Grants Policy Statment

HHS

Grants Policy Statement

U.S. Department of Health and Human Services

Office of the Assistant Secretary for Resources and

Technology

Office of Grants

January 1, 2007

Introduction

The Department of Health and Human Services Grants Policy Statement (HHS GPS)

is intended to make available in a single document the general terms and conditions

of HHS discretionary grant and cooperative agreement awards. These general terms

and conditions are common across all HHS Operating Divisions (OPDIVs)

and apply

as indicated in the HHS GPS unless there are statutory, regulatory, or award-specific

requirements to the contrary (as specified in individual Notices of Award). The HHS

awarding offices are components of the OPDIVs and Staff Divisions (hereafter

“OPDIVs”) that have grant-awarding authority.

This document also is designed to be useful to those interested in the HHS grants

process by providing information about that process and its associated authorities

and about responsibilities. The HHS GPS is available online from the HHS home page

at http://www.hhs.gov/grantsnet.

HHS GPS Organization

The HHS GPS has four parts and an appendix, which allow general information,

application information, and other types of reference material to be separated from

legally binding terms and conditions:

• Part I: HHS Grants Process. Part I describes the OPDIVs, their role, and the

roles of other HHS organizations in HHS grants; specifies recipient and HHS

staff responsibilities; outlines the grant application and review processes; and

explains the various resources available to those interested in the HHS grants

process.

• Part II: Terms and Conditions of HHS Grant Awards. Part II includes generally

applicable terms and conditions. This part also specifies the terms and

conditions that apply to particular types of grants, recipients, and activities

that differ from, supplement, or elaborate on the general terms and

conditions.

• Part III: Points of Contact. Part III lists pertinent offices and officials with

their addresses and telephone numbers.

• Part IV: OPDIV-Specific Information and Terms and Conditions. Part IV, which

supplements Parts I, II, and III for a given OPDIV, contains any OPDIV

supplementary information and OPDIV-specific terms and conditions of award.

This includes statutory, regulatory, or public policy requirements that apply

only to that OPDIV or its programs. OPDIV-specific terms and conditions in

Part IV take precedence if they conflict with requirements in Part II of the

HHS GPS.

As indicated under “Applicability,” the National Institutes of Health (NIH)

maintains its own Grants Policy Statement. While the requirements of both policy

statements are equivalent, the NIH GPS addresses only research and research-

related matters as well as requirements that apply only to NIH.

• Appendices: The appendices include all abbreviations and a glossary of terms

used throughout the HHS GPS for ease of reference.

Supersession and Applicability

Supersession

Applicants for HHS grants and recipients have historically relied on a variety of

sources for information about the grants processes and requirements of HHS and its

component OPDIVs. For the recipients of grants from the OPDIVs constituting the

Public Health Service (PHS), the primary source of information for recipients was the

Public Health Service Grants Policy Statement. This HHS GPS supersedes in its

entirety the Public Health Service Grants Policy Statement, dated April 1, 1994, and

addendum, dated January 24, 1995.

Applicability

This policy statement applies only to HHS discretionary grant programs and only to

awards to organizational entities made by OPDIVs other than the National Institutes

of Health (NIH). It does not apply to awards under mandatory grant programs

(e.g., entitlement programs) or to awards made directly to individuals (e.g.,

scholarships). In 1998 (and with subsequent updates), NIH issued its own NIH

Grants Policy Statement. Until further notice, NIH will continue to issue and maintain

its own Grants Policy Statement in lieu of the HHS GPS.

Recipients are not directly subject to the requirements of HHS Grants Policy

Directives and implementing HHS Grants Administration Manuals (or any predecessor

OPDIV manuals), which are internal documents guiding HHS operations. If an OPDIV

implements a requirement in an internal document that does affect recipients, it will

not do so by citing that document; rather, the requirement is placed on the recipient

through explicit coverage in the NoA.

Cooperative Agreements

The Federal Grant and Cooperative Agreement Act of 1977, 31 U.S.C. 6301, defines

the cooperative agreement as an alternative assistance instrument to be used in lieu

of a grant whenever substantial Federal involvement with the recipient during

performance is anticipated. The difference between grants and cooperative

agreements is the degree of Federal programmatic involvement rather than the type

of administrative requirements imposed. Therefore, statutes, regulations, policies,

and the information contained in this policy statement that are applicable to grants

also apply to cooperative agreements, unless the award itself provides otherwise.

This HHS GPS is issued as a preliminary step by HHS to standardize and

streamline award terms and conditions. Once there are government-wide changes

under the Federal Financial Assistance Management Improvement Act of 1999, 31

U.S.C. 6101 note, HHS will use this document to reflect those changes.

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Subrecipients and Contractors under Grants

The information contained in this policy statement applies directly to the primary

recipients of HHS funds. The HHS GPS indicates in Part II whether requirements

must be applied to or “flowed down” to subawards or contracts under grants.

Recipients are responsible for specifying those requirements in subawards (which

includes consortium agreements) or contracts, as applicable.

Effective Date

This document is effective for all new, competing continuation, and non-competing

continuation HHS grant and cooperative agreement awards with beginning dates on

or after January 1, 2007. This document reflects current HHS requirements as

specified in 45 CFR parts 74 and 92.

The information in this document is subject to change following its issuance due to

changes in statutes, regulations, or policies adopted subsequent to its effective date.

To ensure that applicants and recipients are aware of changes, recipients should

refer to the Federal Register and Code of Federal Regulations (Titles 45 and 42).

These documents are available online at http://www.gpoaccess.gov/.

Conventions

Certain conventions are followed throughout this document. The term “grant” is used

to mean both grants and cooperative agreements; however, for clarity, certain

sections mention both grants and cooperative agreements. The term “recipient”

generally is used to refer to the organization to which an OPDIV makes a grant or

cooperative agreement award. However, depending on the context, the terms

“grantee” may be used rather than “recipient.” “HHS” may be used in this document

to refer to the entire organization or to its component organizations, or else to

contrast an action by an OPDIV with an action by a recipient or other organization. A

reference to Part I, II, III, or IV without further elaboration means the corresponding

part of the HHS GPS. Although most of the requirements in the HHS GPS apply to

the covered activities of all OPDIVs, if a requirement applies more narrowly, the

exception is explicitly noted.

Maintenance

The Office of Grants—part of the HHS Office of the Assistant Secretary for Resources

and Technology—is responsible for developing and maintaining this document, which

will be reissued periodically. Interim changes will be posted on the HHS and OPDIV

Web sites (see Part I). Each change, including its applicability and effective date and

the affected sections of the HHS GPS specified, will be described, and the necessary

language to implement it as a term or condition of award will be provided. The Office

of Grants welcomes comments and suggestions for future versions of the HHS GPS.

Table of Contents

Part I: HHS Grants Process............................................................................I-1

General Information..................................................................................I-1

HHS Grant-Awarding Operating Divisions...............................................I-1

Types of HHS Financial Assistance Programs ..........................................I-3

Sources of Requirements.....................................................................I-4

Roles and Responsibilities....................................................................I-4

Roles and Responsibilities of OPDIV Staff Members and Other HHS

Offices ...............................................................................I-5

Roles and Responsibilities of Recipients and Their Principals..............I-6

Fraud, Waste, and Abuse.....................................................................I-7

Paperwork Reduction Act.....................................................................I-8

Sources of Information about HHS Grant Processes and Programs.............I-9

Application and Application Review Processes ...............................................I-9

Grants.gov and Funding Opportunity Announcements..............................I-9

Eligibility......................................................................................... I-11

Suspension and Debarment........................................................ I-13

Delinquency on Federal Debt ...................................................... I-14

Lobbying ................................................................................. I-15

Application Process........................................................................... I-15

Types of Applications and Letters of Intent ................................... I-15

Application Forms ..................................................................... I-16

Preparing an Application ............................................................ I-17

Public Policy Requirements ................................................................ I-18

Research-Related Requirements.................................................. I-18

National Environmental Policy Act ............................................... I-19

Preservation of Cultural and Historic Resources ............................. I-20

Protection of Wetlands............................................................... I-21

Uniform Relocation Act and Real Property Acquisition Policies Act..... I-22

The Application Budget ..................................................................... I-22

Indirect Costs........................................................................... I-23

Matching or Cost Sharing ........................................................... I-24

Research Patient Care Costs....................................................... I-25

Third-Party Reimbursement........................................................ I-25

Submitting an Application.................................................................. I-25

Executive Order 12372 and Public Health System Reporting RequirementsI-26

Use of Application Information ........................................................... I-27

Freedom of Information Act........................................................ I-28

Privacy Act............................................................................... I-29

Objective Review of Applications ........................................................ I-29

Disposition of Applications ................................................................. I-30

Business Management Reviews and Other Pre-Award Activities............... I-31

Assurances of Compliance.......................................................... I-31

Cost Analysis ........................................................................... I-32

Assessment of Financial and Other Management Systems............... I-32

The Notice of Award................................................................................ I-33

Project Period and Budget Period........................................................ I-34

Other Terms and Conditions .............................................................. I-35

Payment................................................................................................ I-36

SMARTLINK II/ACH........................................................................... I-36

CASHLINE/ACH................................................................................ I-36

Cash Request .................................................................................. I-37

Post-Award Administration ....................................................................... I-37

Part II: Terms and Conditions of Award..........................................................II-1

Overview of Terms and Conditions of Award ................................................II-1

General, Program-Specific, and Award-Specific Terms and Conditions.......II-1

Effect and Order of Precedence ...........................................................II-1

Flow-Down of Requirements under Subawards and Contracts under GrantsII-2

Public Policy Requirements........................................................................II-2

Standards of Conduct for Recipient Employees ......................................II-7

Hatch Act.........................................................................................II-8

Age Discrimination Act of 1975............................................................II-8

Civil Rights Act of 1964......................................................................II-8

Education Amendments of 1972 ..........................................................II-8

Rehabilitation Act of 1973 ..................................................................II-8

Biological Agents and Toxins...............................................................II-9

