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January 15, 2008 • Intergovernmental Alert
This is the first Intergovernmental Alert issued by the Partnership for Intergovernmental Management and Accountability to highlight high-impact federal policies or initiatives. The Partnership, established by AGA to open the lines of communication among governments, will issue the Alert on a periodic basis, as it identifies issues that are likely to have a major impact on the operations of states, local governments, universities and businesses. The Alert also identifies opportunities for volunteers to participate in Partnership projects.
High-Impact Federal Policies
Subaward Data Must Be Submitted to Federal Government
States and other primary award recipients will be required to submit data on all subawards to the federal awarding agencies for inclusion in a searchable database by Jan. 1, 2009. The Federal Funding Accountability and Transparency Act of 2006 calls for creation of a searchable database of federal grants, loans and contracts, which total more than $1 trillion annually. The new database was launched early, on Dec. 13, and is free to the public. It provides information on entities that receive funds directly from the federal government. By Jan. 1, 2009, the database is required to include information on subgrantees and subcontractors that receive federal funds through a primary award recipient. Reasonable costs for the collection and reporting of subaward data is allowable as an indirect cost. No uniform requirements or method of collecting detailed information on subcontractors and subgrantees exists, so in July 2007, a pilot program began to determine the most cost-effective and efficient approach to implementing a government-wide subaward reporting process. The pilot, led by the U.S. Department of Agriculture with participation from other grant-making agencies, is scheduled to end June 30, 2008. Read more.
Governments Required to Withhold Contractors' Taxes
Every governmental entity in the U.S. (federal, state and local) must withhold 3 percent of nearly all payments to contractors and vendors effective Jan. 1, 2011. The amount withheld must then be remitted to the federal government for federal income tax purposes as a means of guarding against possible underpayment of taxes by government vendors not currently subject to withholding. Governments likely will be required to make programming changes to financial and accounting systems, purchase new software, register vendors, keep major new data files and paper reports, and possibly hire new staff. Legislation to repeal the 3 percent withholding requirement has been introduced in the House by Rep. Kendrick Meek (H.R. 1023) and in the Senate by Sen. Larry Craig (S. 777). Read more.
Streamlined Reporting a Reality This Year
Effective in 2008, states, local governments, universities, businesses and other grant recipients will be able to use standard, streamlined forms for reporting on federal awards. The forms are the undertaking of the Federal Grants Streamlining Initiative, being carried out under the Federal Financial Assistance Management Improvement Act of 1999. Late last year, a request for comments was issued in the Federal Register for the following forms:
- Financial Reporting for Grants and Cooperative Agreements: Federal Financial Report (FFR)
- Research Performance Progress Report
- Real and Tangible Personal Property Report
The comment period for these forms has closed, but notices and the accompanying documentation. Additional requests for comments will be published for forms dealing with performance progress reporting and inventions.
Partnership Projects
Leveraging Single Audit
Through a Partnership initiative, states and local governments will have an opportunity to provide input on how the scope of testing for single audits can be targeted to make better use of audit resources and improve improper payments estimates. The initiative will help determine how single audits can be expanded beyond federal program compliance to assess the risk of improper payments and the extent to which improper payments are systematic throughout a program. The initiative will assist the U.S. Office of Management and Budget (OMB), which issues guidance to implement single audit requirements, as well the Improper Payments Information Act of 2002.
Streamlining the Statewide Cost Allocation Process
One of the Partnership's primary goals in 2008 is to identify ways to enhance the process for determining the federal government's share of program or award costs. The Partnership will examine the process for negotiating and implementing OMB Circular A-87--Cost Principles for State, Local and Indian Tribal Governments. While the scope of the project is being defined, possible areas of exploration include: streamlining the process of negotiating Statewide Cost Allocation Plans; resolving disputes between federal awarding agencies and other units of government; and funding working capital reserves.
The Partnership's Steering Committee will soon issue a call for volunteers and will appoint work groups representing a cross-section of the volunteers. To learn more about the projects, contact AGA's Director of Intergovernmental Relations Helena Sims at hsims@agacgfm.org or 850.668.0625. | 
