This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

6462 

Vol. 81, No. 25 

Monday, February 8, 2016 

DEPARTMENT OF THE INTERIOR 

Office of the Secretary 

2 CFR Part 1403 

[4334–63 167DOI02DM DS62400000 

DLSN00000.000000 DX62401] 

RIN 1090–AB11 

Financial Assistance Interior 

Regulation 

AGENCY: Office of the Secretary, Interior. 

ACTION: Proposed rule. 

SUMMARY: This proposed rule 

establishes the Financial Assistance 

Interior Regulation (FAIR). The FAIR 

supplements the OMB Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards (Omni-Circular), which 

was adopted The Department of the 

Interior (Department) on December 19, 

2014. This proposed rule would 

consolidate the Department’s financial 

assistance regulations and policies 

derived from the OMB Omni-Circular. 

DATES: Submit comments on or before 

April 8, 2016. 

ADDRESSES: You may submit comments 

on the rulemaking through the Federal 

eRulemaking Portal at http://

www.regulations.gov. Please use 

Regulation Identifier Number (RIN) 

1090–AB08 in your message. Follow the 

instructions on the Web site for 

submitting comments. 

FOR FURTHER INFORMATION CONTACT: Mr. 

James McCaffery, Deputy Director, 

Office of Acquisition and Property 

Management, Department of the 

Interior, 1849 C Street NW., Mail Stop 

4262 MIB, Washington, DC 20240; 

telephone (202) 513–0695; or email 

James_McCaffery@ios.doi.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On December 26, 2013, the Office of 

Management and Budget (OMB) 

published its Uniform Administrative 

Requirements, Cost Principles, and 

Audit Requirements for Federal Awards 

(referred to as the ‘‘Omni-Circular,’’ 78 

FR 78590). The Omni-Circular provided 

a government-wide framework for 

Federal awards management; and 

streamlined administrative 

requirements, cost principles, and audit 

requirements for Federal awards 

including grants and cooperative 

agreements. 

The Omni-Circular required Federal 

agencies to promulgate regulations 

implementing the policies and 

procedures applicable to Federal awards 

by December 26, 2014. On December 19, 

2014, the Department published a final 

rule to adopt the OMB Omni-Circular in 

full as 2 CFR 1402, Uniform 

Administrative Requirements, Cost 

Principles, and Audit Requirements for 

Federal Awards [79 FR 75867]. 

Subsequently, on December 22, 2014, 

the Department issued memoranda to 

supplement the following provisions of 

the OMB Omni-Circular: (1) Indirect 

Cost Rates for Federal Financial 

Assistance Awards and Agreements; (2) 

Conflict of Interest and Mandatory 

Disclosures for Financial Assistance; (3) 

Financial Assistance Application and 

Merit review Processes; and (4) 

Financial Assistance Awards for ForProfit Entities, Foreign Public Entities, 

and Foreign Organizations. 

When the Omni-Circular became 

effective, it superseded many of the 

Department’s existing financial 

assistance policies. The Department 

adopted the Omni-Circular in full and 

has addressed the Department’s unique 

statutory requirements. The 

Department’s adoption of the OmniCircular is codified at 2 CFR part 1402. 

The Department intends to add 

supplemental rules or regulations for 

financial assistance through the 

establishment of the Financial 

Assistance Interior Regulation (FAIR). 

The FAIR will be codified at 2 CFR part 

1403. 

Invitation to Comment: This action 

represents an administrative 

simplification and is not intended to 

make any substantive changes to 2 CFR 

part 200 policies and procedures. In 

soliciting comments on these actions, 

the Department therefore is not seeking 

to revisit substantive issues resolved 

during the development and finalization 

of the Omni-Circular. 

II. Effect on Prior Issuances 

All Department of the Interior nonregulatory program manuals, handbooks 

and other materials that are inconsistent 

with 2 CFR part 200 and 2 CFR parts 

1400 and 1402 are superseded, except to 

the extent that they are (1) required by 

statute; or (2) authorized in accordance 

with Omni-Circular Section 200.101, 

Applicability. 

Except to the extent inconsistent with 

the regulations in all existing 

Department of the Interior regulations in 

25 CFR parts 23, 27, 39, 40, 41, 256, 272, 

278, and 276; 30 CFR parts 725, 735, 

884, 886, and 890; 36 CFR parts 60, 61, 

63, 65, 67, 72, and 800; 43 CFR parts 26 

and 32; and 50 CFR parts 80, 81, 82, 83, 

and 401 are not superseded by these 

regulations; nor are any information 

collection approvals for financial 

assistance forms that have been granted 

under the Paperwork Reduction Act. 

III. Required Determinations 

1. Regulatory Planning and Review 

(Executive Orders 12866 and 13563). 

Executive Order (E.O.) 12866 provides 

that the Office of Information and 

Regulatory Affairs will review all 

significant rules. The Office of 

Information and Regulatory Affairs has 

determined that this proposed rule is 

not significant. 

Executive Order 13563 reaffirms the 

principles of E.O. 12866, calling for 

improvements in the nation’s regulatory 

system to promote predictability, to 

reduce uncertainty, and to use the best, 

most innovative, and least burdensome 

tools for achieving regulatory ends. E.O. 

13563 directs agencies to consider 

regulatory approaches that reduce 

burdens and maintain flexibility and 

freedom of choice for the public, where 

these approaches are relevant, feasible, 

and consistent with regulatory 

objectives. 

2. Regulatory Flexibility Act. This 

proposed rule will not have a significant 

economic effect on a substantial number 

of small entities under the Regulatory 

Flexibility Act (5 U.S.C. 601 et seq.). 

The Department of the Interior generally 

does not award grants to small 

businesses. The vast majority of Interior 

grants are awarded to States, local 

governments, and not-for-profit 

institutions. 

3. Small Business Regulatory 

Enforcement Fairness Act. This 

proposed rule is not a major rule under 


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the Small Business Regulatory 

Enforcement Fairness Act (5 U.S.C. 

804(2)). This rule does not have an 

annual effect on the economy of $100 

million or more. The Department 

generally does not award grants to small 

businesses. This proposed rule will not 

cause a major increase in costs or prices 

for consumers, individual industries, 

Federal, State, or local government 

agencies, or geographic regions. This 

proposed rule does not have significant 

adverse effects on competition, 

employment, investment, productivity, 

innovation, or the ability of U.S.-based 

enterprises to compete with foreignbased enterprises. This proposed rule 

establishes regulations for the 

Department of the Interior financial 

assistance. The Department’s financial 

assistance is typically offered to States, 

local governments and not-for-profit 

institutions. It would not affect business 

relationships, employment, investment, 

productivity, innovations, or the ability 

of U.S.-based enterprises to compete 

internationally. 

