Deputy Director
for Management, Acting
SUBJECT: Advisory
to Federal Grantees on Responsibility to Address the Year 2000 Issue
The year 2000 (Y2K) issue has received a great deal of attention for
some time now. Federal agencies are working hard to ensure internal
systems and those of organizations with which they exchange data are
Y2K compliant. This effort should include ensuring that Federal grantees
and subgrantees are aware that systems that are not Y2K compliant may
affect their ability to account for Federally funded programs in accordance
with Federal requirements.
Governmentwide
requirements contained in the OMB Circular A-102 Common Rule, "Uniform
Administrative Requirements for Grants and Cooperative Agreements to
State and Local Governments" and OMB Circular A-110, "Uniform Administrative
Requirements for Grants and Agreements with Institutions of Higher Education,
Hospitals, and Non-Profit Organizations" require that grantee and subgrantee
financial management systems be capable of providing specific information
about Federal programs. In addition, program laws and regulations may
require additional information which grantee and subgrantee systems
must be capable of providing. If grantee and subgrantee systems are
not Y2K compliant, they may not be capable of meeting these governmentwide
and program specific requirements.
Federal grantor
agencies should advise grantees of their responsibility to establish
and maintain systems that meet governmentwide and program specific requirements
and that systems which are not Y2K compliant may not be able to satisfy
these requirements. Further, Federal grantor agencies should encourage
grantees to inquire of grantor agencies about the use of grant funds
to correct Y2K problems. Grantees should also be advised of their responsibility
to inform their subgrantees of these requirements and about the use
of grant funds to address Y2K problems.
To assist Federal
agencies in advising grantees, attached you will find an advisory that
all grant-making agencies should use. This will ensure uniformity and
minimize confusion in instances when grantees receive an advisory from
multiple Federal agencies. Each agency should provide a contact person
for questions from grantees.
Should you or your
staff have any questions, please contact Jimmy Charney in the Office
of Federal Financial Management, at (202) 395-3993.
ADVISORY TO GRANTEES
AND SUBGRANTEES
FROM: [Grants
policy officer]
SUBJECT: Non
Year 2000 Compliant Computer Systems May Not Meet Federal Grant Requirements
The Year 2000 Issue
The Year 2000 (Y2K)
Issue concerns the ability of data processing systems to process year-date
dependent data accurately beyond the year 1999. It is a broad operational
problem, as well as an accounting systems problem. Systems that are
not Y2K compliant may not be able to continue to process information
in accordance with Federal management and program specific requirements.
The inability to process information in accordance with Federal requirements
could result in a requirement to return funds that have not been accounted
for properly.
Federal Grants
Management and Program Specific Requirements
Federal grants
management requirements are contained in the OMB Circular A-102 Common
Rule, "Uniform Administrative Requirements for Grants and Cooperative
Agreements to State and Local Governments" and OMB Circular A-110, "Uniform
Administrative Requirements for Grants and Agreements with Institutions
of Higher Education, Hospitals, and Non-Profit Organizations." These
regulations require that grantee and subgrantee financial management
systems be capable of providing certain information, including: (1)
accurate, current, and complete disclosure of the financial results
of each federally-sponsored project or program in accordance with the
prescribed reporting requirements; (2) the source and application of
funds for federally-sponsored activities; and (3) the comparison of
outlays with budgeted amounts for each award.
In addition, implementing
statutes and regulations for certain Federal programs may require that
systems make certain calculations or provide specified data, which may
not be possible if systems are not Y2K compliant. For example, programs
that provide assistance to individuals may have time limits. Such systems
must be able to calculate the passage of time accurately to ensure assistance
payments do not exceed prescribed limits. Loan programs may require
that interest be calculated on outstanding balances over time. Accordingly,
loan systems must be capable of calculating interest payments over the
period covered by loan agreements.
Grantee/Subgrantee
Actions
Grantees and subgrantees
should identify systems critical to the management of Federal programs
(mission-critical systems) and assess whether these systems are Y2K
compliant. For those systems that are not Y2K compliant, grantees and
subgrantees should take immediate action to remediate the Y2K problem
and validate the success of the remediation effort. Since grantee and
subgrantee data processing may be performed by outside entities or be
dependent upon data received from outside entities, the assessment should
include inquiries of these organizations about their Y2K assessment,
system remediation, and testing efforts. The timetable for completing
this process should ensure that properly functioning mission-critical
systems are in operation before existing systems will cease performing
mission-critical functions.
Grantees should
advise Federal grantor agencies if the assessment discloses significant
Y2K problems or if the grantee cannot complete the remediation and testing
phases before systems cease performing properly. Similarly, subgrantees
should advise grantees of significant Y2K problems or an inability to
complete systems testing and validation before systems cease operating
properly. This will assist Federal agencies, grantees, and subgrantees
with contingency planning. [Grantees should contact their Federal
grantor agency about the use of Federal grant funds to address Y2K problems]
or [Attached to this advisory is guidance about the use of grant
funds to address Y2K problems.]
Questions about
this advisory
Grantees should
direct questions about this advisory to the [Federal awarding agency
designated contact]. Subgrantees should direct questions to the
non-federal organization providing them with the most Federal funding.
Additional Y2K
Resources
The General Services
Administration's Office of Information Technology maintains an Internet
site (http://www.itpolicy.gsa.gov) which includes valuable information
about addressing the concerns discussed in this advisory. Check under
the heading "Year 2000 Directories."