����51

November 6, 2020

Questions Presented

1. Is the ����51 (����51) a federal agency, a federal grantee, or a federal contractor?
2. Are ����51 funds federal funds and are ����51 grants federal grants, the provision of federal financial assistance, or federal contracts?
3. Are ����51 grantees federal grantees?

Brief Answer

In general,

1. ����51 is not a federal agency, federal grantee, or a federal contractor.
2. ����51 funds are not federal funds and ����51 grants are not federal grants, do not constitute the provision of federal financial assistance, and are not federal contracts.
3. ����51’s grants do not make its grantees federal grantees.

In some situations, specific statutes or other authorities treat ����51 or ����51 grants as if ����51 was a federal program, but only within the scope of those specific statutes or authorities.  For example, the ����51 Act makes ����51 subject to the Freedom of Information Act.  42 U.S.C. § 2996d(g).  The ����51 Office of Legal Affairs can address questions about any specific situations.

Analysis

Congress created ����51 as a D.C. nonprofit corporation that “shall not be considered a department, agency, or instrumentality[] of the Federal Government.”  .  In light of this plain statutory language, the federal courts have consistently ruled that ����51 is not an agency except when Congress specifically states otherwise.  See, e.g., ., 186 F.3d 457 (4th 1999) (����51 is not an agency under the Administrative Procedure Act).  Where Congress has applied an agency requirement to ����51 by statute, it has explicitly done so, such as in the provision of the ����51 Act that subjects ����51 to the Freedom of Information Act.  42 U.S.C. § 2996d(g) (����51 “shall be subject to the provisions of section 552 of title 5” (relating to freedom of information)).  Similarly, although ����51 is not a federal entity, the ����51 Act authorizes the President of the United States to “direct that appropriate support functions of the Federal Government may be made available to the Corporation in carrying out its activities.”  42 U.S.C § 2995k.  That authority permits ����51, unlike other nonprofit corporations, to use government rates and benefits such as the GSA purchasing schedule and use of a .gov domain.

The United States Government Accountability Office (GAO) has explained that ����51 is not a federal agency and, thus not subject to the laws that generally govern federal agencies.  See (August 2007) (discussing the structure of ����51 and that it is not a federal agency or a U.S. government corporation).  Furthermore, ����51 is not within or subject to the authority of the Executive Branch, which cannot direct ����51 operations.  For example, “Congress authorized ����51, unlike federal agencies in general, to submit its annual budget requests directly to Congress and to receive its appropriation in one installment at the beginning of the fiscal year without apportionment by the Office of Management and Budget.  42 U.S.C. §§ 2996d(e)(2), 2996i(a) (1994). Cf. 31 U.S.C § 1512 (1994).”  . 

The following are examples of some, but not all, requirements on federal grants that do not apply to ����51 grants.

1. ����51 grants are not subject to the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Office of Management and Budget (OMB), 2 C.F.R. Part 200. Rather, ����51 sets cost standards and audit requirements on ����51 grants.  Neither ����51 nor ����51 funds meet the definitions of a federal agency, federal program, or federal financial assistance under 2 C.F.R. Part 200.  Instead, ����51 sets out cost principles at 45 C.F.R. Part 1630, and those principles in some places refer to OMB regulations for guidance.
2. ����51 grants are not included in the Catalog of Federal Domestic Assistance.
3. ����51 grants are not subject to the Federal Funding Accountability and Transparency Act (FFATA) or the Digital Accountability and Transparency Act (DATA Act). Thus, ����51 grants are not included in the USASpending.gov data reporting system.  Rather, ����51 collects and publishes financial and case service data regarding ����51 grants.
4. Neither ����51 nor ����51 grants are within the authority of the Executive Branch to direct operations because ����51 is not an agency and ����51 grants are not federal grants. Thus, ����51 and ����51 grants are not subject to directives by the Office of Management and Budget or Executive Orders of the U.S. President that are directed to “agencies” or address requirements for federal grants.

The following are examples of some, but not all, federal requirements that apply to ����51 grants because of specific mandates in statutory or other authorities.

1. For purposes of specific federal laws relating to waste, fraud, and abuse with federal funds, ����51 “shall be considered to be a Federal agency and all funds provided by [����51] shall be considered to be Federal funds provided by grant or contract.” L. 104-134, Sect. 504(a)(19) (1996) (incorporated by reference in ����51’s annual appropriation).  See 45 C.F.R. Part 1640—Application of Federal Law to ����51 Recipients.  The exhaustive list of those laws appears at .
2. ����51 grants are audited under generally accepted government auditing standards and, for audit purposes, are treated as federal funds. Pub. L. 104-134, Sect. 509 (1996) (incorporated by reference in ����51’s annual appropriation).  For this reason, ����51 grants appear on the Schedule of Federal Awards in ����51 grantees’ financial statements, although they are not federal awards for any other purpose.
3. ����51 has an Office of Inspector General (OIG) as a “designated federal entity” under section 8G of the Inspector General Act, [. The ����51 OIG conducts audits, investigations, and other reviews of both ����51 and ����51 grants.

For any questions regarding these issues, including questions about whether other specific federal requirements apply to ����51 grants, please contact Mark Freedman, Senior Associate General Counsel, at mfreedman@lsc.gov.

RONALD S. FLAGG
Vice President for Legal Affairs and General Counsel

MARK FREEDMAN
Senior Associate General Counsel