4. Unfunded Mandates Reform Act. 

This proposed rule (1) does not impose 

an unfunded mandate on State, local, or 

tribal governments or the private sector 

of more than $100 million per year; (2) 

does not have a significant or unique 

effect on State, local, or tribal 

governments, or the private sector (3) 

does not impose requirements on State, 

local, or tribal governments; and (4) is 

a reorganization of existing 

requirements and does not impose any 

new regulations. A statement containing 

the information required by the 

Unfunded Mandates Reform Act (2 

U.S.C. 1531 et seq.) is not required. 

5. Takings (E.O. 12630). Under the 

criteria in section 2 of E.O. 12630, this 

proposed rule does not have significant 

takings implications. It does not impose 

any obligations on the public that would 

result in a taking. A takings implication 

assessment is not required. 

6. Federalism (E.O. 13132). Under the 

criteria in section 1 of E.O. 13132, this 

proposed rule does not have sufficient 

Federalism implications to warrant the 

preparation of a Federalism summary 

impact statement. It would not 

substantially and directly affect the 

relationship between the Federal and 

state governments. A Federalism 

summary impact statement is not 

required. 

7. Civil Justice Reform (E.O. 12988). 

This proposed rule complies with the 

requirements of E.O. 12988. 

Specifically, this rule (1) meets the 

criteria of section 3(a) of this E.O. 

requiring that all regulations be 

reviewed to eliminate errors and 

ambiguity and be written to minimize 

litigation; and (2) meets the criteria of 

section 3(b)(2) of this E.O. requiring that 

all regulations be written in clear 

language and contain clear legal 

standards. 

8. Consultation with Indian tribes 

(E.O. 13175). The Department strives to 

strengthen its government-togovernment relationship with Indian 

tribes through a commitment to 

consultation and recognition of their 

right to self-governance and tribal 

sovereignty. We have evaluated this rule 

under the Department’s consultation 

policy and under the criteria in E.O. 

13175 and have determined that it has 

no substantial direct effect on Federally 

recognized Indian tribes and that 

consultation under the Department’s 

tribal consultation policy is not 

required. This rule does not apply to 

tribal awards made in accordance with 

the Indian Self-Determination and 

Education Assistance Act (Pub. L. 93– 

638, 88 Stat. 2204), as amended. 

However, this rule does apply to 

discretionary grants or cooperative 

agreements awarded to Tribes pursuant 

to Sec. 9 of Pub. L. 93–638 when 

mutually agreed to by the Secretary of 

the Interior and the tribal organization 

involved. 

9. Paperwork Reduction Act, 44 

U.S.C. 3501, et seq. Information 

collected in the financial assistance 

application process will be collected 

and managed in accordance with OmniCircular section 200.206, Standard 

application requirements. However this 

rule does not contain information 

collection requirements, and a 

submission to the Office of Management 

and Budget under the Paperwork 

Reduction Act (44 U.S.C. 3501 et seq.) 

is not required. We may not conduct or 

sponsor, and you are not required to 

respond to, a collection of information 

unless it displays a currently valid OMB 

control number. 

10. National Environmental Policy 

Act. This proposed rule does not 

constitute a major Federal action 

significantly affecting the quality of the 

human environment. A detailed 

statement under the National 

Environmental Policy Act of 1969 

(NEPA) is not required. 

11. Effects on the Energy Supply (E.O. 

13211). This proposed rule is not a 

significant energy action under the 

definition in E.O. 13211. A Statement of 

Energy Effects is not required. 

12. Plain Language. We are required 

by section 1(b)(12) of E.O. 12866 and 

section 3(b)(1)(B) of E.O. 12988 and by 

the Presidential Memorandum of June 1, 

1998, to write all rules in plain 

language. This means that each rule we 

publish must (1) be logically organized; 

(2) use the active voice to address 

readers directly; (3) use common, 

everyday words and clear language 

rather than jargon; (4) be divided into 

short sections and sentences; and (5) use 

lists and tables wherever possible. If you 

feel that we have not met these 

requirements, please contact the person 

listed in the FOR FURTHER INFORMATION

CONTACT section of this preamble. 

List of Subjects in 2 CFR Part 1403 

Financial assistance, Grant 

administration, Grant programs. 

For the reasons set forth in the 

preamble, the Department of the Interior 

proposes to amend 2 CFR chapter XIV 

by adding part 1403 to read as follows: 

PART 1403—FINANCIAL ASSISTANCE 

INTERIOR REGULATION 

Sec. 

1403.100 What is the purpose of this part? 

1403.101 To whom does the Financial 

Assistance Interior Regulation (FAIR) 

apply? 

1403.102 Does the FAIR include any 

exceptions to OMB guidance? 

1403.103 Does the Department have any 

other policies or procedures award 

recipients must follow? 

1403.104–1403.110 [Reserved]. 

1403.111 What terms do I need to know? 

1403.112 What is conflict of interest? 

1403.113 What are mandatory disclosures 

for financial assistance? 

1403.114–1403.203 [Reserved] 

1403.204 What is the financial assistance 

application and merit review process? 

1403.205 [Reserved] 

1403.206 What are the FAIR requirements 

for domestic for-profit and foreign 

entities? 

1403.207 What specific conditions apply? 

1403.208–1403.400 [Reserved] 

1403.401 What are the policies, procedures, 

and general decision-making criteria for 

deviations from negotiated indirect cost 

rates? 

1403.402–1403.999 [Reserved] 

Authority: 5 U.S.C. 301; 2 CFR part 200. 

§ 1403.100 What is the purpose of this 

part? 

The Financial Assistance Interior 

Regulation (FAIR) serves as the 

regulatory structure for the 

Department’s financial assistance 

regulations that implement or 

supplement the OMB Omni-Circular, 2 

CFR part 200. 

§ 1403.101 To whom does the Financial 

Assistance Interior Regulation (FAIR) 

apply? 

The FAIR applies to all the 

Department of the Interior grant-making 

organizations and to any non-Federal 

entity that applies for, receives, 

operates, or expends funds from a 

Department Federal financial assistance 

award, cooperative agreement or grant. 


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§ 1403.102 Does the FAIR include any 

exceptions to OMB Guidance? 

The FAIR does not apply to tribal 

awards made in accordance with the 

Indian Self-Determination and 

Education Assistance Act (Public Law 

93–638, 88 Stat. 2204), as amended. 

However, the FAIR does apply to 

discretionary grants or cooperative 

agreements awarded to Tribes pursuant 

to section 9 of Public Law 93–638 when 

mutually agreed to by the Secretary of 

the Interior and the tribal organization 

involved. The FAIR applies to all 

financial assistance awards within the 

Department, except where otherwise 

provided by Statute. Grants Officers 

must document statutory exceptions in 

the official award file. 