USA PATRIOT Act.......................................................................II-9

Public Health Security and Bioterrorism Preparedness and

Response Act.....................................................................II-9

Human Subjects................................................................................II-9

Office for Human Research Protections’ and Recipient Responsibilities II-

Protection of Research Subjects’ Identities .................................. II-12

Animal Welfare ...............................................................................II-12

Other Research-Related Requirements ...............................................II-13

Research Misconduct................................................................II-13

Financial Conflict of Interest ...................................................... II-14

Recombinant DNA and Human Gene Transfer Research ................. II-15

Human Embryonic Stem Cell Research and Cloning....................... II-16

Research on Human Fetal Tissue................................................ II-16

Transplantation of Human Fetal Tissue........................................II-18

Certificates of Confidentiality ..................................................... II-18

Investigational New Drug Applications/Investigational Device

Exceptions....................................................................... II-18

Controlled Substances .............................................................. II-19

Construction-Related Requirements ................................................... II-20

Flood Insurance....................................................................... II-20

Architectural Barriers................................................................ II-20

Clean Air and Clean Water Act ................................................... II-20

Safe Drinking Water Act............................................................ II-20

Health, Safety, and Related Requirements .......................................... II-21

Restriction on Funding Abortions................................................ II-21

Restriction on Distribution of Sterile Needles/Needle Exchange....... II-21

Standards for Privacy of Individually Identifiable Health InformationII-21

Confidentiality of Patient/Client Records ......................................II-21

Drug-Free Workplace................................................................ II-21

Pro-Children Act ......................................................................II-22

Smoke-Free Workplace............................................................. II-22

Health and Safety .................................................................... II-22

Acknowledgment of Federal Funding ..................................................II-23

Activities Abroad.............................................................................II-23

Limited English Proficiency................................................................ II-23

Resource Conservation and Recovery Act............................................ II-23

Seat Belts ...................................................................................... II-23

Cost Considerations ...............................................................................II-24

General .........................................................................................II-24

The Cost Principles .......................................................................... II-24

Direct Costs and Indirect Costs ......................................................... II-25

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Reimbursement of Indirect Costs....................................................... II-26

Applicable Credits............................................................................ II-28

Allowable Costs and Activities ........................................................... II-28

Cost Transfers ................................................................................ II-43

Cost Overruns and Rate of Expenditure .............................................. II-44

Allocation of Costs........................................................................... II-44

Services Provided by Affiliated Organizations....................................... II-45

Matching or Cost Sharing........................................................................ II-45

Valuation of Donated Goods and Services ........................................... II-46

Donated Supplies, Equipment, Space, or Land ............................. II-46

Volunteer Services ................................................................... II-47

Using Program Income to Meet a Matching or Cost-Sharing Requirement II-48

Documentation ............................................................................... II-48

Prior-Approval Requirements................................................................... II-48

OPDIV Prior Approval....................................................................... II-48

Carryover of Unobligated Balances ............................................. II-51

Change of Grantee Organization ................................................ II-51

Change in Scope...................................................................... II-53

Change in Status, including Absence, of Principal Investigator/Project

Director and Other Key Personnel ....................................... II-54

Need for Additional OPDIV Funding............................................. II-54

Need for Additional Time to Complete Project- or Program-Related

Activities (“No-Cost Extension”)..........................................II-55

Significant Rebudgeting ............................................................ II-55

Transfer of Substantive Programmatic Work ................................ II-56

Requesting OPDIV Prior Approval ............................................... II-56

Expanded Authorities....................................................................... II-57

Carryover of Unobligated Balances ............................................. II-58

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Extension of Final Budget Period of a Previously Approved Project

Period.............................................................................II-58

Financial Management............................................................................ II-59

Financial Management System .......................................................... II-59

Program Income ............................................................................. II-60

Accountability and Alternatives for Use ....................................... II-60

Reporting of Program Income ....................................................II-62

Interest Earned on Advances of Grant Funds....................................... II-62

Property Management ............................................................................ II-63

Exempt Property ............................................................................. II-64

Nonexempt Property........................................................................ II-64

Equipment Management System .......................................................II-64

Sale of Equipment and Supplies ........................................................ II-65

Revocable License ........................................................................... II-65

Debt Instruments............................................................................ II-66

Real Property.................................................................................. II-66

Acquisition, Use, and Management ............................................. II-66

Disposition.............................................................................. II-67

Notice of Federal Interest.......................................................... II-67

Insurance ............................................................................... II-67

Intellectual Property...............................................................................II-68

Rights in Data.................................................................................II-69

Access to Research Data .................................................................. II-69

Publications.................................................................................... II-70

Patents and Inventions ....................................................................II-71

Royalties and Licensing Fees from Copyrights, Inventions,

and Patents ..................................................................... II-71

Invention Reporting ................................................................. II-72

Sharing Research Tools.................................................................... II-74

Procurement Management ......................................................................II-75

Approval Requirements ....................................................................II-76

Requirements for Using Small Businesses, Minority-Owned Firms, and

Women-Owned Businesses........................................................ II-77

Subawards.....................................................................................II-78

Changes in Organizational Status............................................................. II-79

Federally Sponsored Surveys................................................................... II-81

Monitoring ............................................................................................ II-82

Reporting ............................................................................................. II-82

Financial Reporting.......................................................................... II-83

Progress Reporting ..........................................................................II-84

Other Reporting .............................................................................. II-85

Overdue Reports............................................................................. II-85

Record Retention and Access................................................................... II-86

Audit Requirements................................................................................ II-86

Enforcement Actions .............................................................................. II-88

Modification of the Terms and Conditions of Award............................... II-89

Withholding a Non-Competing Continuation Award............................... II-89

Suspension or Termination ...............................................................II-89

Closeout............................................................................................... II-90

Final Financial Status Report............................................................. II-90

Final Progress Report.......................................................................II-91

Final Invention Statement and Certification.........................................II-92

Debt Collection...................................................................................... II-92

Appeals................................................................................................ II-93

Requirements for Specific Types of Grants................................................. II-94

Conference Grants...........................................................................II-94

Definitions .............................................................................. II-94

Representation ........................................................................II-95

Funding.................................................................................. II-95

Acknowledgment of Support and Disclaimer................................. II-95

Use of HHS and OPDIV Logos ....................................................II-95

Allowable and Unallowable Costs................................................II-96

Intellectual Property: Publications, Copyright, and Public Disclosure II-97

Reporting and Record Retention................................................. II-98

Construction and Modernization of Facilities ........................................ II-98

Funding.................................................................................. II-99

Allowable and Unallowable Costs and Activities ............................II-99

Prior-Approval Requirements................................................... II-101

Procurement Requirements ..................................................... II-102

Equal Employment Opportunity, Labor Standards, and Other Contract

Requirements ................................................................ II-102

Use of Facility and Disposition.................................................. II-104

Traineeship, Fellowship, and Similar Awards Made to Organizations on

Behalf of Individuals............................................................... II-105

Initiation of Support ............................................................... II-105

Payment............................................................................... II-106

Allowable Costs ..................................................................... II-106

Supplementation of Stipends, Compensation, and Other Income... II-109

Reporting Requirements ......................................................... II-110

Changes in the Project/Activity ................................................ II-111

Consecutive Support .............................................................. II-112

Termination .......................................................................... II-112

Inventions and Patents........................................................... II-112

Disposition of Professional Fees ............................................... II-113

Requirements for Specific Types of Recipients.......................................... II-113

Grants to Foreign Organizations, International Organizations, and Domestic

Grants with Foreign Components and Subawards to Foreign

Organizations........................................................................ II-113

Public Policy Requirements...................................................... II-113

Funding and Payment............................................................. II-114

Allowable Costs ..................................................................... II-114

Prior-Approval Requirements................................................... II-114

Audit II-115

Subawards............................................................................ II-115

Grants to Federal Institutions and Allowable Costs and Payments to

(or on Behalf of) Federal Employees under Grants ...................... II-115

Eligibility .............................................................................. II-116

Payment............................................................................... II-116

Allowable Costs under Grants to Federal Institutions................... II-116

Equipment Accountability........................................................ II-117

Procurement Requirements ..................................................... II-117

Intellectual Property............................................................... II-117

Reporting Requirements ......................................................... II-118

Allowable Costs and Payments to (or on Behalf of) Federal Employees

under Grants ................................................................. II-118

Grants to For-Profit Organizations.................................................... II-120

General ................................................................................ II-120

Allowable Costs and Payment of Fee......................................... II-120

Intellectual Property............................................................... II-121

Audit II-121

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Small Business Innovation Research and Small Business Technology

Transfer Programs.......................................................... II-122

Part III: Points of Contact ...........................................................................III-1

Appendix A: Abbreviations ........................................................................... A-1

Appendix B: Glossary .................................................................................. B-1

Index ........................................................................................................ C-1

Part I: HHS Grants Process

General Information

This section provides information about how HHS is organized to award and

administer grants and cooperative agreements. This section describes the roles of

organizations within HHS with responsibilities for the HHS grants process, as well as

organizations external to HHS that have a role in that process.

HHS is the Federal government’s principal agency for protecting the health of

Americans and providing essential human services, especially for those who are least

able to help themselves. In support of its mission, HHS awards grants under more

than 300 programs, making it the largest grant-awarding agency in the Federal

government.

HHS Grant-Awarding Operating Divisions (OPDIVs)

HHS grant programs are the responsibility of 12 OPDIVs (see Exhibit 1).

Exhibit 1. OPDIVs with Responsibilities for HHS Grant Programs

OPDIV Mission

Administration for

Children and Families

ACF is responsible for programs that promote the economic and social well-

being of children, families and communities. Administers the State-Federal

welfare program, Temporary Assistance for Needy Families, providing

assistance to an estimated 5 million people, including 4 million children.

Administers the national child support enforcement system. Administers the

Head Start program, serving more than 900,000 preschool children.

