A 2022 NC Senate bill (S.894) that would address a variety of issues that nonprofits have experienced with their grants and contracts with the NC Department of Health and Human Services (DHHS), including late contracts, late payments, underpayment for indirect costs, midstream changes to contract terms, and burdensome application and reporting requirements.
The bill would:
- Allow nonprofit grantees and contractors to get automatic six-month extensions of their contracts if the renewal process hasn’t been completed within 10 days of the new contract start date. This provision is designed to respond to concerns that many nonprofits have expressed about challenges in offering continuity of services when DHHS is delayed in issuing new contracts.
- Require DHHS to pay reimbursement invoices within 30 days of receipt of an invoice from a nonprofit and require DHHS to pay interest at the rate of 3% per month when making late payments to nonprofit contractors and grantees.
- Establish a de minimis indirect cost rate of 10% of modified total direct costs on nonprofits’ grants and contracts with DHHS where organizations don’t have federally-approved indirect cost rate. Contractors with a federally-approved indirect cost rate would also be allowed to apply this rate to their state grants and contracts with DHHS. This provision is consistent with the rule in the OMB Uniform Guidance for indirect costs on federal funds and was developed in response to many nonprofits’ concerns that their state contracts do not allow funds to be used for indirect costs.
- Set a standard 60-day timeframe for contract negotiation, oversight, and monitoring duties and a requirement that key performance indicators and contract deliverables are included in the contract and used as the basis for performance monitoring. This provision comes in response to nonprofits’ concerns about lengthy contract negotiations and unclear performance measures on contracts.
- Establish training and continuing education requirements for DHHS staff and limit the required trainings and meetings that nonprofits must attend as part of their grants or contracts to those that are directly related to services provided under the contract or necessary for purposes of contract administration. This provision is designed to respond to some of nonprofits’ concerns about burdensome grant application and reporting requirements.
- Prohibit DHHS from making material amendments to contracts with nonprofit service providers after the execution of the contracts unless the amendments are necessary to comply with changes to federal or state laws. This provision responds to nonprofits’ concerns about midstream changes to their state contracts, which can create significant new compliance costs for nonprofits.
- Create a legislative advisory committee on nonprofit/DHHS contracting that would look into issues of late contract delivery, late payments, underpayment for indirect costs, mid-stream changes to contracts, overly complex or redundant grant and contract application requirements, overly complex or redundant grant and contract reporting requirements, and unduly burdensome and unnecessary training or meeting requirements for contractors or grantees. This committee would report its findings to the General Assembly at least once a year.
The bill was filed because of nonprofits' advocacy. Dozens of nonprofits have provided feedback to the Center about these issues. The Center is greatly appreciative to Senator Jim Burgin (R-Harnett) for filing this important bill to help nonprofits provide servcies more efficiently and effectively.