D.C. Law 23-185. Nonprofit Fair Compensation Act of 2020.

AN ACT

To require that grants and contracts between the District and nonprofit organizations compensate the nonprofit organizations for indirect costs at the same rate each organization has negotiated to receive for a current federal contract or grant, if applicable, and to create a mechanism to determine an indirect cost rate for a nonprofit organization that does not have a negotiated federal rate.

BE IT ENACTED BY THE COUNCIL OF THE DISTRICT OF COLUMBIA, That this act may be cited as the "Nonprofit Fair Compensation Act of 2020".

Sec. 2. Definitions.

For the purposes of this act, the term:

(1) "Certified Public Accountant" means a person licensed in the District as a Certified Public Accountant in the District pursuant to 17 DCMR § 2500, et seq., or any successor regulations.

(2) "Indirect costs" shall have the same meaning as provided in 2 C.F.R. § 200.56, or any successor regulations.

(3) "NICRA" means a Negotiated Indirect Cost Rate Agreement that reflects an indirect cost rate negotiated between the federal government and a grant or contract awardee, which is used to calculate an awardee's compensation by federal agencies for indirect costs.

(4) "Nonprofit organization" means an organization that is tax exempt under 26 U.S. Code § 501(c)(3), (4), or (6).

(5) "OMB Uniform Guidance" means the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards and any related guidance published by the Office of Management and Budget, located at 2 C.F.R. § 200 et seq., or any successor regulations.

Sec. 3. Indirect cost compensation.

(a) Unless otherwise provided for by law, nonprofit organizations shall be compensated for indirect costs incurred in provision of goods or performance of services within the terms of any grant or contract with the District pursuant to the nonprofit organization's unexpired NICRA. If a nonprofit organization does not have an unexpired NICRA, the nonprofit organization may elect to be compensated for indirect costs:

(1) As calculated using a de minimis rate of 10% of all direct costs under the grant or contract;

(2) By negotiating a new percentage indirect cost rate with the awarding agency;

(3) As calculated with the same percentage indirect cost rate as the nonprofit organization negotiated with any District agency within the past 2 years; however nonprofit organizations may request to renegotiate indirect cost rates pursuant to subsection (c) of this section; or

(4) As calculated with a percentage rate and base amount, determined by a certified public accountant using the nonprofit organization's audited financial statements from the immediately preceding fiscal year, pursuant to the OMB Uniform Guidance, and certified in writing by the certified public accountant.

(b) If the funding for a grant or contract comes from a federal agency, indirect costs shall be compensated consistent with the requirements for pass-through entities in 2 C.F.R. § 200.331, or any successor regulations.

(c) Each contract and grant awarded by the District shall include an indirect cost compensation clause that obligates the contractor or grantee to pay indirect costs to any nonprofit organization subcontractor or subgrantee at the same rate as the nonprofit organization would receive as a contractor or grantee with the District.

(d) This section shall not apply to foundations, hospitals, colleges, or universities.

(e) The Mayor, pursuant to Title I of the District of Columbia Administrative Procedure Act, approved October 21, 1968 (82 Stat. 1204; D.C. Official Code § 2-501 et seq.) may issue rules to implement the provisions of this section.

Sec. 4. Applicability.

(a) Section (3)(a) of this act shall apply:

(1) For grants and contracts valued at or below $1 million beginning on the first day of the new fiscal year following the effective date of this legislation.

(2) For grants and contracts valued at or below $5 million, but greater than $1 million, beginning on the first day of the new fiscal year following the applicability of paragraph (1) of this subsection.

(3) For grants and contracts valued at or below $ 10 million, but greater than $5 million, beginning on the first day of the new fiscal year following the applicability of paragraph (2) of this subsection.

(4) For grants and contracts valued at or below $25 million, but greater than $10 million beginning on the first day of the new fiscal year following the applicability of paragraph (3) of this subsection.

(5) For grants and contract valued above $25 million beginning on the first day of the new fiscal year following the applicability of paragraph (4) of this subsection.

Sec. 5. Fiscal impact statement.

The Council adopts the fiscal impact statement in the committee report as the fiscal impact statement required by section 4a of the General Legislative Procedures Act of 2975, approved October 16, 2006 (120 Stat. 2038; D.C. Official Code § 1-301.47a).

Sec. 5. Effective date.

This act shall take effect following approval by the Mayor (or in the event of a veto by the Mayor, action by the Council to override the veto), a 30-day period of congressional review as provided in section 602(c)(1) of the District of Columbia Home Rule Act, approved December 24, 1973 (87 Stat. 813; D.C. Official Code § 1-206.02(c)(1)), and publication in the District of Columbia Register.