Provides funds to assist low-income families in paying for child care, and

supports State programs to support foster care and provide adoption

assistance. Funds programs to prevent child abuse and domestic violence.

http://www.acf.dhhs.gov/

Administration on Aging AoA supports a nationwide aging network, providing services to the elderly,

especially to enable them to remain independent. Supports close to 240

million meals for the elderly each year, including home-delivered "meals on

wheels." Helps provide transportation and at-home services. Supports

ombudsman services for the elderly, and provides policy leadership on aging

issues.

http://www.aoa.dhhs.gov

Agency for Healthcare

Research and Quality

AHRQ supports research to improve the quality, safety, efficiency, and

effectiveness of health care for all Americans.

http://www.ahrq.gov

Office of the Assistant

Secretary for Planning

and Evaluation

The ASPE is the principal advisor to the Secretary of HHS on policy

development and is responsible for major activities in policy coordination,

legislation development, strategic planning, policy research, evaluation, and

economic analysis.

http://aspe.hhs.gov/_/index.cfm

I-1

Exhibit 1. OPDIVs with Responsibilities for HHS Grant Programs

OPDIV Mission

Centers for Disease

Control and Prevention

Working with States and other partners, CDC provides a system of health

surveillance to monitor and prevent disease outbreaks (including

bioterrorism), implement disease prevention strategies, and maintain

national health statistics. Provides for immunization services, workplace

safety, and environmental disease prevention. Working with the World

Health Organization, CDC also guards against international disease

transmission, with personnel stationed in more than 25 foreign countries.

CDC helps prevent exposure to hazardous substances from waste sites on

the U.S. Environmental Protection Agency's National Priorities List, and

develops toxicological profiles of chemicals at these sites through the

Agency for Toxic Substances and Disease Registry.

http://www.cdc.gov

Centers for Medicare and

Medicaid Services

CMS administers the Medicare and Medicaid programs, which provide

health care to about one in every four Americans. Medicare provides health

insurance for more than 41 million elderly and disabled Americans.

Medicaid, a joint Federal-State program, provides health coverage for some

44 million low-income persons, including 19 million children, and nursing

home coverage for low-income elderly. CMS also administers the State

Children's Health Insurance Program that covers more than 4.2 million

children.

http://www.medicare.gov, http://www.cms.gov

Food and Drug

Administration

FDA ensures the safety of foods and cosmetics, and the safety and efficacy

of pharmaceuticals, biological products, and medical devices, products

which represent almost 25 cents out of every dollar in U.S. consumer

spending.

http://www.fda.gov

Health Resources and

Services Administration

HRSA provides access to essential health care services for people who are

low-income, uninsured, or live in rural areas or urban neighborhoods where

access to or availability of health care is limited. HRSA-funded health

centers provide medical care to more than 13 million patients each year at

more than 3,600 sites nationwide. HRSA also helps prepare the nation's

health care system and providers to respond to bioterrorism and other public

health emergencies, is responsible for the National Health Service Corps,

and helps build the health care workforce through many training and

education programs. HRSA administers a variety of programs to improve the

health of mothers and children and serves people living with HIV/AIDS

through the Ryan White CARE Act programs. HRSA also oversees the

nation's organ transplantation system.

http://www.hrsa.gov

Indian Health Service IHS is the principal Federal health care provider and health advocate for

Indian people, and its goal is to raise their health status to the highest

possible level.

http://www.ihs.gov

National Institutes of

Health

NIH is the world's premier medical research organization. Its mission is to

improve human health by increasing scientific knowledge related to disease

and health. NIH carries out its mission through the conduct of intramural and

extramural support of biomedical and behavioral research, research training,

research infrastructure, and communications. NIH makes extramural awards

though its Institutes and Centers.

http://www.nih.gov

I-2

Exhibit 1. OPDIVs with Responsibilities for HHS Grant Programs

OPDIV Mission

Office of Public Health

and Science

OPHS is located within the Office of the Assistant Secretary for Health, who

is the primary adviser to the Secretary, HHS on matters involving the

nation’s public health and oversees the U.S. Public Health Service (PHS).

OPHS includes several offices—Office of Minority Health, Office of

Population Affairs, and Office of Disease Prevention and Health Promotion.

http://www.osophs.dhhs.gov/ophs/

Substance Abuse and

Mental Health Services

Administration

SAMHSA works to improve the quality and availability of substance abuse

prevention, addiction treatment, and mental health services. Provides

funding through block grants to States to support substance abuse and

mental health services, including treatment for more than 650,000

Americans with serious substance abuse problems or mental health

problems. Helps improve substance abuse prevention and treatment

services through the identification and dissemination of best practices.

Monitors prevalence and incidence of substance abuse.

http://www.samhsa.gov

There are several references throughout the HHS GPS to “PHS OPDIVs.” Unless

otherwise specified for a specific requirement, the PHS OPDIVs include the following:

AHRQ, CDC, FDA, HRSA, IHS, OPHS, and SAMHSA. NIH also is a PHS OPDIV;

however, the requirements that apply to NIH grants are included in the NIH Grants

Policy Statement.

Types of HHS Financial Assistance Programs

HHS financial assistance programs reflect a breadth of programmatic activity,

consistent with the mission of each OPDIV. Activities are carried out under a variety

of types of grants as well as by use of cooperative agreements. HHS generally

classifies its financial assistance programs in two major categories of grants—

discretionary and mandatory. Discretionary grants are those for which the OPDIV

may exercise judgment (“discretion”) in determining the recipient and the amount of

the award. Discretionary grants may be further categorized by purpose (for example,

research, training, services, construction, and conference support). Generally such

awards are made following a competitive process. Mandatory grants are those that

an OPDIV is required to award if the recipient (usually a State) submits an

acceptable plan or application and meets the statutory and regulatory eligibility and

compliance requirements for the program. Mandatory grants include block grants

and entitlement grants.

When an OPDIV expects to be substantially involved in carrying out the

project/program, it awards a cooperative agreement rather than a grant. Substantial

involvement pertains to programmatic involvement rather than administrative

oversight.

These distinctions help in determining the appropriate relationship between the

OPDIV and the recipient and in determining which governing requirements apply. In

general, discretionary grants are subject to more detailed programmatic and

administrative requirements than block grants, which afford States a significant

degree of programmatic and administrative discretion within broad guidelines.

However, even within discretionary grants, a range of potential requirements may

I-3

apply depending on the type of recipient and the nature of the programmatic

activity. For example, different requirements apply to university-based research

grants than to community-based services grants. The applicable requirements are

communicated to potential recipients as part of the funding opportunity

announcement process and also are observed as part of the award and post-award

administration processes.

Sources of Requirements

This policy statement is based on generally applicable public laws and Executive

orders, OMB circulars and the HHS implementation of them, and HHS-specific

policies and procedures applicable to discretionary grants and cooperative

agreements. Among these are the regulations that implement OMB Circular A-102

(applicable to grants to State, local, and Indian tribal governments) and OMB

Circular A-110 (applicable to grants to institutions of higher education, hospitals, and

other non-profit organizations), reissued as 2 CFR part 215, and OMB circulars

incorporated in them—the OMB cost principles and single audit circular. These

regulations are codified at 45 CFR part 74

(Uniform Administrative Requirements for

Awards and Subawards to Institutions of Higher Education, Hospitals, Other Non-

Profit Organizations, and Commercial Organizations) and 45 CFR part 92 (Uniform

Administrative Requirements for Grants and Cooperative Agreements to State, Local,

and Tribal Governments). These requirements provide the framework for the terms

and conditions of OPDIV awards as specified in Part II and apply generally; however,

where applicable, differences based on grant purpose or type of recipient will be

highlighted. In addition, grants are awarded and administered under a variety of

programmatic authorities (established in statute and program regulations) and under

OPDIV and award-specific requirements. Part II also addresses the relationship

among these differing types of requirements. Part IV includes OPDIV requirements

that differ from those in Part II of the HHS GPS. The NoA includes any requirements

that are specific to that award.

Roles and Responsibilities

HHS, as a Federal grantor agency, is responsible to Congress and the U.S. taxpayer

for carrying out its mission cost-effectively and in compliance with applicable

requirements. HHS seeks to ensure integrity and accountability in the award and

administration of grants by relying on a system of checks and balances and

separation of responsibilities within its own staff and by establishing a similar set of

expectations for recipient organizations. The recipient’s roles and responsibilities

have assumed greater importance as HHS has shifted to increased reliance on

systems compliance and provided greater decision-making authority to recipients.

Currently, the HHS implementation of OMB Circular A-110 continues to be 45

CFR part 74 even with the publication of A-110 in Title 2 of the CFR (2 CFR part

215).

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The following sections highlight the major functions and areas of responsibility of

Federal and recipient offices and staffs. HHS recognizes that additional staff

members in a number of different organizations may be involved in grant-related

activities; however, this section details only the major participants representing the

Federal government and the recipient.

Roles and Responsibilities of OPDIV Staff Members

and Other HHS Offices

The roles and responsibilities of HHS participants are as follows:

• Grants Management Officer. The GMO is the OPDIV official whose name

appears on the NoA and is the official responsible for the business

management and other non-programmatic aspects of an award. These

activities include, but are not limited to, evaluating grant applications for

administrative content and compliance with statutes, regulations, and

guidelines; negotiating awards; providing consultation and technical

assistance to applicants and recipients, including interpretation of grants

administration policies and provisions; and administering and closing out

grants. The GMO is the focal point for receiving and acting on requests for

prior approval or for changes in the terms and conditions of award. The GMO

is the only official authorized to obligate the OPDIV to the expenditure of

Federal funds or to change the funding, duration, or other terms and

conditions of an award. OPDIVs may have one or more GMOs with

responsibility for particular programs or awards. The GMO works closely with

his or her counterparts at the recipient organization and with the designated

HHS PO.

• Grants Management Specialist. The GMS is an OPDIV employee with assigned

responsibility for the day-to-day management of a portfolio of OPDIV grants.

The GMS performs many of the activities described above on behalf of the

GMO and usually is the primary point of contact for the recipient when dealing

with grant-related issues.