§ 1403.103 Does the Department have any 

other policies or procedures award 

recipients must follow? 

Award recipients must follow bureau/ 

office program specific policies and 

procedures and applicable governmentwide requirements. In the event that a 

bureau’s or office’s specific policies and 

procedures conflict with 2 CFR part 200 

or this part, the bureau/office will 

adhere to the provisions of 2 CFR part 

200 and this part unless the policy/

procedures are required by law. 

§ 1403.104–1403.110 [Reserved] 

§ 1403.111 What terms do I need to know? 

(a) Conflict of interest is any 

relationship or matter which might 

place the recipient, its employees, and/ 

or its subrecipients in a position of 

conflict, real or apparent, between their 

responsibilities under the agreement 

and any other interests. Conflicts of 

interest also include, but are not limited 

to, direct or indirect financial interests, 

personal relationships, and business 

relationships including positions of 

trust in outside organizations, 

consideration of future employment 

arrangements with a different 

organization, or decision-making 

affecting the award that would cause a 

reasonable person with knowledge of 

the relevant facts to question the 

impartiality of the Recipient and/or 

recipient’s employees and subrecipients 

in the matter. 

(b) Discretionary Federal financial 

assistance means Federal awards 

including grants and cooperative 

agreements that are awarded at the 

discretion of the agency. 

(c) Employment means: 

(1) In any capacity, even if otherwise 

permissible, by any applicant or 

potential applicant for a Federal 

financial assistance award; 

(2) Employment within the last 12 

months with a different organization 

applying for some portion of the award’s 

approved project activities and funding 

to complete them OR expected to apply 

for and to receive some portion of the 

award; and/or 

(3) Employment with a different 

organization of any member of the 

organization employee’s household or a 

relative with whom the organization’s 

employee has a close personal 

relationship who is applying for some 

portion of the award’s approved project 

activities and funding to complete them, 

OR expected to apply for and to receive 

some portion of the award. 

Non-Federal entity means a State, 

local government, Indian tribe, 

institution of higher education, or 

nonprofit organization that carries out a 

Federal award as a recipient or 

subrecipients. 

(d) Personal relationship means a 

Federal award program employee’s 

spouse and/or dependent children, or 

other members of an employee’s 

household, which may compromise or 

impair the fairness and impartiality of 

the Proposal Evaluator and Advisor and 

Grants Officer in the review, selection, 

award, and management of a financial 

assistance award. 

(e) Recipient means a non-Federal 

entity that receives a Federal award 

directly from a Federal awarding agency 

to carry out an activity under a Federal 

program. The term recipient does not 

include subrecipients. 

(f) Subrecipient means a non-Federal 

entity that receives a subaward from a 

pass-through entity to carry out part of 

a Federal program, but does not include 

an individual that is a beneficiary of 

such program. A subrecipient may also 

be a recipient of other Federal awards 

directly from a Federal awarding 

agency. 

§ 1403.112 What is conflict of interest? 

(a) Non-Federal entities must disclose 

in writing any potential conflict of 

interest to the Department awarding 

agency or pass-through entity and the 

Department’s Office of Inspector 

General in accordance with 2 CFR 

200.112, Conflict of interest. Proposal 

evaluators and advisors, including 

members of evaluation committees, 

must render impartial, technically 

sound, and objective assistance and 

advice to protect the integrity of the 

proposal evaluation and award selection 

process. A Federal employee is 

prohibited from participating in his or 

her government capacity in any 

particular matter when the employee, 

his or her spouse, minor child, outside 

business associate, or a person or 

organization with whom the employee 

is negotiating or has an arrangement for 

prospective employment, has a financial 

interest in the particular matter (see 18 

U.S.C. 208). 

(b) Employees are prohibited from 

having a direct or indirect financial 

interest that conflicts substantially or 

appears to conflict substantially with 

his or her government duties and 

responsibilities (see 5 CFR 2635.402 and 

5 CFR 2635.502). Employees are also 

prohibited from engaging in, either 

directly or indirectly, a financial 

transaction resulting from or primarily 

relying on information obtained through 

his or her government employment (see 

5 CFR 2635.702 and 5 CFR 2635.703). In 

addition, 43 CFR 20.401–403 contains 

other regulations concerning conflicts of 

interest involving employees of specific 

bureaus and offices. Employee 

Responsibility and Conduct Regulations 

for the Department are contained in 43 

CFR part 20, 5 CFR 2634, 5 CFR 2635, 

and 5 CFR 2640. 

(c) With the exception of contracting 

personnel, proposal evaluators and 

advisors are not required to file a 

Statement of Employment and Financial 

Interest (DI–210) unless they occupy 

positions identified in 5 CFR 2634.202 

and 5 CFR 2634.904. Therefore, upon 

receipt of a Memorandum of 

Appointment, each proposal evaluator 

and advisor must sign and return a 

Conflict of Interest Certificate to the 

Grants Officer or official responsible for 

the review. If an actual or potential 

conflict of interest exists, the appointee 

may not evaluate or provide advice on 

a potential applicant’s proposal until 

the conflict has been resolved with the 

servicing Ethics Counselor. Signed 

certificates from all proposal evaluators 

and advisors must be retained in the 

master file for the Funding Opportunity 

Announcement. 

(d) During the evaluation process, 

each proposal evaluator and advisor 

must assure that there are no financial 

or employment interests which conflict 

or give the appearance of conflicting 

with his or her duty to evaluate 

proposals impartially and objectively. 

Examples of situations which may be 

prohibited or represent a potential 

conflict of interest may include, but are 

not limited to: 

(1) Financial interest, including 

ownership of stocks and bonds, in a 

firm which submits, or is expected to 

submit, an application in response to 

the funding opportunity; 

(2) Outstanding financial 

commitments to any applicant or 

potential applicant; 

(3) Employment in any capacity, even 

if otherwise permissible, by any 

applicant or potential applicant; 


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(4) Employment within the last 12 

months by any applicant or potential 

applicant; 

(5) Any non-vested pension or 

reemployment rights, or interest in 

profit sharing or stock bonus plan, 

arising out of the previous employment 

by an applicant or potential applicant; 

(6) Employment of any member of the 

immediate family by any applicant or 

potential applicant; 

(7) Positions of trust that may include 

employment, past or present, as an 

officer, director, trustee, general partner, 

agent, attorney, consultant, or 

contractor; 

(8) A close personal relationship that 

may include a spouse, dependent child 

or member of the proposal evaluator’s 

household that may compromise or 

impair the fairness and impartiality of 

the proposal evaluator or advisor and 

grants officer during the proposal 

evaluation and award selection process, 

and the management of an award; and 

(9) Negotiation of outside 

employment with any applicant or 

potential applicant. 

