HHS Adopts New Rules for Federal Financial Assistance (2 CFR Part 200) to Make Grants More Accessible and Transparent

Today, the U.S. Department of Health and Human Services (HHS), through the Office of Grants in the Office of the Assistant Secretary for Financial Resources, announced the publication of an Interim Final Rule (IFR) that implements the 2024 Revisions to the Uniform Administrative Requirements for Federal Financial Assistance (Uniform Guidance) at 2 CFR part 200 (89 FR 30046). According to the GAO, HHS is the largest grant-making agency in the Federal government. HHS adoption of 2 CFR part 200 is an important step to align with other Federal agencies and reduce administrative burden for the financial assistance community.

The Uniform Guidance sets the foundational requirements for Federal financial assistance, including grants and cooperative agreements. In April of this year, the Office of Management and Budget finalized a significant and cross-cutting update to the Uniform Guidance.

“The new rules represent an essential step in making it easier to apply for Federal funds and tracking how money is spent” said HHS Secretary Xavier Becerra. “They allow recipients of Federal funds to devote more time and money on delivering meaningful results for the American people and ensure Federal agencies can effectively safeguard taxpayer resources.”

Historically, HHS has maintained its own implementing regulations for HHS awards at 45 CFR part 75. This IFR describes HHS’s plan to fully adopt 2 CFR part 200 over the course of the next year, instead of maintaining separate regulations.

“We are excited about the opportunity to make Federal financial assistance more accessible and transparent,” said Dale Bell, Deputy Assistant Secretary, Office of the Assistant Secretary for Financial Resources. “The new rules are more flexible, make compliance easier, and reduce administrative burden on agencies and recipients.”

The IFR presents a phased approach for the implementation of the Uniform Guidance. It delays the effective date to October 1, 2025, for all provisions of the Uniform Guidance at 2 CFR part 200 and HHS-specific modifications at 2 CFR part 300, providing federal agencies critical additional time to prepare to fully implement these revisions.

In the interim, HHS is adopting significant changes to monetary thresholds and other administrative processes that have not been updated for many years. As of October 1, 2024, the IFR will implement eight key provisions that add flexibilities and reduce burden for the applicant and recipient community, for awards made on or after October 1, 2024.

These key provisions are:

1. Increased exclusion threshold of subawards from $25,000 to $50,000 for modified total direct cost calculations (2 CFR § 200.1 definition of Modified Total Direct Cost).
2. Increased threshold for equipment from $5,000 to $10,000, and clarification that Indian tribes may use their own procedures for equipment disposition (2 CFR § 200.313(e)).
3. Increased threshold for supplies from $5,000 to $10,000 (2 CFR § 200.314(a)).
4. Increased amount of fixed amount subawards that a recipient may provide with agency prior written approval to $500,000 (2 CFR § 200.333).
5. Increased indirect cost de minimis rate from 10 to 15 percent (2 CFR § 200.414).
6. Increased single audit threshold from $750,000 to $1 million (2 CFR § 200.501).

HHS has already adopted these provisions:

7. Increased micro-purchase threshold to $50,000 (2 CFR § 200.320).
8. Allowing 120 days after the period of performance for submission of all final reports related to award closeout (2 CFR § 200.344); See 88 FR 63591.

The result of the dual-phased implementation will be a single set of Federal financial assistance requirements at 2 CFR part 200, with minimal HHS-specific modifications at 2 CFR part 300, in October 2025. The single set of regulations will lessen confusion and reduce administrative burden while fostering enhanced transparency, coordination, and accountability across HHS agencies and the Federal government.

HHS is soliciting comment on the dual-phased approach to implementation in the IFR. The IFR, with request for comments, will be officially posted in the near future. The published version can be downloaded now from the Federal Register.