• Project Officer/Program Official. The PO is the OPDIV official responsible for

the programmatic, scientific, and/or technical aspects of assigned applications

and grants. The PO’s responsibilities include, but are not limited to,

development of programs to meet the OPDIV mission; preparation of funding

opportunity announcements; provision of programmatic technical assistance;

post-award monitoring of project/program performance, including review of

progress reports and making site visits; and other activities complementary to

those of the GMO. The PO and the GMO work as a team in many of these

activities.

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• Review Administrator. In some OPDIVs, RAs manage application review

activities for discretionary grants. The RA, who may be an employee of the

funding OPDIV, another OPDIV that provides review services, or a contractor,

reviews applications for completeness and conformity to requirements;

ensures that an adequate number of reviewers with appropriate expertise is

available for application review; and assigns applications to individual

reviewers.

• Other HHS Functions. In addition to the GMO and PO, an applicant or

recipient may be required to interact with other HHS staff members or offices

with respect to its organization-wide systems and/or individual transactions.

These include the office responsible for negotiating indirect cost rates (known

as “facilities and administrative costs” for some organizations) and research

patient care rates, typically the responsible

DCA office or NIH’s DFAS; the

HHS OIG; the Assistant Secretary for Resources and Technology’s Division of

Financial Systems, Payment Integrity, and Audit Resolution; OHRP; OLAW;

DPM; and ORI. Staff members in these offices generally coordinate with the

GMO on grant-related matters, but they are responsible for discrete areas of

specialization and are not required to channel their communications with the

applicant or recipient through the GMO. Part III of this policy statement

includes a list of these organizations and contact information.

Roles and Responsibilities of Recipients and Their Principals

HHS grant awards generally are made to organizations. The organization is legally

accountable for the performance of the award and the expenditure of funds. The

roles and responsibilities of designated individuals at recipient organizations, who

serve as agents of the recipient, are as follows:

• Authorized Organizational Representative. The authorized organizational

representative is the designated representative of the applicant/recipient

organization with authority to act on the organization’s behalf in matters

related to the award and administration of grants. In signing a grant

application, this individual agrees that the organization will assume the

obligations imposed by applicable Federal statutes and regulations and other

terms and conditions of the award, including any assurances, if a grant is

awarded. These responsibilities include accountability both for the appropriate

use of funds awarded and the performance of the grant-supported project or

activities as specified in the approved application. Although HHS requires that

the recipient organization designate such an individual, HHS does not specify

the organizational location or full set of responsibilities for this individual.

• Principal Investigator/Program or Project Director. The PI/PD is the individual,

designated by the recipient, responsible for the scientific, technical, or

programmatic aspects of the grant and for day-to-day management of the

project or program. The PI/PD generally is an employee of the recipient.

However, because the grant, if awarded, is made to the recipient

organization, if the PI/PD is not an employee of that organization, the

organization must have a formal written agreement with the PI/PD that

specifies an official relationship between the parties even if the relationship

The responsible DCA office generally is determined on the basis of geographical

location.

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does not involve a salary or other form of remuneration. If the PI/PD is not an

employee of the applicant organization, the OPDIV will assess whether the

arrangement will result in the organization being able to fulfill its

responsibilities under the grant, if awarded.

The PI/PD is a member of the recipient team responsible for ensuring

compliance with the financial and administrative aspects of the award. This

individual works closely with designated officials within the recipient

organization to create and maintain necessary documentation, including both

technical and administrative reports; prepare justifications; appropriately

acknowledge Federal support in publications, announcements, news

programs, and other media; and ensure compliance with other Federal and

organizational requirements. The PI/PD is encouraged to maintain contact

with the PO with respect to the scientific, technical, or programmatic aspects

of the project or program and, as applicable, the GMO concerning the

business and administrative aspects of the award.

Organizations receiving HHS grant funds, whether such funds are received directly

from an OPDIV, indirectly under a contract, subaward, or as student assistance

under a training grant, are responsible for and must adhere to all applicable Federal

statutes, regulations, and policies, including income tax regulations. Questions

concerning the applicability of income tax regulations to grant funds should be

directed to the IRS. Organizations also are expected to be in compliance with

applicable State and local laws and ordinances.

Fraud, Waste, and Abuse

Anyone who becomes aware of the existence (or apparent existence) of fraud,

waste, or abuse related to HHS grants or use of grant funds should report this

information to HHS. The HHS OIG provides several means, including toll-free

numbers, for this purpose. The OIG hotline may be reached by telephone at 1-800-

HHS-TIPS (1-800-447-8477) or TTY at 1-800-377-4950; by fax at 1-800-223-8164;

by e-mail at [email protected]; or by mail at Office of the Inspector General,

Department of Health and Human Services, Attn: HOTLINE, 330 Independence

Avenue, SW, Washington, DC 20201. Fraud, waste, and abuse includes, but is not

limited to, embezzlement, misuse, or misappropriation of grant funds or property,

and false statements, whether by organizations or individuals. Examples are theft of

grant funds for personal use; using funds for non-grant-related purposes; theft of

federally owned property or property acquired or leased under a grant; charging

inflated building rental fees for a building owned by the recipient; submitting false

financial reports; and submitting false financial data in bids submitted to the

recipient (for eventual payment under the grant).

Callers are not required to give their names and, if they do, their identities are kept

confidential. Contact information for the OIG and the OIG hotline also is included in

Part III of this policy statement. In addition, some OPDIVs have a designated point

of contact within the OPDIV for receiving information from third parties about

administrative or programmatic concerns relating to an application or award. These

contacts may be found in Part IV or on the OPDIV’s Web site.

The Federal government may pursue administrative, civil, or criminal action under a

variety of statutes that relate to fraud and false statements or claims. Even if a grant

is not awarded, the applicant may be subject to penalties if the information

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contained in or submitted as part of an application, including its certifications and

assurances, is found to be false, fictitious, or fraudulent.

The Program Fraud and Civil Remedies Act of 1986, 31 U.S.C. 3801 et seq., provides

for the imposition by HHS of civil penalties and assessments against people who

knowingly make false, fictitious, or misleading claims to the Federal government for

money, including money representing grants, loans, or benefits. A civil penalty of not

more than $5,000 may be assessed for each such claim. If a grant is awarded and

payment is made on a false or fraudulent claim, an assessment of not more than

twice the amount of the claim, up to $150,000, may be made in lieu of damages.

Regulations at 45 CFR part 79 specify the process for imposing civil penalties and

assessments, including hearing and appeal rights.

The Criminal False Claims Act, 18 U.S.C. 287 and 1001, provides for criminal

prosecution of a person who knowingly makes or presents any false, fictitious, or

fraudulent statements, representations, or claims against the United States.

Violations carry a maximum sentence of 5 years imprisonment (or 8 years for

offenses involving international or domestic terrorism) and/or a fine.

The Civil False Claims Act, 31 U.S.C. 3729(a), provides for imposition of penalties

and damages by the United States, through civil litigation, against any person who

knowingly makes a false or fraudulent claim for payment, makes or uses a false

record or false statement to get a false claim paid or approved, or conspires to

defraud the Federal government to get a false claim paid. A “false claim” is any

request or demand for money or property made to the United States or to a

contractor, grantee, or other recipient, if the Federal government provides or will

reimburse any portion of the funds claimed. Civil penalties of $5,500 to $11,000 may

be imposed for each false claim, plus damages of up to three times the amount of

the false claim.

Part II of this policy statement addresses the administrative remedies included in 45

CFR parts 74 and 92 that the Federal government may use after award if a recipient

deliberately withholds information, submits fraudulent information, or does not

comply with applicable requirements. These remedies include recovery of misspent

grant funds.

Paperwork Reduction Act

OMB clearance is required for OPDIV “information collections.” An information

collection occurs when identical questions are posed to, or identical reporting,

recordkeeping, or disclosure requirements are imposed on, 10 or more people,

whether the collection is mandatory, voluntary, or required to obtain or retain a

benefit. All application or reporting forms, whether paper or electronic, that an

OPDIV requires an applicant or recipient to complete and submit must receive OMB

approval before the OPDIV may collect the information. Information collection under

a cooperative agreement award or a grant award, under specified conditions, also

requires OMB clearance. See Part II of this policy statement for OMB clearance

requirements under the PRA.

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Sources of Information about HHS Grant Processes and

Programs

The Catalog of Federal Domestic Assistance is a government-wide publication

available to members of the public that can be used to obtain general information

about assistance programs. It is updated twice a year. A listing of current entries in

the CFDA is available at http://www.cfda.gov/. HHS programs are found under the

prefix 93.XXX.

Grants.gov FIND is a government-wide source of information about specific funding

opportunities. HHS uses detailed funding opportunity announcements to invite

applications for specific funding opportunities. Synopses of these announcements are

posted at Grants.gov FIND. The “Application and Review Processes” section of this

policy statement provides information about Grants.gov FIND and the types of HHS

funding opportunity announcements.

HHS and its individual OPDIVs maintain a number of information resources about

their grant programs and activities that can be accessed through their Web sites.

Some are descriptive materials that enable interested parties to learn about OPDIV

grant initiatives, funding opportunities, and proposed and actual policy changes.

Others provide historical data. This information is updated periodically. The HHS Web

site address for grant-related materials and links to OPDIVs is

http://www.hhs.gov/grantsnet/.

Application and Application Review Processes

This section provides an overview of the following:

• Funding opportunity announcements

• Types of entities generally eligible to receive grants

• Types of applications

• The application submission process (including application forms, application

receipt points and deadlines, and use of information in applications)

• The objective review of applications.

Several of these areas also pertain after award. For example, an organization must

remain eligible in order to continue to receive funding. In addition, post-award

changes may invoke requirements that in this section are identified as “application”

requirements, e.g., undertaking an activity not contemplated at the time of award

that might affect a historic property.