(e) Each proposal evaluator and 

advisor must immediately disclose in 

writing to the Grants Officer or the 

individual responsible for the review as 

soon as it becomes known that an actual 

or potential conflict of interest exists. 

The Grants Officer must obtain the 

assistance of the servicing Ethics 

Counselor in order to reach an opinion 

or resolution. A record of the 

disposition of all conflict of interest 

situations must be included in the 

award file. 

(f) All Department financial assistance 

awards must include the following term 

and condition prohibiting recipient, 

recipient employee and subrecipient 

conflicts of interest: 

Conflict of Interest 

The recipient must establish safeguards to 

prohibit its employees and subrecipients 

from using their positions for purposes that 

constitute or present the appearance of a 

personal or organizational conflict of interest. 

The recipient is responsible for notifying the 

Grants Officer in writing of any actual or 

potential conflicts of interest that may arise 

during the life of this award. Conflicts of 

interest include any relationship or matter 

which might place the recipient or its 

employees in a position of conflict, real or 

apparent, between their responsibilities 

under the agreement and any other outside 

interests. Conflicts of interest may also 

include, but are not limited to, direct or 

indirect financial interests, close personal 

relationships, positions of trust in outside 

organizations, consideration of future 

employment arrangements with a different 

organization, or decision-making affecting 

the award that would cause a reasonable 

person with knowledge of the relevant facts 

to question the impartiality of the recipient 

and/or recipient’s employees and 

subrecipients in the matter. 

The Grants Officer and the servicing Ethics 

Counselor will determine if a conflict of 

interest exists. If a conflict of interest exists, 

the Grants Officer will determine whether a 

mitigation plan is feasible. Mitigation plans 

must be approved by the Grants Officer in 

writing. Failure to resolve conflicts of interest 

in a manner that satisfies the government 

may be cause for termination of the award. 

Failure to make required disclosures may 

result in any of the remedies described in 2 

CFR 200.338, including suspension or 

debarment (see also 2 CFR part 180). 

§ 1403.113 What are mandatory 

disclosures for financial assistance? 

The non-Federal entity or applicant 

for a Federal award must disclose in 

writing, in a timely manner, to the 

Federal awarding agency or passthrough entity all violations of Federal 

criminal law involving fraud, bribery, or 

gratuity violations potentially affecting 

the Federal award. Failure to make 

required disclosures can result in any of 

the remedies described in 2 CFR 

200.338 (see also 2 CFR part 180 and 31 

U.S.C. 3321). A non-Federal entity or 

applicant for a the Department award 

must disclose, in a timely manner, in 

writing to the Department awarding 

agency or pass-through entity, and to 

the Department’s Office of Inspector 

General, all violations of Federal 

criminal law involving fraud, bribery, or 

gratuity violations potentially affecting 

the Federal award. 

§ 1403.114–1403.203 [Reserved] 

§ 1403.204 What is the financial assistance 

application and merit review process? 

(a) This merit review process does not 

apply to instruments such as intra- and 

inter-agency agreements, international 

agreements (excluding grants and 

cooperative agreements with foreign 

recipients), memoranda of 

understanding or agreement, 

cooperative research and development 

agreements, concession contracts, 

permits, or fixed price awards. 

(b) This merit review process must be 

described or incorporated by reference 

in the applicable funding opportunity 

announcement (see 2 CFR part 200 

appendix I and 2 CFR 200.203). It is also 

important for the Department’s bureaus 

and offices to create review systems for 

discretionary programs that are 

noncompetitive that consider statutory 

or regulatory provisions, a business 

evaluation, risk assessment, and other 

applicable government-wide pre-award 

considerations. 

(c) Actions required—(1) Competition 

in grant and cooperative agreement 

awards. Maximum competition in grant 

and cooperative agreement awards is 

expected in awarding discretionary 

funds, unless otherwise directed by 

Congress. When grants and cooperative 

agreements are awarded competitively, 

the Department requires that the 

competitive process be fair and 

impartial, that all applicants be 

evaluated only on the criteria stated in 

the announcement, and that no 

applicant receive an unfair competitive 

advantage. Synopses of all 

announcements for open competition, 

and all modifications/amendments to 

announcements for open competition, 

must be posted on Grants.gov 

(www.grants.gov). 

(2) Independent objective evaluation 

of financial assistance applications and 

proposals. Announcements and 

competitions for assistance and 

agreements must provide for an 

objective and unbiased process for 

reviewing applications submitted in 

response to the announcement and for 

selecting applicants for award. This 

requires a comprehensive, impartial, 

and objective examination of 

applications based on the criteria 

contained in the announcement by 

individuals who have no conflicts of 

interest with respect to the competing 

proposal/applications or applicants. 

Bureaus and offices must exercise due 

diligence to ensure that applications are 

reviewed and evaluated by qualified 

reviewers; applications are scored on 

the basis of announced criteria; 

consideration is given to the level of 

applicant risk and past performance; 

applications are ranked; and funding 

determinations are made. Awarding 

officials must check the System for 

Award Management (SAM) immediately 

prior to award to verify that the awardee 

is not suspended, debarred or otherwise 

ineligible at the time of award. The 

SAM review must include a review of 

the recipient organization’s name and 

principal staff. 

(3) Evaluation and Selection Plan for 

Funding Opportunity Announcements. 

Bureaus and offices must develop an 

Evaluation and Selection Plan in 

concert with the Funding Opportunity 

Announcement (FOA) to ensure 

consistency, and to outline and 

document the selection process. The 

Evaluation and Selection Plan should be 

finalized prior to the release of the FOA. 

An Evaluation and Selection Plan is 

comprised of five basic elements: 

(i) Merit review factors and subfactors; 

(ii) A rating system (e.g., adjectival, 

color coding, numerical, or ordinal); 

(iii) Evaluation standards or 

descriptions which explain the basis for 


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assignment of the various rating system 

grades/scores; 

(iv) Program policy factors; and 

(v) The basis for selection. 

(4) Basic review standards. Bureaus 

and offices must initially screen new 

applications/proposals to ensure that 

they meet the following standards 

before they are subjected to a detailed 

evaluation utilizing a merit review 

process. The review system should 

include three phases: initial screening, 

threshold review and a merit review. 

Bureaus and offices may remove an 

application from funding consideration 

if it does not pass the Basic Eligibility 

Screening. 

