Committee reviews strike-all amendment to H233, directs informal working group on grant rules

The House Committee on Government Operations & Military Affairs reviewed a strike-all amendment (draft 2.1) to H233 that would create an informal working group to study and recommend changes to state grant and contracting practices, including a proposal to require state agencies to accept indirect cost rates approved by federal or state entities and to allow grants to be awarded directly to agencies or political subdivisions when they are uniquely suited to deliver services.

Ellen Heikowski, attorney, Office of Legislative Council, told the committee, "I have brought the committee a strike all amendment to H233. It's actually going to be draft 2.1," and described the draft as "a little more organized and easier to read." Heikowski said draft 2.1 consolidates previous language into a single section that establishes an informal study committee composed of the Secretary of Administration (or designee), a representative of Common Good Vermont, and a representative of the Vermont Association of Planning and Development Agencies (the regional planning commissions, or RPCs). The bill would require the group to meet and develop recommendations "on or before 12/15/2025."

Under the draft, the working group would consider issues under Administrative Bulletin 5, including: whether all state agencies should accept indirect rates approved by a federal or state agency; creating a uniform indirect-rate calculation methodology and approval process for state-administered grants to nonprofits when a rate is higher than the standard de minimis; and whether to allow a state granting agency to award a grant directly to another state agency or political subdivision deemed uniquely suited to provide the service "in lieu of compliance with any bidding requirements otherwise established by rule or law." The draft would direct the group to submit findings and recommendations for statutory or Administrative Bulletin 5 changes to the House and Senate committees on Government Operations and on Appropriations.

Committee members pressed for clarifications about scope and timing. One member asked whether the bill should set a specific timeframe for agencies to accept an externally approved indirect rate, noting prior problems updating Administrative Bulletin 5. Heikowski said the working group would examine implementation details, and suggested language such as "in a timely manner" might be added to the bill's clause about acceptance. A member suggested that the working group could recommend a concrete timeframe (for example, 60 or 90 days) but cautioned against picking an arbitrary number during initial drafting.

Peter Gregory, executive director of the Two Rivers–Ottauquechee Regional Commission, explained how RPC-approved indirect rates typically operate in his region: "they start on July 1 and then [end] June 30. So they're annual rates that are approved based on previous year's audit and figures. So they don't affect at the start of the fiscal year, generally approved in January effective." He added that federally negotiated indirect rates (NCRAs) can be approved for multiple years and that the bill aims to create a process to have those approved rates honored across Vermont state agencies.

Members also debated language about who counts as an "agency" in the provision that would allow direct awards instead of competitive bidding. Some sought to make clear the bill distinguishes between a state agency and a political subdivision (for example, an RPC). Concerns were raised about favoritism and ensuring competitive processes are preserved when appropriate; at least one member said, "I also don't like favoritism at all… I don't like taking away competitive grant writing… or a competitive bidding process." Counsel and committee members agreed to rework wording for clarity and to circulate edits after the session.

The committee did not take a formal vote on H233 at this meeting. Counsel said she would make the agreed edits and the committee planned additional follow-up after floor activity. Heikowski noted the version under discussion is intended as a condensed, stakeholder-driven alternative to earlier drafts and that stakeholders (RPCs and Representative Nugent were cited) helped shape the recommendations.