Grants.gov and Funding Opportunity Announcements

It is HHS policy to maximize competition for discretionary grants to the greatest

extent practicable. As such, OPDIVs promote the widest and earliest possible

dissemination of information for potential applicants concerning the availability of

competing funding opportunities. A synopsis of each new competing funding

opportunity is posted at Grants.gov FIND. Grants.gov FIND

(http://grants.gov/applicants_grant_opportunities.jsp) is a government-wide

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electronic site that includes, in a single place, postings of available Federal grant and

other financial assistance opportunities. Each synopsis includes a brief description of

the funding opportunity, eligibility requirements, cost sharing or matching

requirements, application deadline date, and other information that allows a potential

applicant to determine whether it wants to read the funding opportunity

announcement to obtain further details about the funding opportunity.

All HHS funding opportunity announcements follow the standard government-wide

format and must be available on the Internet.

Each synopsis is required to provide

an electronic link to the full funding opportunity announcement. For HHS, that link

may be to the OPDIV or a program Web site, the Federal Register, or the NIH Guide

for Grants and Contracts. An OPDIV also may choose to issue a notice in the Federal

its location (e.g., directing the reader to the OPDIV or program Web site).

In addition, if the OPDIV can identify all eligible applicants, the OPDIV may send the

funding opportunity announcement directly to each eligible organization (generally

the business office with a copy to the PI/PD). This may be the case if a competition is

limited to a certain class or group of eligible organizations (see “Eligibility” below);

for example, a program may be limited, by statute, to States, or a funding

opportunity may be limited to incumbent recipients, based on a justified limitation of

competition. Synopses/funding opportunity announcements generally will allow

applicants a minimum of 30 days to prepare and submit applications.

There are several types of authorized exceptions to the requirements for use of

Grants.gov FIND, Internet posting of an announcement, and/or the maximum time

to prepare an application. The authorization is provided on a case-by-case basis

according to an internal HHS justification process. The recognized exceptions include

applications for single-source awards and urgent applications.

A single-source application is one resulting from an OPDIV request to only one

applicant. Urgent applications are ones required to fulfill immediate needs such as

public health needs after a natural disaster. For urgent awards, which may be made

on a single-source or limited-competition basis, OPDIVs are required to allow the

maximum feasible time for application preparation.

Because single-source (including urgent single-source) applications do not represent

competitive funding opportunities, information about them is not posted at

Grants.gov FIND. When an awarding office anticipates making a single-source award,

the OPDIV is required to publish in the Federal Register a notice of its intent to make

the award prior to or simultaneous with issuance of the award.

The standard government-wide format was promulgated by the Office of

Federal Financial Management, OMB, on June 23, 2003 (68 FR 37370).

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Eligibility

Authorizing legislation and governing programmatic regulations specify eligibility for

individual grant programs. In general, HHS grants may be awarded to domestic

public or private, non-profit or for-profit organizations.

Eligible organizations may

include State, local, and Indian tribal governments; institutions of higher education;

other non-profit organizations (including faith-based, community-based, and tribal

organizations); and hospitals. In some cases, grants also may be made to foreign or

international organizations. Eligibility for a particular funding opportunity

announcement is specified in the Grants.gov FIND synopsis, with more detailed

eligibility information found in the funding opportunity announcement.

On the basis of a statute or regulation or a limitation, with appropriate justification,

described in a funding opportunity announcement, an OPDIV may limit eligibility to,

or exclude from eligibility, classes or types of entities. Examples are limitations on

the participation of foreign entities, and programs under which only small businesses

are eligible applicants. In addition to organizational eligibility, an OPDIV may include

responsiveness criteria in a funding opportunity announcement. Responsiveness

criteria are objective criteria, such as possessing a particular certification or, if

specified by the OPDIV, not exceeding a stated page limitation. These are sometimes

called “go-no-go” criteria.

The applicant may be required to provide proof of its status by submitting

documentation. For non-profit entities, except where the grant program’s authorizing

statute sets particular limits, acceptable evidence of eligibility includes the following:

• A copy of a currently valid Internal Revenue Service tax exemption certificate

• A statement from a State taxing body, State attorney general, or other

appropriate State official certifying that the applicant organization has a non-

profit status

• A certified copy of the organization’s certificate of incorporation or similar

document that clearly establishes non-profit status

• Any of the above proof for a State or national parent organization and a

statement signed by the parent organization that the applicant organization is

a local non-profit affiliate.

Any requirements, such as citizenship, affecting the eligibility of the PI/PD or others

(e.g., trainees) will be specified in the funding opportunity announcement (which

may provide a link or reference to another document in which the requirements are

found). For example, for career awards, the individual to be trained must be a citizen

or a non-citizen national of the United States or have been lawfully admitted for

permanent residence at the time of award. A non-citizen national is a person who,

although not a citizen of the United States, owes permanent allegiance to the United

States. They generally are individuals born in U.S. outlying possessions (American

Samoa and Swains Island)

Section 1611 of Title 2 of the U.S.C. prohibits non-profit entities organized

under (501)(c)(4) of the Internal Revenue Code that engage in lobbying activities

from receiving Federal grants.

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• on or after the date of formal acquisition of the possession, or

• to parents who are non-citizen nationals and have had a residence in the

United States or one of its outlying possessions before the birth of that

individual.

In most cases, individuals are required to have the appropriate citizenship status

when the award is made rather than when the application is submitted. For research

grants, the applicant is required to determine that individuals identified as key

personnel possess visas that will allow them to remain in this country long enough

for them to be productive on the research project. Recipient organizations are

expected to have policies, consistently applied regardless of the source of funds, to

address this area. If a grant is awarded and an individual’s visa will not allow a long

enough stay to be productive on the project, the grant may be terminated. Trainees

must have been lawfully admitted for permanent residence at the time of

appointment. This must be documented by the individual's possession of an alien

registration receipt card I-151 or I-551. Individuals on temporary or student visas

are not eligible to receive training grant (or fellowship) support.

Upon receipt of applications, the awarding office performs an initial screening for

eligibility. Unless an applicant is required to submit proof of eligibility, the authorized

organizational representative’s signature on the application generally serves as

assurance that the applicant is eligible to apply for and receive an award (e.g., a

small business applying under the SBIR or STTR programs). However, an awarding

office may independently verify the applicant’s status.

If an applicant is found to be ineligible or if the applicant or application does not

meet published responsiveness criteria, the OPDIV will return the application without

further review. If a grant is awarded, in the post-award phase, the OPDIV monitors

changes in recipient and project status to ensure continued eligibility.

Title 8 Section 1101(a)(29) of the U.S.C. includes an additional criterion that is

not applicable to this eligibility determination.

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Suspension and Debarment

HHS regulations published in 45 CFR part 76

implement the government-wide

debarment and suspension requirements for HHS’s non-procurement transactions.

“Non-procurement transactions” include grants and cooperative agreements (as well

as scholarships, fellowships, and loans). Organizations or individuals that are

suspended, debarred, declared ineligible, or voluntarily excluded from eligibility for

covered transactions by any Federal department or agency cannot, during the period

of suspension, debarment, or exclusion, receive HHS grants or be paid from HHS

grant funds, whether under a primary or lower-tier transaction. Because individuals

who have been debarred, suspended, declared ineligible or who have been

voluntarily excluded from covered transactions may not receive Federal funds for a

specified period of time, charges made to HHS grants for such individuals (e.g.,

salary) are unallowable.

Applicants are required to disclose if any of the following conditions apply to them or

their principals, including PIs and other key personnel:

• Within the 3-year period preceding the application, they have been convicted

of, or had a civil judgment rendered against them for:

h fraud or a criminal offense in connection with obtaining, attempting to

obtain, or performing a public (Federal, State, or local) transaction or

contract under a public transaction;

h violation of a Federal or State antitrust statute;

h embezzlement, theft, forgery, bribery, falsification, or destruction of

records; or

h false statements or receipt stolen property.

• They are presently indicted or otherwise criminally or civilly charged by a

governmental entity (Federal, State, or local) with commission of any of the

offenses enumerated above.

• Within a 3-year period preceding the application, they have had any public

transaction (Federal, State, or local) terminated for cause or default.

Disclosure of unfavorable information will not necessarily cause an OPDIV to return

an application. If the applicant discloses unfavorable information, the application still

may undergo objective review (see “Objective Review of Applications” in this

section). If appropriate, the OPDIV will consider the information as part of the

determination of whether to award a grant. The OPDIV also will consider any

additional information or explanation that an applicant elects to submit with the

disclosed information. If an awarding office makes an award and later determines

that the recipient failed to disclose relevant information, the OPDIV may void the

award, terminate the award for material failure to comply with the terms and

Consistent with the OMB guidance on debarment and suspension in 2 CFR part 180,

the regulations at 45 CFR part 76 will be superseded, for HHS, by 2 CFR part 376.

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conditions of the award, or pursue any other available remedies, including

suspension and debarment.

In addition to reviewing any information submitted by the applicant, the GMO will

determine whether the applicant is included on the Excluded Parties Listing System

maintained by GSA.

This system is a centrally maintained government-wide

database that includes the names of organizations and individuals that have been

debarred, suspended, declared ineligible, or been voluntarily excluded; the reasons

for that status; and the duration of that status.

A variety of “lower-tier” transactions also are subject to these requirements.

Contracts (including individual consultants) under grants (where the contract

requires the provision of goods or services that will equal or exceed $25,000) and all

subawards (including consortium agreements) also are subject to these suspension

and debarment rules. A recipient is required to comply with the requirements of 45

CFR 76.300 through 76.365 as a condition of its award from HHS. The recipient must

include a requirement in any covered transaction at the next lower tier to comply

with those same regulatory provisions. One of those provisions is that, before

entering into a covered transaction, the recipient or lower-tier participant must verify

that the entity is not suspended or debarred or otherwise excluded. This requirement

extends to trainees under an institutional training grant before their appointment.

This verification may be accomplished by checking the Excluded Parties Listing

System, collecting a certification from the organization or individual, or adding a

clause or condition to the covered transaction with that entity.