(5) Basic eligibility screening. The 

initial stage is to consider the timeliness 

of the application submission, applicant 

eligibility, and completeness of the 

documents submitted for review. All 

applications should be screened to 

ensure that: 

(i) The application meets the 

requirements of the applicable funding 

opportunity; 

(ii) The applicant meets the eligibility 

requirements detailed in the funding 

opportunity; 

(iii) The applicant entity and 

principal investigator/key personnel are 

not suspended, debarred, or otherwise 

described as ineligible in the System for 

Award Management; and 

(iv) The application contains a 

properly executed Standard Form (SF)- 

424, Application for Financial 

Assistance, SF–424B or SF–424D, 

Assurances, Detailed Budget Review 

Sheets; and, if applicable, the SF–LLL, 

Disclosure of Lobbying. 

(6) Completeness. Bureaus and offices 

may return applications/proposals that 

are incomplete or otherwise fail to meet 

the requirements of the Grants.gov FOA 

to the sender to be corrected or 

modified/supplemented by the sender. 

Until the application/proposal meets the 

above requirements, it shall not be given 

detailed evaluation. Bureaus and offices 

may use discretion to determine the 

length of time for applicants to resolve 

application deficiencies. 

(7) Timeliness. In a competitive 

review process, bureaus and offices 

shall consider the timeliness of the 

application submission. Applications 

that are submitted beyond the 

announced deadline date shall be 

removed from the review process. 

(8) Threshold screening. Bureaus and 

offices are responsible for screening 

applications and proposals for the 

adequacy of the budget and compliance 

with statutory and other requirements. 

The SF–424 and Detailed Budget 

Worksheets must be reviewed in 

accordance with Department of the 

Interior policy on Financial Assistance 

Cost Reviews. Bureaus and offices must 

also consider risk thresholds at this 

stage of the process. Elements to be 

considered include organization; single 

audit submissions, past performance; 

availability of necessary resources, 

equipment, or facilities; financial 

strength and management capabilities; 

procurement procedures; or procedures 

for selecting and monitoring 

subrecipients or sub-vendors, if 

applicable. 

(9) Merit review evaluation screening. 

This is the final review stage where the 

technical merit of the application/

proposal is reviewed. In the absence of 

a program rule or statutory requirement, 

program officials should develop 

criteria that include all aspects of 

technical merit. Bureaus and offices 

should develop criteria that are 

conceptually independent of each other, 

but all-encompassing when taken 

together. While criteria will vary, the 

basic criteria should focus reviewers’ 

attention on the project’s underlying 

merit (i.e., significance, approach, and 

feasibility). The criteria should focus 

not only on the technical details of the 

proposed project but also on the broader 

importance or potential impact of the 

project. The criteria should be easily 

understood. If the criteria are 

susceptible to varying interpretations, 

reviewers will use their own 

interpretation. Program policy factors 

may be used during the selection 

process to provide for consideration of 

factors that are important to the 

fulfillment of agency program 

objectives. 

§ 1403.205 [Reserved] 

§ 1403.206 What are the FAIR 

requirements for domestic for-profit and 

foreign entities? 

The Omni-Circular and the 

Department’s FAIR Omni-Circular 

supplement apply to for-profit entities, 

foreign public entities or foreign 

organizations except where the Federal 

awarding agency determines that the 

application of these subparts would be 

inconsistent with the international 

obligations of the United States or the 

statute or regulations of a foreign 

government (see definitions in 2 CFR 

200.46 and 2 CFR 200.47). 

(a) Requirements for domestic forprofit entities. (1) Section 1403.207 

contains standard award terms and 

conditions that bureaus and offices must 

always apply to for-profit entities; and 

terms and conditions that bureaus and 

offices may apply to for-profit entities. 

Bureaus and offices must always 

incorporate into awards to domestic forprofit organizations the award terms and 

conditions that always apply, either 

directly or by reference. 

(2) Bureaus and offices may apply the 

administrative guidelines in 2 CFR part 

200 subparts A through D; the cost 

principles at 48 CFR part 1, subpart 

31.2; and the procedures for negotiating 

indirect costs detailed in section 

1403.401 of the FAIR, to domestic forprofit entities 

(3) Depending on the nature of a 

particular program, offices and bureaus 

may alternatively develop programspecific administrative guidelines for 

domestic for-profits based on the 

requirements in 2 CFR part 200 subparts 

A through D, but may not apply more 

restrictive requirements than the 

requirements in 2 CFR part 200 subparts 

A through D unless approved by OMB 

through a request to the Director, Office 

of Acquisition and Property 

Management. 

(b) Requirements for foreign entities. 

Section 1403.207 of the FAIR contains 

standard award terms and conditions for 

foreign entities that include terms and 

conditions that bureaus and offices must 

always apply to foreign entities; and 

terms and conditions that bureaus and 

offices may apply to foreign entities. 

Bureaus and offices must always 

incorporate the terms and conditions 

that always apply to awards to foreign 

entities, either directly or by reference. 

All applicable award terms and 

conditions apply unless the foreign 

recipient provides conclusive evidence 

to the Departmental grant making 

program, and the program agrees, that 

application of a particular requirement 

is inconsistent with the international 

obligations of the United States or the 

laws or regulations of a foreign 

government to which the recipient is 

subject. 

(c) Restrictions on foreign awards. 

Bureaus and offices must not fund 

projects in countries determined by the 

U.S. Department of State to have 

provided support for acts of 

international terrorism (see http://

www.state.gov/j/ct/list/c14151.htm for 

more information), and are therefore 

subject to sanctions that restrict U.S. 

foreign assistance and other financial 

transactions, without proper licenses 

administered by the U.S. Department of 

the Treasury, Office of Foreign Asset 

Controls (see http://www.treasury.gov/

resourcecenter/sanctions/Pages/

default.aspx for more information). 

(d) Method of payment for foreign 

awards. Foreign recipients must not 

register in or be paid through the 

Department of the Treasury’s 

Automated Standard Application for 

Payments (ASAP). Foreign recipients 


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with bank accounts in the United States 

are paid by Electronic Funds Transfer 

(EFT) through the Automated Clearing 

House (ACH). Foreign recipients with 

bank accounts outside of the United 

States are paid electronically through 

the Department of the Treasury’s 

International Treasury Services (ITS) 

system. The Debt Collection 

Improvement Act of 1996 requires that 

all Federal agency payments be made 

electronically. However, Treasury 

regulations do allow for some 

exceptions, including or certain foreign 

entities. Refer to Department of the 

Interior guidance on Electronic Funds 

Transfer Waiver Process at https://

www.doi.gov/sites/doi.gov/files/

migrated/pam/programs/acquisition/

upload/DIAPR-2012-06-Amendment-1- 

Electronic-Funds-Transfer-WaiverProcess-2.pdf for more information. 

(e) Requirements for award terms and 

conditions. Bureau and office award 

terms and conditions must be managed 

in accordance with the requirements in 

2 CFR 200.210. 

§ 1403.207 What specific conditions 

apply? 

