Date: October 8, 2002
From: Cynthia J. Burbank, FHWA Associate Administrator for Planning, Environment & Realty
(signed by Cindy Burbank)
(signed by J.M. Ryan for)
Charlotte Adams, FTA Associate Administrator for Planning
Reply to: HEP-2
Attn. of: TPL-10
To: FHWA Division Administrators
FHWA Resource Center Managers
FTA Regional Administrators
The purpose of this memorandum is to provide guidance on the use of FHWA and FTA State planning and research and metropolitan planning funds for membership dues in professional associations or other organizations.
This responds to several recent questions from field offices, State DOTs, and MPOs. The guidance below is based on the guidelines in the following OMB Circulars: A-87, Cost Principles for State, Local and Indian Tribal Governments; A-21, Cost Principles for Educational Institutions; and A-122, Cost Principles for Non-Profit Organizations.
A basic guideline in these OMB circulars is that for a cost to be allowable, as either a direct or indirect cost, it must be necessary and reasonable for proper and efficient performance of the Federally funded program and must be assignable to the Federal program and other activities in accordance with the benefits received by those activities. In essence, a cost can be billed to a Federal award based on the relative benefits to the work being performed with the Federal funds versus other benefiting activities.
For organizations such as the American Association of State Highway and Transportation Officials (AASHTO), the American Public Transportation Association (APTA), and the National Association of Regional Councils (NARC), which are multipurpose organizations that provide benefits to their members for more than just transportation planning, the membership dues need to be treated as an indirect cost or the dues must be allocated to all benefiting activities of the member agency on an equitable basis that considers the relative benefits to the federally funded transportation planning work.
In the case of the Association of Metropolitan Planning Organizations (AMPO), which is an organization that specifically serves the MPOs responsible for carrying out the metropolitan planning process required by title 23 U.S.C. and Chapter 53 of title 49, U.S.C., the eligible portion of the dues may be billed directly to FHWA/FTA funds if similar costs are billed directly to other benefiting activities. Similarly, NARC Transportation Supplemental Services membership fees may be billed as a direct cost.
Memberships in any organization or professional association must be in the name of the member agency and not in the name of an individual in order to be allowable. In addition, in all cases the portion of the organization=s dues that is used for lobbying is unallowable and cannot be billed to Federal funds as either an indirect or direct cost. In the case of non-profit organizations such as AASHTO, NARC, APTA, and AMPO, those activities that are considered to be lobbying and unallowable are identified in OMB Circular A-122, Attachment B, paragraph 25 (copy attached). If these organizations do not notify their members of the portion of the dues that are for lobbying activities, the State DOT or MPO should request such information from the organization.
OMB Circular A-122, Attachment B
a. Notwithstanding other provisions of this Circular, costs associated with the following activities are unallowable:
(1) Attempts to influence the outcomes of any Federal, State, or local election, referendum, initiative, or similar procedure, through in kind or cash contributions, endorsements, publicity, or similar activity;
(2) Establishing, administering, contributing to, or paying the expenses of a political party, campaign, political action committee, or other organization established for the purpose of influencing the outcomes of elections;
(3) Any attempt to influence: (i) The introduction of Federal or State legislation; or (ii) the enactment or modification of any pending Federal or State legislation through communication with any member or employee of the Congress or State legislature (including efforts to influence State or local officials to engage in similar lobbying activity), or with any Government official or employee in connection with a decision to sign or veto enrolled legislation;
(4) Any attempt to influence: (i) The introduction of Federal or State legislation; or (ii) the enactment or modification of any pending Federal or State legislation by preparing, distributing or using publicity or propaganda, or by urging members of the general public or any segment thereof to contribute to or participate in any mass demonstration, march, rally, fundraising drive, lobbying campaign or letter writing or telephone campaign; or
(5) Legislative liaison activities, including attendance at legislative sessions or committee hearings, gathering information regarding legislation, and analyzing the effect of legislation, when such activities are carried on in support of or in knowing preparation for an effort to engage in unallowable lobbying.
b. The following activities are excepted from the coverage of subparagraph a:
(1) Providing a technical and factual presentation of information on a topic directly related to the performance of a grant, contract or other agreement through hearing testimony, statements or letters to the Congress or a State legislature, or subdivision, member, or cognizant staff member thereof, in response to a documented request (including a Congressional Record notice requesting testimony or statements for the record at a regularly scheduled hearing) made by the recipient member, legislative body or subdivision, or a cognizant staff member thereof; provided such information is readily obtainable and can be readily put in deliverable form; and further provided that costs under this section for travel, lodging or meals are unallowable unless incurred to offer testimony at a regularly scheduled Congressional hearing pursuant to a written request for such presentation made by the Chairman or Ranking Minority Member of the Committee or Subcommittee conducting such hearing.
(2) Any lobbying made unallowable by subparagraph a.(3) to influence State legislation in order to directly reduce the cost, or to avoid material impairment of the organization's authority to perform the grant, contract, or other agreement.
(3) Any activity specifically authorized by statute to be undertaken with funds from the grant, contract, or other agreement.
c. (1) When an organization seeks reimbursement for indirect costs, total lobbying costs shall be separately identified in the indirect cost rate proposal, and thereafter treated as other unallowable activity costs in accordance with the procedures of subparagraph B.3 of Attachment A.
(2) Organizations shall submit, as part of the annual indirect cost rate proposal, a certification that the requirements and standards of this paragraph have been complied with.
(3) Organizations shall maintain adequate records to demonstrate that the determination of costs as being allowable or unallowable pursuant to paragraph 25 complies with the requirements of this Circular.
(4) Time logs, calendars, or similar records shall not be required to be created for purposes of complying with this paragraph during any particular calendar month when: (1) the employee engages in lobbying (as defined in subparagraphs (a) and (b)) 25 percent or less of the employee's compensated hours of employment during that calendar month, and (2) within the preceding five?year period, the organization has not materially misstated allowable or unallowable costs of any nature, including legislative lobbying costs. When conditions (1) and (2) are met, organizations are not required to establish records to support the allowabliliy of claimed costs in addition to records already required or maintained. Also, when conditions (1) and (2) are met, the absence of time logs, calendars, or similar records will not serve as a basis for disallowing costs by contesting estimates of lobbying time spent by employees during a calendar month.
(5) Agencies shall establish procedures for resolving in advance, in consultation with OMB, any significant questions or disagreements concerning the interpretation or application of paragraph 25. Any such advance resolution shall be binding in any subsequent settlements, audits or investigations with respect to that grant or contract for purposes of interpretation of this Circular; provided, however, that this shall not be construed to prevent a contractor or grantee from contesting the lawfulness of such a determination.