Delinquency on Federal Debt

Any organization or individual that is indebted to the United States, and has a

judgment lien filed against it for a debt to the United States, is ineligible to receive a

Federal grant. Applicants are required to indicate in their applications if they are

delinquent on any Federal debt. If the applicant discloses a delinquency, HHS may

not award the grant until the debt is satisfied or satisfactory arrangements are made

with the agency to which the debt is owed. In addition, once the debt is repaid or

satisfactory arrangements made, an OPDIV will continue to take that delinquency

into account when determining whether the applicant would be responsible with

respect to an HHS grant, if awarded.

Anyone who has been judged to be in default on a Federal debt and who has had a

judgment lien filed against him or her should not be listed as a participant in an

application for an HHS grant until the judgment is paid in full or is otherwise

satisfied. No funds may be rebudgeted following an award to pay such an individual.

The OPDIV will disallow costs charged to awards that provide funds to individuals in

violation of this requirement.

The information contained in the Excluded Parties Listing System is available in

printed and electronic formats. The printed version is published monthly. Copies may

be obtained by purchasing a yearly subscription from the Superintendent of

Documents, U.S. Government Printing Office, Washington, DC 20402, or by calling

the Government Printing Office Inquiry and Order Desk at 202-783-3238. The

electronic version can be accessed on the Internet (http://www.epls.gov

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Lobbying

Applicants for (and recipients of) Federal grants, cooperative agreements, contracts,

and loans are prohibited by 31 U.S.C. 1352, “Limitation on use of appropriated funds

to influence certain Federal contracting and financial transactions,” from using

appropriated Federal funds to pay any person for influencing or attempting to

influence any officer or employee of an agency, a member of Congress, an officer or

employee of Congress, or an employee of a member of Congress with respect to the

award, extension, continuation, renewal, amendment, or modification of any of these

instruments. These requirements are implemented for HHS in 45 CFR part 93, which

also describes types of activities, such as legislative liaison activities and professional

and technical services that are not subject to this prohibition.

Applicants for HHS grants with total costs expected to exceed $100,000 are required

to certify that they

• have not made, and will not make, such a prohibited payment;

• will be responsible for reporting the use of non-appropriated funds for such

purposes; and

• will include these requirements in consortium agreements, other subawards,

and contracts under grants that will exceed $100,000 and will obtain

necessary certifications from those consortium participants and contractors.

Disclosure reporting is required after award as indicated in Part II of this policy

statement.

Application Process

Types of Applications and Letters of Intent

Under the project period system, a project may be approved for a multi-year period,

but generally is funded in annual increments known as “budget periods.” This system

provides the recipient with an indication of the OPDIV’s intent to non-competitively

fund the project during the approved project period as long as required information

is submitted, funds are available, and certain criteria are met. For some types of

projects, e.g., construction, an award covering multiple years is issued at the outset

at the fully funded amount. HHS uses the following types of applications and

requests for funding under the project period system:

• New Application—a request for financial assistance for a project or activity

that is not currently receiving support, which must compete for support

unless justified as a single-source application.

• Competing Continuation Application—a request for funding to renew, by one

or more additional budget periods (described as a “competitive segment”), a

project period that would otherwise expire. This type of application is

sometimes referred to as “renewal.” These applications must compete for

support in the same manner as new applications.

• Supplemental Application—a request for an increase in support in a current

budget period for expansion of the scope of the approved project or program

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or to meet an unforeseen increase in costs. The request may specify

budgetary changes required for the remainder of the project period as well as

for the current budget period. Supplemental applications requesting a

programmatic expansion (change in scope) must undergo objective review

and generally are required to compete for support; requests for

administrative supplements may be awarded without objective review or

competition.

• Revised (Amended) Application—an unfunded application that the applicant

has modified following objective review and has resubmitted for a subsequent

review cycle.

• Non-Competing Continuation Application—a request for funding, whether the

OPDIV terms the request an application or a progress or performance report,

for funding the second or subsequent budget period within an approved

competitive segment. A non-competing continuation application does not

compete with other applications for support.

Generally, funding opportunity announcements will invite the submission of full

applications at the outset. However, an OPDIV may require or encourage submission

of preliminary documents before submission of applications for initial (new) support.

If pre-applications are used, they must be submitted as specified by the OPDIV in

the funding opportunity announcement. Pre-applications may be required as a means

of screening out, through an objective review process, those applications with little

or no chance for Federal funding before applicants incur significant expenditures in

preparing an application.

OPDIVs may request submission of LOIs preliminary to submission of applications.

LOIs generally are not required to include detailed information about a proposed

project or application. Instead, LOIs are used to estimate the number of applications

that may be submitted. When used in this way, potential applicants are not required

to submit them, and, if an LOI is submitted, it is not binding and does not require

the respondent to submit an application.

Application Forms

Exhibit 2 lists the application forms used by the OPDIVs. The forms vary by applicant

or grant type and they may differ for non-competing continuation applications and

other applications. These forms and associated instructions are available

electronically at the specified Web site and, as appropriate, at the Grants.gov APPLY

site (http://www.grants.gov/Appl

y). Questions about application forms and

instructions may be directed to the OPDIV to which the application will be submitted.

Exhibit 2. Required Forms for Applications

Application title Form number Use/availability

Application for Federal

Assistance

SF 424 Face page for applications from State, local, and Indian tribal

governmental applicants for all types of grants, and

nongovernmental applicants for construction and health

services grants submitted through Grants.gov

http://www.whitehouse.gov/omb/grants/grants_forms.html

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Exhibit 2. Required Forms for Applications

Application title Form number Use/availability

Public Health Service

Grant Application for

Use by State and Local

Government Applicants

and Nongovernmental

Applicants for Health

Services Projects

PHS 5161-1, with

budget and

assurances

applicable to non-

construction (424-A

and 424-B) or

construction (424-C

and 424-D)

All applications, including non-competing continuation

applications, from State, local, and Indian tribal governmental

applicants and non-governmental applicants for construction

and health services projects

http://www.hhs.gov/forms/publicuse.html

Research Grant

Application

SF 424 (R&R) Suite of forms for use as specified by the OPDIV when

applying through Grants.gov

Application for a Public

Health Service Grant

PHS 398 New and competing continuation applications for research

project grants and cooperative agreements, program

projects, centers, career awards, Kirschstein-National

Research Service Awards institutional research training

grants, research-related conference grants, and SBIR and

STTR grants

Available at http://grants.nih.gov/grants/forms.htm

Application for Ruth L.

Kirschstein National

Research Service

Award Individual

Fellowship

PHS 416-1 Kirschstein-National Research Service Award fellowships

http://grants.nih.gov/grants/forms.htm

Public Health Service

Non-Competing Grant

Progress Report

PHS 2590 Non-competing continuation applications for research project

grants and cooperative agreements, program projects,

centers, career awards, Kirschstein-National Research

Service Awards institutional research training grants,

research-related conference grants (when applicable), and

SBIR and STTR grants.

Available at http://grants.nih.gov/grants/forms.htm

Preparing an Application

Regardless of any preliminary documentation required or submitted, to be

considered for support, an applicant must be an eligible entity and must submit a

complete application that complies with OPDIV instructions. In addition to indicating

the substantive information required, OPDIVs may specify page limitations or other

formatting requirements, whether for hard-copy or electronic applications.

A complete new or competing continuation application typically includes a project

description, detailed budget and budget justification, biographical sketches of key

personnel, and other information specified in the funding opportunity announcement.

The funding opportunity announcement (or related application package) may provide

specific instructions for completion of these forms that differ from the standard

instructions for completion.

This form may continue to be used in accordance with OPDIV instructions until

transition to use of Grants.gov is complete.

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In preparing an application, an applicant should ensure that it addresses

requirements specified (or incorporated by reference) in the funding opportunity

announcement that relate to the project or program narrative, public policy

requirements, and the application budget.

The same project may not be submitted concurrently to two PHS OPDIVs, a

limitation that applies to the PHS OPDIVs only. Any such applications will be returned

to the applicant without review.

Public Policy Requirements

Public policy requirements are requirements with a broader national purpose than

that of the Federal sponsoring program or award that an applicant/recipient must

adhere to as a prerequisite to and/or condition of an award. Public policy

requirements are established by statute, regulation, or Executive order. In some

cases they relate to general activities, such as preservation of the environment,

while, in other cases they are integral to the purposes of the grant-supported

project, such as protecting the welfare or identity of subjects in research projects.

Some public policy requirements require an indication of intent to comply with the

requirement if an award is made, others require submission of specific

documentation before award (sometimes in the form of a certification or assurance

or an environmental assessment), and still others require a demonstration of

compliance that is an integral part of the application review for technical or scientific

merit (e.g., the requirement in 45 CFR 46.111(a)(6) that, when appropriate, the

research plan must make adequate provision for monitoring the data collected to

ensure the safety of subjects). Applicants and recipients should take particular note

of these requirements. If an applicant or recipient does not provide the required

information or the information is incomplete or is otherwise not adequate, depending

on the requirement the organization may be deemed ineligible for award, the award

may be delayed, an award may be terminated, or other appropriate action may be

taken by the OPDIV.

The signature of the authorized organizational representative on the application

indicates that the organization complies, or intends to comply, with all applicable

public policy requirements specified in the funding opportunity announcement,

generally by reference to another document such as application instructions or a

grants policy statement. Some requirements (human subjects assurance, civil rights

assurance, environmental analysis) are in the form of separate documents that an

applicant must have on file with the applicable HHS office before an award may be

made. Other requirements may be satisfied by means of “just-in-time”

documentation submitted, at OPDIV request, by those applicants being considered

for award.

Part II contains general guidance to help the applicant/recipient determine which

public policy requirements apply to its activities after award, including whether a

requirement should be included in subawards or contracts under the grant.