(a) Mandatory award terms and 

conditions for domestic for-profit 

entities. The award terms and 

conditions in: 

(1) 2 CFR part 25, Universal Identifier 

and System for Award Management; 

(2) 2 CFR part 170, Reporting 

Subawards and Executive 

Compensation; 

(3) 2 CFR part 175, Award Term for 

Trafficking in Persons; 

(4) 2 CFR part 1400, Governmentwide Debarment and Suspension (Nonprocurement); 

(5) 2 CFR part 1401, Requirements for 

Drug-Free Workplace (Financial 

Assistance); and 

(6) 43 CFR part 18, New Restrictions 

on Lobbying, always apply to domestic 

for-profit entities. 

(b) Submission of an application for 

financial assistance also represents the 

applicant’s certification of the 

statements in 43 CFR part 18, appendix 

A, Certification Regarding Lobbying. 

(c) The terms and conditions of 41 

U.S.C. 4712, Pilot Program for 

Enhancement of Recipient and 

Subrecipient Employee Whistleblower 

Protection, apply to all awards issued 

after July 1, 2013 and shall remain in 

effect until January 1, 2017. 

(d) Bureaus and offices shall include 

the terms and conditions of 41 U.S.C. 

6306, Prohibition on Members of 

Congress Making Contracts with the 

Federal Government, 41 U.S.C. 6306; 

and Executive Order 13513, Federal 

Leadership on Reducing Text Messaging 

while Driving, in all awards to domestic 

for-profit entities. 

(e) Whistleblower protection clause. 

Recipients must insert the following 

clause in all subawards and contracts 

related to the prime award that are over 

the Simplified Acquisition Threshold: 

All awards and related subawards and 

contracts over the Simplified Acquisition 

Threshold, and all employees working on 

applicable awards and related subawards 

and contracts, are subject to the whistleblower rights and remedies in accordance 

with the pilot program on award recipient 

employee whistleblower protections established at 41 U.S.C. 4712 by section 828 of 

the National Defense Authorization Act for 

Fiscal Year 2013 (Pub. L. 112–239). 

(f) Recipients, their subrecipients and 

contractors that are awarded contracts 

over the Simplified Acquisition 

Threshold related to an applicable 

award, shall inform their employees, in 

writing, in the predominant language of 

the workforce, of the employee 

whistleblower rights and protections 

under 41 U.S.C. 4712. 

(g) Discretionary award terms and 

conditions for domestic for-profit 

entities. The award terms and 

conditions in 2 CFR part 200, subparts 

A through E; and 48 CFR part 1, subpart 

31.2, Contracts with Commercial 

Organizations, apply only when the 

Federal program specifically 

incorporates them into a for-profit 

recipient’s notice of award. 

(f) Indirect cost rates. For information 

on indirect cost rate negotiations, 

contact the Interior Business Center 

(IBC) Indirect Cost Services Division by 

telephone at (916) 566–7111 or by email 

at ics@ibc.doi.gov. Visit the IBC Indirect 

Cost Services Division Web site at 

http://www.doi.gov/ibc/services/

Indirect_Cost_Services/index.cfm for 

more information. 

(g) Mandatory award terms and 

conditions for foreign public entities. (1) 

The award terms and conditions in 2 

CFR part 25, Universal Identifier and 

System for Award Management; 2 CFR 

part 170, Reporting Subawards and 

Executive Compensation; 2 CFR part 

175, Award Term for Trafficking in 

Persons (applicable to private entity 

subrecipients of foreign public entities); 

2 CFR part 1401, Requirements for DrugFree Workplace (Financial Assistance); 

and 43 CFR part 18, New Restrictions on 

Lobbying, always apply to all foreign 

public entities (see definition in 2 CFR 

200.46) and foreign organizations (see 

definition in 2 CFR 200.47). Submission 

of an application for financial assistance 

also represents the applicant’s 

certification of the statements in 43 CFR 

part 18, appendix A, Certification 

Regarding Lobbying. 

(2) Bureaus and offices must also 

include the terms and conditions of 41 

U.S.C. 6306, Prohibition on Members of 

Congress Making Contracts with Federal 

Government; and Executive Order 

13513, Federal Leadership on Reducing 

Text Messaging While Driving, in 

awards to foreign public entities. 

(h) Discretionary award terms and 

conditions for foreign public entities 

and foreign organizations. (1) The 

award terms and conditions in 2 CFR 

part 200 subparts A through E apply to 

foreign public entities and foreign 

organizations only when the Federal 

program specifically incorporates them 

into a foreign recipient’s notice of 

award. Foreign public entities are also 

subject to the requirements specific to 

States, with the following exceptions: 

(2) State payment procedures in 2 

CFR 200.305(a) do not apply. Foreign 

public entities must follow the payment 

procedures in 2 CFR 200.305(b)). 

(3) The requirements of 2 CFR part 6 

200.321, Contracting with Small and 

Minority Businesses, Women’s Business 

Enterprises, and Labor Surplus Area 

Firms; and 2 CFR 200.322, Procurement 

of Recovered Materials, do not apply. 

(4) Foreign non-profit organizations 

(see definition in 2 CFR 200.70) are 

subject to the requirements specific to 

domestic non-profit organizations. 

(5) Foreign institutions of higher 

education (IHEs) (institutions located 

outside the United States that meet the 

definition in 20 U.S.C. 1001) are subject 

to requirements specific domestic to 

IHEs. 

(i) Cost principles. Foreign public 

entities are subject to the cost principles 

in 48 CFR part 1, subpart 31.2. Foreign 

hospitals (i.e., a facility licensed as a 

hospital under the law of any foreign 

governmental entity or a facility 

operated as a hospital by a foreign 

public entity) are subject to the cost 

principles in 45 CFR part 74, appendix 

E. 

(j) Indirect costs. (1) The provisions of 

2 CFR part 200, appendix IV, Indirect 

(F&A) Costs Identification and 

Assignment, and Rate Determination for 

Nonprofit Organizations, apply to 

foreign non-profit organizations. 

(2) The provisions of 2 CFR part 200 

appendix VII, States and Local 

Government and Indian Tribe Indirect 

Cost Proposals, apply to foreign public 

entities. Foreign for-profit entities may 

contact the Interior Business Center 

(IBC) Indirect Cost Services by 

telephone at (916) 566–7111 or by email 

at ics@ibc.doi.gov, or visit the IBC 

Indirect Cost Services Web site at 

http://www.doi.govgov/ibc/services/


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Indirect_Cost_Services/index.cfm for 

more information. 

(3) The provisions of 45 CFR part 74, 

appendix E, Principles for Determining 

Costs Applicable to Research and 

Development under Grants and 

Contracts with Hospitals, apply to 

foreign hospitals. The U.S. Department 

of Health and Human Services (HHS) is 

the cognizant agency for indirect costs 

for foreign hospitals. Visit the HHS Cost 

Allocation Services Web site at https:// 

rates.psc.gov/ for more information. 

