E8-11409. Disallowing Management Fees in EPA Assistance Agreements

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Notice.

SUMMARY:

The term “management fees or similar charges” refers to expenses added to the direct costs in order to accumulate and reserve funds for ongoing business expenses, unforeseen liabilities, or for other similar costs which are not allowable under EPA assistance agreements. EPA will not, as a matter of policy, allow recipients of EPA financial assistance to charge management fees to their agreements with the Agency. Recipients will have actual notice of EPA's policy prohibiting management fees through a term and condition and competitive solicitation announcements.

EPA funds for financial assistance are limited. The Agency has decided that, in the absence of contrary statutory direction, the public's interest in supporting projects that promote environmental protection is best served by ensuring that EPA financial assistance is used only to pay for costs that are allocable to the specific project receiving EPA financial assistance, and are reasonable and necessary for the performance of the project. Management fees or similar charges may not be used to improve or expand the capacity of organizations carrying out EPA funded projects, except to the extent authorized by the terms of the agreement as a direct cost of carrying out the scope of work. EPA's “no management fee” policy is consistent with OMB Circular A-122, as codified at 2 CFR Part 230. According to 2 CFR Part 230, Appendix B, Item 9, contributions to contingency reserves for unforeseen events are unallowable. Therefore, management fees or similar charges in excess of the direct costs and approved indirect rates are not allowable under EPA assistance agreements.

FOR FURTHER INFORMATION CONTACT:

Brian Hanlon, 202-564-2865.

Dated: May 15, 2008.

Howard Corcoran,

Director, Office of Grants and Debarment.