Research-Related Requirements

Just-in-time procedures may be used in relation to requirements for submission of

certification of IRB approval of the project’s proposed use of human subjects,

verification of IACUC approval of the project’s proposed use of live vertebrate

animals, and evidence of compliance with the requirement for education in the

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protection of human research participants. Applications from organizations with

approved Animal Welfare Assurances will be considered incomplete if they do not

contain the information concerning the use of vertebrate animals required as part of

the application (see application instructions for completing the specific points that

need to be addressed). In the case of apparent or potential violation of the policy,

the application may be referred back to the applicant for further IACUC review.

The funding opportunity announcement will specify the timing and nature of required

just-in-time submissions. These requirements differ from any need to describe the

involvement of human subjects or animals in an application, which is reviewed by the

objective reviewers.

In addition, several OPDIVs have policies concerning the inclusion of women,

minorities, and children as subjects in their grant-supported research. These policies,

which implement Section 492B of the PHS Act, 42 U.S.C. 289 a-2, require that

women and members of minority groups and their subpopulations be included in

OPDIV-supported research projects involving human subjects, unless a clear and

compelling rationale and justification establishes that inclusion is inappropriate with

respect to the health of the subjects, the purpose of the research, or other

circumstances. When these policies apply (as specified in the funding opportunity

announcement), the applicant is required to address inclusion of these groups in the

application narrative, and the applicant’s plans will be assessed as part of the

objective (peer) review process. Failure to comply with this policy or to adequately

address use of human subjects and animals may adversely affect the score for

technical merit, which may result in the OPDIV not making an award.

National Environmental Policy Act

NEPA, as amended, 42 U.S.C. 4331 et seq., establishes national policy goals and

procedures to protect and enhance the environment, including protection against

natural disasters. To comply with NEPA for its grant-supported activities, HHS

requires the environmental aspects of construction grants (and certain non-

construction projects as specified by the OPDIV) to be reviewed and evaluated before

final action on the application.

If the OPDIV determines that NEPA applies (or may apply), the OPDIV will address

NEPA requirements in the funding opportunity announcement. If the OPDIV has not

indicated in the funding opportunity announcement that NEPA applies, no

environmental analysis is necessary, unless, in an unusual situation, the applicant

anticipates a significant environmental consequence or, following receipt of an

application, an OPDIV official indicates the need for an environmental analysis. In

those cases, an environmental analysis must be provided with the application or as

requested by the OPDIV. An environmental analysis means a written review that

indicates the expected environmental effects resulting from the proposed action,

defines the current and future implications of those effects, and lists any proposed

actions or safeguards to avoid or reduce any negative environmental effects. If NEPA

applies, the application must be accompanied by the applicant’s own separately

bound environmental analysis to facilitate review and evaluation for environmental

concerns before approval or other action on the application.

Public Disclosure

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Section 102 of NEPA, 42 U.S.C. 4332, and EO 11514 (March 5, 1970) provide for

public comment and participation in the environmental impact review process. If it is

determined that there is an environmental impact, applicants are required to publicly

disclose the project in a newspaper or other publicly available medium and to

describe its environmental impact concurrent with notification to the SPOC (see

“Intergovernmental Review under Executive Order 12372” in Part I). An example of

a suitable disclosure statement follows:

Notice is hereby given that the Uptown Community Health Center proposes to

construct additional space, partially utilizing Federal funds. The proposed

construction project is the addition of 2,700 square feet connected to the existing

Allen Building, which is located at 5333 Main Street, Downtown, Ohio.

The Uptown Community Health Center has evaluated the environmental and

community impact of the proposed construction. There will be construction noise

and increased construction traffic during the construction period. No significant

permanent environmental impacts are foreseen. All building permits and zoning

approvals have been obtained. In accordance with Executive Order 11514

(March 5, 1970), which implements the National Environmental Policy Act of

1969, as amended, any individual or group may comment on, or request

information concerning, the environmental implications of the proposed project.

Communications should be addressed to the Uptown Community Health Center,

and must be received by (date). The Federal grant application may be reviewed

at 5333 Main Street, during normal working hours.

Preservation of Cultural and Historic Resources

Under Section 106 of the National Historic Preservation Act (16 U.S.C. 470 et seq.,

agencies must consider the effect on historic properties before making a decision on

whether to fund a project. Historic properties include any district, site, building,

structure, or object that is listed on, or is eligible for listing on, the National Register

of Historic Places (National Register). In addition, the Advisory Council on Historic

Preservation must be afforded a reasonable opportunity to comment on such

undertakings. The purchase, construction, or alteration/renovation of a facility with

Federal funds, whether that activity is the purpose of the project or is one activity

under a grant with a broader purpose (e.g., alteration of a facility under a research

project), is an “undertaking” as that term is defined under 36 CFR 800.16(y).

However, these are not the only activities that may result in the need to comply with

Section 106. The procedures to be followed by Federal agencies in complying with

Section 106 are set forth in the Council’s regulations at 36 CFR part 800.

Pursuant to the regulations at 36 CFR part 800, before deciding to make an award,

the OPDIV approving official for a grant-funded project or program must determine

the project’s or program’s effect on historic properties in consultation with the

involved State Historic Preservation Officers, Tribal Historic Preservation Officers,

representatives of the local government, affected Indian tribes and Native Hawaiian

organizations, the applicant organization, and other interested parties. In order for

an OPDIV to carry out these responsibilities, applicants (and recipients) must identify

to the OPDIV any property listed or eligible for listing on the National Register of

Historic Places that will be affected by the award. Generally this will be at the time of

application, but may not be known until after award as a result of a planned post-

award change.

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The term “effect” is defined under 36 CFR 800.16(i) as an “alteration to the

characteristics of a historic property qualifying it for inclusion in or eligibility for the

National Register.” The project’s impact on the property’s use, character, location,

and setting, including whether it will have an adverse effect, are considered when

determining its effect on the historic property. The project or program will be

considered to have an adverse effect if it will endanger those qualities that make the

property eligible for inclusion in the National Register.

If the undertaking will have an adverse effect on a historic property, the consultation

process must proceed as provided under 36 CFR 800.6 in the effort to develop either

a memorandum of agreement or a programmatic agreement detailing the steps

necessary to avoid, minimize, or mitigate the adverse effects. In cases where the

consultation is terminated without an agreement to resolve the adverse effects, the

OPDIV will follow the applicable requirements of 36 CFR 800.7. These requirements

must be satisfied before approval of the application or a post-award change to an

approved application.

Under the Council’s regulations, applicants/recipients may initiate the Section 106

compliance consultations when authorized to do so by the OPDIV. If the OPDIV

provides that authorization, it must notify the involved State Historic Preservation

Officers, Tribal Historic Preservation Officers, and other consulting parties that the

applicant has been given that authority. The OPDIV remains legally responsible for

all findings and determinations made on its behalf. Each organization that plans to

use OPDIV funds for purchase, construction, or renovation of a facility, other activity

specified by the OPDIV, or activity deemed by the applicant to have an effect on a

historic property must ensure that it has provided complete and accurate

documentation to assist the agency with meeting its Section 106 compliance

responsibilities. Failure to obtain this clearance and make this assurance will delay

action on an application or change request. The State Historic Preservation Liaison

Officer or the National Trust for Historic Preservation may be contacted for additional

details.

Protection of Wetlands

EO 11990 provides that federally funded construction and improvements minimize

the destruction, loss, or degradation of wetlands. The EO provides that, in

furtherance of Section 101(b)(3) of NEPA (42 U.S.C. 4331(b)(3)), Federal agencies,

to the extent permitted by law, must avoid undertaking or assisting with new

construction located in wetlands unless the head of the agency finds that there is no

practicable alternative to such construction, and that the proposed action includes all

practicable measures to minimize harm to wetlands that may result from such use.

In making this finding, the head of the agency may take into account economic,

environmental, and other pertinent factors. The public disclosure requirement

described above also pertains to early public review of any plans or proposals for

new construction in wetlands.

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Uniform Relocation Act and Real Property Acquisition Policies Act

The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970

(the Uniform Relocation Act), 42 U.S.C. 4601 et seq., applies to all programs or

projects undertaken by Federal agencies or with Federal financial assistance that

cause the displacement of any person.

The HHS requirements for complying with the Uniform Relocation Act are set forth in

49 CFR part 24. Those regulations include uniform policies and procedures regarding

treatment of displaced people. They encourage entities to negotiate promptly and

amicably with property owners so property owners’ interests are protected and

litigation can be avoided.

The Application Budget

Applicants generally will be required to prepare a detailed budget as part of the

application consistent with instructions in the funding opportunity announcement and

application instructions. Among other things, applicants need to understand the

types of costs that are allowable under the program or award, the cost principles to

which it will be subject, differences between direct and indirect costs, circumstances

requiring establishment of an indirect cost rate or research patient care cost rate,

and any requirement for non-Federal participation (in the form of matching or cost

sharing).

In general, HHS discretionary grant awards provide for reimbursement of actual,

allowable program/project costs incurred. Except for those types of awards for which

HHS will not reimburse indirect costs as specified below, program/project costs

consist of allowable direct costs plus the allocable portion of indirect costs of the

organization, less applicable credits (as described in Part II and in the cost

principles). A “direct cost” is any cost that can be specifically identified with a

particular project, program, or activity or that can be directly assigned to such

activities relatively easily and with a high degree of accuracy. Direct costs include,

but are not limited to, salaries, travel, equipment, and supplies directly benefiting

the grant-supported project or activity. Most organizations also incur costs for

common or joint objectives that, therefore, cannot be readily identified with an

individual project, program, or organizational activity. These costs are identified as

“indirect costs” or “facilities and administrative costs.” They generally include

facilities operation and maintenance costs, depreciation, and administrative

expenses. Organizations must have or negotiate an indirect cost rate to support a

request for reimbursement of indirect costs (with limited exceptions specified below).