(4) Indirect costs for institutes of 

higher education are negotiated with 

HHS in accordance with 2 CFR part 200 

appendix III, Indirect (F&A) Costs 

Identification and Assignment, and Rate 

Determination for Institutions of Higher 

Education (IHEs). Visit the HHS Cost 

Allocation Services Web site at https:// 

rates.psc.gov/ for more information. 

(5) The applicable standard award 

terms and conditions will apply unless 

the recipient provides conclusive 

evidence for an exception. In granting 

the exception, the bureau/office agrees 

that the application of a particular 

requirement is inconsistent with the 

international obligations of the United 

States or the laws or regulations of a 

foreign government to which the 

recipient is subject. Such case-by-case 

exceptions are allowable under 2 CFR 

200.102(b). 

(6) The immunities provided to public 

international organizations under the 

International Organizations Immunities 

Act (22 U.S.C. 288–288f) are not 

considered waived unless they are 

expressly waived in writing by an 

authorized official at the organization. 

Signing the SF–424 Assurances or 

accepting an award does not constitute 

an express waiver of such immunities. 

The SF–424 Assurances form also states 

that ‘‘certain of these assurances may 

not be applicable to your project or 

program.’’ For a list of public 

international organizations awarded 

immunities under the International 

Organizations Immunities Act (see the 

U.S. Department of State’s Foreign 

Affairs Manual (FAM), at 9 FAM 41.24, 

Exhibit I). 

§ 1403.208–1403.400 [Reserved] 

§ 1403.401 What are the policies, 

procedures, and general decision-making 

criteria for deviations from negotiated 

indirect cost rates? 

(a) The provisions of 2 CFR 200.414(c) 

require Federal agencies to accept 

federally negotiated indirect cost rates. 

Federal agencies may use a rate different 

from the negotiated rate for a class of 

awards or a single Federal award only 

when required by Federal statute or 

regulation, or when approved by a 

Federal awarding agency head or 

delegate based upon documented 

justification described within 2 CFR 

200.414(c)(3). In addition, the 

Department accepts indirect cost rates 

that have been reduced or removed 

voluntarily by the proposed recipient of 

the award, on an award-specific basis. 

The following policies, procedures and 

general decision-making criteria apply 

for deviations from negotiated indirect 

cost rates for financial assistance 

programs and agreements. 

(1) Distribution basis. For all 

deviations to the Federal negotiated 

indirect cost rate, including statutory, 

regulatory, programmatic, and 

voluntary, the basis of direct costs 

against which the indirect cost rate is 

applied must be: 

(i) The same base identified in the 

recipient’s negotiated indirect cost rate 

agreement, if the recipient has a 

federally negotiated indirect cost rate 

agreement; or 

(ii) The modified total direct cost 

(MTDC) base, in cases where the 

recipient does not have a federally 

negotiated indirect cost rate agreement 

or, with prior approval of the Awarding 

Agency, when the recipient’s federally 

negotiated indirect cost rate agreement 

base is only a subset of the MTDC (such 

as salaries and wages) and the use of the 

MTDC still results in an overall 

reduction in the total indirect cost 

recovered. The MTDC is the base 

defined by 2 CFR 200.68. 

(iii) In cases where the recipient does 

not have a federally negotiated indirect 

cost rate agreement, under no 

circumstances will the Department use 

a modified rate based upon Total Direct 

Cost or other base not identified in the 

federally negotiated indirect cost rate 

agreement or defined within 2 CFR 

200.68. The purpose of this restriction is 

to ensure that the reduced rate is 

applied against a base that does not 

include any potentially distorting items 

(such as pass-through funds, 

subcontracts in excess of $25,000, and 

participant support costs); and is based 

on the requirements outlined in 2 CFR 

200.68; 2 CFR 200.414(f); 2 CFR part 200 

appendix III, section C.2.; 2 CFR part 

200 appendix IV, section B.3.f.; and 

appendix VII, section C.2.c. 

(2) Indirect cost rate deviation 

required by statute or regulation. In 

accordance with 2 CFR 200.414(c)(1), a 

Federal agency must use a rate other 

than the Federal negotiated rate where 

required by Federal statute or 

regulation. For such instances within 

the Department, the official award file 

must document the specific statute or 

regulation that required the deviation. 

(3) Indirect cost rate reductions used 

as cost-share. Instances where the 

recipient elects to use a rate lower than 

the federally negotiated indirect cost 

rate, and uses the balance of the 

unrecovered indirect costs to meet a 

cost-share or matching requirement 

required by the program and/or statute, 

are not considered a deviation from 2 

CFR 200.414(c), as the federally 

negotiated indirect cost rate is being 

applied under the agreement in order to 

meet the terms and conditions of the 

award. 

(4) Programmatic indirect cost rate 

deviation approval process. The 

following requirements apply for 

review, approval, and posting of 

programmatic indirect cost rate waivers: 

(5) Program qualifications. Programs 

that have instituted a program-wide 

requirement and governance process for 

deviations from federally negotiated 

indirect cost rates may qualify for a 

programmatic deviation approval. 

(6) Deviation requests. Deviation 

requests must be submitted by the 

responsible senior program manager to 

the Department Office of Acquisition 

and Property Management. The request 

for deviation approval must include a 

description of the program, and the 

governance process for negotiating and/ 

or communicating to recipients the 

indirect cost rate requirements under 

the program. The program must make its 

governance documentation, rate 

deviations, and other program 

information publicly available. 

(7) Approvals. Programmatic 

deviations must be approved, in writing, 

by the Director, Office of Acquisition 

and Property Management. Approved 

deviations will be made publicly 

available along with the governance 

documentation for the program. 

(8) The following programs are 

approved to use an indirect cost rate 

that deviates from the federally 

negotiated indirect cost rate agreements: 

(i) Cooperative Fish and Wildlife 

Research Unit (CRU) Program; 

(ii) Cooperative Ecosystem Studies 

Unit (CESU) Program; and 

(iii) Land Buy-Back Program for Tribal 

Nations. 

(9) Voluntary indirect cost rate 

reduction. On an award-specific basis, 

an applicant and/or proposed recipient 

may elect to reduce or eliminate the 

indirect cost rate applied to costs under 

that award. The election must be 

voluntary and cannot be required by the 

awarding official, funding opportunity 

announcement, program, or other nonstatutory or non-regulatory 

requirements. For these award-specific 

and voluntary reductions, the 

Department can accept the lower rate 


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Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / Proposed Rules 6469 

provided the official file clearly 

documents the recipient’s voluntary 

election. 

