Uniform Administrative Requirements (2 CFR 200)

2 CFR Part 200, commonly called the Uniform Guidance or Uniform Administrative Requirements, is the single federal regulation that establishes financial management, cost principles, procurement standards, and audit requirements applicable to all federal grants and cooperative agreements, regardless of awarding agency.

What is 2 CFR Part 200?

The Office of Management and Budget (OMB) issued 2 CFR Part 200 in 2013 to consolidate eight previously separate circulars (A-21, A-87, A-102, A-110, A-122, A-133, A-89, and A-50) into a single, uniform set of requirements. The regulation took effect in December 2014 and applies to all new federal grants and cooperative agreements awarded after that date, regardless of the awarding agency, the recipient type, or the amount.

2 CFR Part 200 has five subparts: A (Acronyms and Definitions), B (General Provisions), C (Pre-Federal Award Requirements), D (Post-Federal Award Requirements), and F (Audit Requirements). Subpart E establishes cost principles, the rules for determining which costs are allowable, allocable, and reasonable when charged to a federal award.

Key requirements include: maintaining a financial management system capable of producing accurate financial reports; following competitive procurement standards when purchasing goods and services with grant funds; obtaining prior approvals for significant budget or scope changes; maintaining adequate internal controls; submitting required performance and financial reports on schedule; managing property acquired with grant funds; and having a Single Audit performed when total federal expenditures exceed $750,000 in a fiscal year.

Why 2 CFR Part 200 matters for government contractors

Any organization receiving a federal grant, including SBIR awardees, university research centers, nonprofits, and state agencies, must comply with 2 CFR Part 200. Understanding the cost principles in Subpart E is essential for determining what expenses can legitimately be charged to a grant and avoiding audit findings for unallowable costs.

Example

A small business wins a $500,000 SBIR Phase II grant from NSF. Under 2 CFR Part 200, the firm must: maintain a financial management system that separately tracks SBIR expenditures from company funds; charge only allowable costs (salaries, fringe, indirect costs, and direct project costs approved in the budget); submit semi-annual performance reports and Federal Financial Reports (SF-425); and if total federal expenditures across all awards exceed $750,000 in a fiscal year, arrange for a Single Audit by an independent auditor.

Frequently Asked Questions

Does 2 CFR Part 200 apply to federal contracts?

No. 2 CFR Part 200 applies to grants and cooperative agreements only. Federal contracts are governed by the FAR, which has its own separate cost accounting rules (the Cost Accounting Standards and FAR Part 31).

What are the three tests for an allowable cost under 2 CFR Part 200?

A cost charged to a federal award must be: (1) allowable under the applicable cost principles (Subpart E), (2) allocable to the specific award (it provides benefit to the project), and (3) reasonable (what a prudent person would pay for the same item in comparable circumstances). All three tests must be met.

When was 2 CFR Part 200 last significantly updated?

The most recent significant update took effect October 1, 2024, incorporating revisions that increased the Single Audit threshold from $750,000 to $1,000,000 in total federal expenditures, updated the equipment threshold, and revised several cost provisions. Grantees should confirm they are working from the current version.

Are for-profit businesses subject to the same cost principles as nonprofits?

Not entirely. For-profit organizations are subject to the cost principles at 48 CFR Part 31 (FAR cost principles) rather than the nonprofit cost principles in 2 CFR Part 200 Subpart E, when the cost principles apply. However, for-profit grantees are still subject to the administrative, procurement, and audit requirements in the other subparts.