB Circular A-133: Audits of Institutions of Higher Education and Other Nonprofit Institutions Circular A-133 deals with audit requirements for universities receiving funds from the Federal government. Here's a link to Circular A-133 in the Award Management section of our website.
The following excerpts give information about the purpose of the Circular:"Circular A-133 establishes audit requirements and defines Federal responsibilities for implementing and monitoring such requirements for institutions of higher education and other nonprofit institutions receiving Federal awards. 12. Scope of Audit and Audit Objectives.

a. The audit shall be made by an independent auditor in accordance with Government Auditing Standards developed by the Comptroller General of the United States covering financial audits. An audit under this Circular should be an organization-wide audit of the institution. However, there may be instances where Federal auditors are performing audits or are planning to perform audits at nonprofit institutions. In these cases, to minimize duplication of audit work, a coordinated audit approach may be agreed upon between the independent auditor, the recipient and the cognizant agency or the oversight agency. Those auditors who assume responsibility for any or all of the reports called for by paragraph 15 should follow guidance set forth in Government Auditing Standards in using work performed be others.

b. The auditor shall determine whether the financial statements of the institution present fairly its financial position and the results of its operations in accordance with generally accepted accounting principles;

1. The institution has an internal control structure to provide reasonable assurance that the institution is managing Federal awards in compliance with applicable laws and regulations, and controls that ensure compliance with the laws and regulations that could have a material impact on the financial statements; and
2. The institution has complied with laws and regulations that may have a direct and material effect on its financial statement amounts and on each major Federal program.

14. Illegal Acts. If, during or in connection with the audit of a nonprofit institution, the auditor becomes aware of illegal acts, such acts shall be reported in accordance with the provisions of the Government Auditing Standards."

(FAR): Federal Acquisition Regulations
The FAR, with its agency supplements, applies to all contracts by and for the use of the Federal government through purchase or lease, for supplies or services. Acquisition includes the description of requirements to satisfy agency needs, solicitation and selection of sources, award of contracts, contract financing, contact performance and administration, and technical and management functions directly related to the process of fulfilling agency needs by contract. The FAR incorporates OMB Circular A-21 in its entirety, by reference.

Here's a link to the Federal Acquisition Regulations in the Award Management section of our website.

Date last reviewed Mar 2002