(10) Unrecovered indirect costs. In 

accordance with 2 CFR 200.405, indirect 

costs not recovered due to deviations to 

the federally negotiated rate are not 

allowable for recovery via any other 

means. 

(b) [Reserved] 

§ 1403.402–1403.999 [Reserved] 

Dated: January 20, 2016. 

Kristen J. Sarri, 

Principal Deputy Assistant Secretary—Policy, 

Management and Budget. 

[FR Doc. 2016–02039 Filed 2–5–16; 8:45 am] 

BILLING CODE 4334–63–P 

OFFICE OF PERSONNEL 

MANAGEMENT 

5 CFR PART 250 

RIN 3206–AL98 

Personnel Management in Agencies 

AGENCY: Office of Personnel 

Management. 

ACTION: Proposed rule. 

SUMMARY: The Office of Personnel 

Management is issuing proposed 

regulations that introduce updated 

systems and regulatory definitions for 

managing human resources in the 

Federal Government. The rulemaking 

also proposes to reduce and clarify the 

reporting procedures that agencies are 

required to follow, creates a data-driven 

review process (HRStat); and describes 

workforce planning methods that 

agencies are required to follow. 

Additionally, the proposed regulation 

aligns Strategic Human Capital 

Management to the Government 

Performance and Results Act 

Modernization Act of 2010 (Pub. L. 111– 

352). It also sets forth the new Human 

Capital Framework (HCF), which 

replaces the Human Capital Assessment 

Accountability Framework (HCAAF). 

DATES: Comments must be received on 

or before April 8, 2016. 

ADDRESSES: You may submit comments, 

identified by RIN number 3206–AL98, 

using any of the following methods: 

Federal eRulemaking Portal: http://

www.regulations.gov. Follow the 

instructions for submitting comments. 

Mail: Veronica Villalobos, Principal 

Deputy Associate Director, Employee 

Services, Office of Personnel 

Management, Room 7460, 1900 E Street 

NW., Washington, DC 20415. 

FOR FURTHER INFORMATION CONTACT: For 

information contact Jan Chisolm-King 

by email at janet.chisolm-king@opm.gov 

or by telephone at (202) 606–1958. 

SUPPLEMENTARY INFORMATION: The Office 

of Personnel Management (OPM) is 

issuing proposed regulations to revise 5 

CFR part 250, subpart B, Strategic 

Human Capital Management and 5 CFR 

part 250, subpart C, Employee Surveys. 

5 CFR part 250, subpart B, 

implements the requirements of 5 U.S.C. 

1103(c) and the Chief Human Capital 

Officers Act (CHCO Act). Section 

1103(c)(1) requires OPM to design a set 

of systems, including appropriate 

metrics, for assessing the management 

of human capital by Federal agencies 

and to define those systems in 

regulation. Section 1103(c)(2) requires 

OPM to define the systems in 

regulations and include standards 

addressing a series of specified topics. 

Subpart B of part 250 of title 5, Code of 

Federal Regulations, contains those 

regulations. Subpart B also provides an 

avenue for Chief Human Capital Officers 

(CHCOs) to carry out their required 

functions under 5 U.S.C. 1402(a). 

Current regulations implement 5 

U.S.C. 1103(c) by adopting the systems 

currently comprising the Human Capital 

Assessment and Accountability 

Framework (HCAAF) to constitute the 

systems required by 5 U.S.C. 1103(c)(1) 

and to provide the systems definitions 

and standards required by 5 U.S.C. 

1103(c)(2). The HCAAF is a framework 

that integrates four human capital 

systems—Strategic Planning and 

Alignment, Talent Management, 

Performance Culture, and Evaluation. 

These systems define practices for the 

effective and efficient management of 

human capital and support the steps 

involved in the planning and goal 

setting, implementation, and evaluation 

of human capital policies, programs, 

and initiatives in the Federal 

Government. 

Proposed August 2011 Regulations 

In August, 2011, OPM issued 

proposed regulations (FR Doc No: 2011– 

19844) that sought to make several 

changes to the regulatory definitions 

related to the strategic management of 

human capital. The current regulations 

implement 5 U.S.C. 1103(c) by adopting 

the systems comprising the Human 

Capital Assessment and Accountability 

Framework (HCAAF) to constitute the 

systems required by 5 U.S.C. 1103(c)(1) 

and to provide the systems definitions 

and standards required by 5 U.S.C. 

1103(c)(2). Having the HCAAF written 

into regulation makes it difficult to keep 

current. OPM concluded in 2011, as it 

does again today, that it would be more 

effective to provide definitions in the 

regulations that establish broad, 

overarching concepts, and to treat some 

of the system-specific material in the 

framework as guidance that is subject to 

change as Federal human capital 

management evolves. This removal of 

the HCAAF from the stated regulation 

into guidance would allow OPM to 

refresh aspects of the framework, 

without requiring a change to the 

specific regulations, thereby 

encouraging flexibility and adaptability. 

An additional change in the earlier 

proposal was the elimination of the 

requirement for the Strategic Human 

Capital Plan (SHCP) and Human Capital 

Management Report (HCMR) to reduce 

the burden of reporting requirements for 

the agencies. 

In addition, the earlier proposed 

regulation would have clarified 

requirements imposed by two separate 

legal authorities. In the past, there was 

some confusion regarding whether 

agencies must establish separate 

accountability systems in order to 

satisfy the statutory requirements of 5 

U.S.C. 1103(c)(2)(F) and any 

requirement OPM previously imposed 

under Civil Service Rule X (5 CFR 10.2). 

The proposed regulations were expected 

to make clear that the requirements of 

these two legal authorities are satisfied 

by the establishment of the Human 

Capital Accountability System (HCAS) 

set forth in section 250.205 of the 

proposed regulation. 

Recent Developments 

OPM did not make the proposed 

regulation final because of several 

developments that required additional 

changes to what had been written in the 

proposed regulation. One major change 

was the enactment of the Government 

Performance and Results Act 

Modernization Act of 2010 (Pub. L. 111– 

352), and the issuance of the Diversity 

and Inclusion Executive Order (E.O. 

13583). 

The Government Performance and 

Results Act (GPRA) Modernization Act 

(GPRAMA) 

Before the enactment of GPRAMA, 

agencies were required to develop 

Strategic Human Capital Plans that 

identified human capital (HC) strategies 

and resources that support agency 

missions and strategic goals. Under 

GPRAMA, agency strategic HC plans are 

no longer required; however, agencies 

must now integrate the human capital 

strategies and resources within their 

agency strategic plan. Human Capital 

Management Reports (HCMRs) also 

were eliminated. Implementation 

guidance for GPRAMA states that 

CHCOs will address in their Annual 

Performance Plan, ‘‘how performance 


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