Profit and Fee Under Federal Financial Assistance Awards, 1657-1658 [2012-241]

Agencies

• National Aeronautics and Space Administration

[Federal Register Volume 77, Number 7 (Wednesday, January 11, 2012)]
[Proposed Rules]
[Pages 1657-1658]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-241]


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NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

14 CFR Part 1260

RIN 2700-AD79


Profit and Fee Under Federal Financial Assistance Awards

AGENCY: National Aeronautics and Space Administration.

ACTION: Proposed rule.

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SUMMARY: NASA is proposing to revise the NASA Grant & Cooperative 
Agreement Handbook to prohibit the payment of profit or fee on Federal 
Financial Assistance awards, i. e. grants and cooperative agreements. 
This is an extension of the currently existing prohibition on payment 
of profit or fee to commercial entities under Federal Financial 
Assistance awards.

DATES: Interested parties should submit comments to NASA at the address 
identified below on or before March 12, 2012 to be considered in 
formulation of the final rule.

ADDRESSES: Interested parties may submit comments, identified by RIN 
2700-AD79, via the Federal eRulemaking Portal: https://www.regulations.gov. Follow the instructions for submitting comments. 
Comments may also be submitted to R. Todd Lacks (Room 5J75), NASA 
Headquarters, Office of Procurement, Contract Management Division, 
Washington, DC 20546. Comments may also be submitted by email to: 
todd.lacks@nasa.gov.

FOR FURTHER INFORMATION CONTACT: R. Todd Lacks, NASA Headquarters, 
Office of Procurement, Contract Management Division, Room 5J75; 
telephone: (202) 358-0799; email: todd.lacks@nasa.gov.

SUPPLEMENTARY INFORMATION:

I. Background

    Historically, NASA has discouraged the payment of profit or fee 
under its Federal Financial Assistance awards because payment in excess 
of costs is inconsistent with the intent of grant and cooperative 
agreements which provide funding in the form of financial assistance to 
recipients for their performance of a public purpose. In the case of 
awards to commercial firms, payment of profit or fee is specifically 
prohibited. Because the prohibition does not include other recipients 
such as educational and non-profit organizations, NASA's policy has 
been misinterpreted and inconsistent application has occurred. A recent 
review indicates that, in instances where the Agency has accepted such 
proposals and paid management fees, the payment of those fees has been 
inappropriate for the grant or cooperative agreement effort. While the 
payment of fees, historically, has occurred on less than 1 percent of 
Agency grants and cooperative agreements, this proposed rule which 
extends the prohibition on payment of profit or fees to all recipients 
of NASA grants and cooperative agreements, will ensure that the 
regulation accurately reflects Agency policy.

II. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting

[[Page 1658]]

flexibility. This is not a significant regulatory action and, 
therefore, was not subject to review under section 6(b) of E.O. 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

III. Regulatory Flexibility Act

    NASA certifies that this proposed rule will not have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., 
because the rule does not impose any additional requirements on small 
entities and currently less than 1 percent of recipients of NASA grants 
and cooperative agreements receive profit or management fees.

IV. Paperwork Reduction Act

    The Paper Reduction Act (Pub. L. 104-13) is not applicable because 
the prohibition on payment of profit and management fees by NASA does 
not require the submission of any information by recipients that 
requires the approval of the Office of Management and Budget under 44 
U.S.C. 3501, et seq.

List of Subjects in 14 CFR Part 1260

    Colleges and universities, Business and Industry, Grant programs, 
Grants administration, Cooperative agreements, State and local 
governments, Non-profit organizations, Commercial firms, Recipients.

William P. McNally,
Assistant Administrator for Procurement.

    Accordingly, 14 CFR Part 1260 is proposed to be amended as follows:
    1. The authority citation for 14 CFR 1260 continues to read as 
follows:

     Authority: 42 U.S.C. 2473(c)(1), Pub. L. 97-258, 96 Stat. 1003 
(31 U.S.C. 6301, et seq.), and OMB Circular A-110.

PART 1260--GRANTS AND COOPERATIVE AGREEMENTS

    2. In Sec.  1260.4, paragraph (b)(2) is revised to read as follows:


Sec.  1260.4  Applicability.

* * * * *
    (b) * * *
    (1) * * *
    (2) NASA does not pay profit or fee under grants or cooperative 
agreements.
* * * * *
    3. In Sec.  1260.10, paragraph (b)(1)(iv) is added to read as 
follows:


Sec.  1260.10  Proposals.

* * * * *
    (b) * * *
    (1) * * *
    (iv) NASA does not pay profit or fee under its grants or 
cooperative agreements.
* * * * *
    4. In Sec.  1260.14, paragraph (e) is added to read as follows:


Sec.  1260.14  Limitations.

* * * * *
    (e) NASA does not pay profit or fee under its grants or cooperative 
agreements.

[FR Doc. 2012-241 Filed 1-10-12; 8:45 am]
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