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The various sets of government-wide (or, in the case of hospitals, HHS) cost

principles establish the general standards for the allowability, including allocability, of

costs and provide detailed guidance on the cost accounting treatment of costs as

direct or indirect costs. Applicability of a particular set of cost principles depends on

the type of organization making the expenditure. For example, if a State government

recipient collaborates with a university as a contractor under the grant, the State

would be subject to the cost principles for States, while the university would be

subject to the cost principles for institutions of higher education. The allowability of

costs also is subject to any requirements or limits established in the governing

statute, program regulations, or the terms and conditions of awards. Because these

considerations apply throughout the grants process, they are addressed in detail in

Part II.

Indirect Costs

If indirect costs are reimbursable under an award, applicants may request indirect

costs in their applications. Indirect costs should not be requested in applications for

the following types of awards:

• Construction grants

• Conference grants

• Fellowships.

The following types of organizations may not request indirect costs:

• Federal institutions

• International or foreign organizations if the grant will be performed entirely

outside the territorial limits of the United States (indirect costs may be paid to the

American University, Beirut, which is not considered a foreign organization, and

the World Health Organization).

For other types of awards and organizations, OPDIVs will not reimburse indirect costs

unless the recipient has an indirect cost rate covering the applicable activities and

period. Indirect cost rates are negotiated by DCA, DFAS in the Office of Acquisition

Management and Policy, NIH (responsible for negotiating indirect cost rates for for-

profit entities receiving awards from HHS), or other Federal agency with cognizance

for indirect cost rate negotiation. However, as indicated in OMB Circular A-87, certain

governmental organizations other than Indian tribal governments are not required to

submit their indirect cost rate proposals to the Federal government, but must retain

the documentation related to their indirect cost requests for audit purposes. Further,

awarding offices will not require a recipient to establish an indirect cost rate if the

organization’s total operations consist of a single grant-supported project or if the

organization appropriately and consistently treats all costs as direct costs to projects

and accounts for them as such. In the latter case, the GMO must be satisfied that

the organization’s accounting system can adequately identify and support all costs as

direct costs to the project or program. This includes being able to identify and

segregate costs on the basis of a process that assigns costs commensurate with the

benefits provided to individual projects or programs.

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If an organization is advised by the GMO of the need to establish a rate, the GMO will

refer the organization to the appropriate office. Indirect cost proposals must be

prepared in accordance with the applicable cost principles and guidance provided by

the cognizant office or agency. Further information concerning the establishment of

indirect cost rates and the reimbursement of indirect costs may be obtained from

DCA or DFAS.

Even if an organization has an established indirect cost rate, under training grants

(including education grants and career awards) to all types of entities other than

State, local, or Indian tribal governmental agencies, OPDIVs reimburse indirect costs

at a fixed rate. Therefore, when requesting indirect costs, these applicants should

budget indirect costs at a rate of 8 percent of modified total direct costs, exclusive of

tuition and fees, expenditures for equipment, and subawards and contracts in excess

of $25,000. Training grant applications from State, local, or Indian tribal

governmental agencies may request full indirect cost reimbursement. State

universities and hospitals are not considered governmental agencies for this purpose.

Matching or Cost Sharing

If the funding opportunity announcement specifies that matching or cost sharing is

required, it also will specify the following:

• Whether the inclusion of matching or cost sharing in the application is an

eligibility requirement or is an evaluation criterion

• The nature of the requirement, e.g., whether it is a fixed percentage or the

OPDIV cannot fund more than a specified percentage of costs

• Required documentation, such as letters of commitment.

The terms “matching” and “cost sharing” are often used interchangeably. However,

“matching” usually refers to a statutorily specified percentage, whether specified as a

fixed or minimum percentage of non-Federal participation in allowable program or

project costs that must be contributed by a recipient in order to be eligible for

Federal funding or a not-to-exceed percentage of Federal participation. “Cost

sharing” refers to any situation in which the recipient shares in the costs of a project

other than as statutorily required matching. This includes situations in which

contributions are voluntarily proposed by an applicant and accepted by the OPDIV by

inclusion in the approved budget as shown in the NoA.

Unless restricted by statute or regulation, matching or cost sharing may be provided

as direct and/or indirect costs, consistent with the recipient’s accounting system—

and its usual method of charging for similar items—and any restrictions or limitations

in the applicable cost principles. Recipient contributions may be derived from any

non-Federal source; from Federal sources if received as fees, payments, or

reimbursements for the provision of a specific service, such as patient care

reimbursements received under Medicare or Medicaid; or from other program

income, if authorized by the OPDIV (see Part II). Otherwise, unless there is specific

statutory authority, Federal funds may not be used to match HHS grant funds.

The source and amount of costs and/or the value of third-party in-kind contributions

proposed by the applicant to meet a matching or cost-sharing requirement must be

identified in the application budget. The determination of allowability of costs for

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matching or cost-sharing purposes is based on the same requirements, including the

cost principles, that apply to use of Federal funds. Also, the classification of a

contributed cost as either direct or indirect must be consistent with the classification

of other costs incurred by the recipient for the same purpose in like circumstances.

Guidance on the valuation of in-kind contributions is found in 45 CFR 74.23, 45 CFR

92.24, and Part II of this policy statement.

Research Patient Care Costs

HHS provides funds for research patient care costs under grants to hospitals to cover

the costs of routine services for inpatients or ancillary services for inpatient or

outpatient subjects/volunteers involved in research studies. In order to receive

reimbursement for research patient care costs, any hospital that, as a direct

recipient of OPDIV funds, expects to incur more than $100,000 in patient care costs

in any single budget period on a single OPDIV grant must either have in place, or

take steps to negotiate, a research patient care rate agreement with the cognizant

DCA office. Detailed information on research patient care costs is included in Part II.

Third-Party Reimbursement

Under health services delivery programs, OPDIV funding may serve as seed money

to allow recipients to develop necessary capabilities and the ability to obtain funding

from non-Federal sources or may be conditioned on recipients maximizing their

funding from other sources, with Federal funding for the difference between those

amounts and their costs of operation. In addition to any required narrative discussion

of applicant plans to seek third-party reimbursement for delivery of health services

and establishment of fee schedules to charge beneficiaries according to their ability

to pay, the applicant may be required to show in the application budget the amounts

expected to be collected from third-party payors (program income). More detailed

discussion of program income is included in Part II.

Submitting an Application

Many OPDIV programs accept applications electronically through Grants.gov APPLY.

Grants.gov provides a secure and reliable government-wide single portal for applying

for Federal grants electronically, simplifying the grant application process and

reducing paperwork. For OPDIV programs allowing submission of applications

through Grants.gov, the OPDIV will post an application package at Grants.gov APPLY

that includes the funding opportunity announcement, the required forms, and

submission instructions. However, even if an OPDIV accepts applications

electronically, an applicant may choose to submit its application in hard copy.

Funding opportunity announcements also will indicate the date and time by which a

competing application must be submitted in order to be considered as part of that

competition, the address to which the application must be submitted (which may be

a contractor), and, if hard copy, the number of copies. Generally, OPDIVs will require

submission of an original and two copies of an application.

All applications must include a DUNS number, which is obtained from Dun &

Bradstreet (D&B) at 1-866-705-5711 or at

http://ccr.dnb.com/ccr/pages/CCRSearch.jsp. To determine if an organization

already has a DUNS number or to obtain a DUNS number, the organization should

contact D&B. There is no charge to obtain a DUNS number.

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Before using Grants.gov APPLY, an applicant organization must register with Central

Contractor Registration (http://www.ccr.gov/) and the credential provider. Central

Contractor Registration can be accomplished online or by telephone (1-888-227-

2423). The DUNS number is required before initiating registration with Central

Contractor Registration. Specific details about Central Contractor Registration and

credential provider registration associated with the use of Grants.gov are available at

http://www.grants.gov/GetStartedRegister?type=organization. Organizations are not

required to register with Central Contractor Registration if they submit applications

by any means other than through Grants.gov, e.g., in hard copy.

For funding opportunity announcements with common deadline dates for application

submission, to be considered timely, an application must be sent on or before the

deadline date. The established receipt or deadline date may be waived only in

extenuating circumstances such as extreme weather (e.g., floods or hurricanes),

widespread disruptions of mail service, or disruptions of electronic or other services.

The deadline is the same for applications submitted electronically. For applications

submitted through Grants.gov, the OPDIV will determine whether an application was

submitted before the deadline based on the time it is received and clocked in at the

Grants.gov portal. Applications may be sent through the United States Postal Service

or delivered by a courier delivery service. Some OPDIVs will not accept applications

hand-carried by individuals. For hard-copy applications, if sent on time to the

address specified in the funding opportunity announcement (with documented proof

of mailing) but received after the deadline, an application can be accepted for review

only if it is received in time for orderly processing. If the receipt date falls on a

weekend or a Federal holiday, the deadline date is extended to the next business

day. If an application is sent to any address other than that specified in the funding

opportunity announcement, it may result in a delay in processing or the application

not being reviewed.

Executive Order 12372 and Public Health System Reporting

Requirements

Certain HHS program/activities are subject to the requirements of EO 12372, as

amended, “Intergovernmental Review of Federal Programs,” and the HHS

implementation at 45 CFR part 100, and to other intergovernmental cooperation

provisions. These requirements allow State and local governments to provide input

on applications submitted (or to be submitted) for funding consideration. If EO

12372 might apply to a program or applicants or applications under the program, the

following information will be included in the funding opportunity announcement:

• Even if a program is covered by EO 12372, not all States participate in this

process. To determine whether it must comply with a State process under

EO 12372, an applicant should check the information maintained by OMB at

its Web site (http://www.whitehouse.gov/omb/grants/spoc.html). If the State

does not participate, no SPOC contact will be listed. Applications from

federally recognized Indian tribal governments are not subject to EO 12372

requirements, even under covered programs.

• Before an award decision, the OPDIV must allow adequate time—60 days

from the established deadline date for receipt of applications for a new or

other competing application, or 30 days from the established deadline date

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for receipt of the application for a non-competing continuation application—for

completion (or expiration) of the State process.

The primary purpose of the Public Health System Reporting requirements is to

provide State and/or local health agencies with information on proposed in-State

grant activity by certain applicants applying for funding under health care delivery

programs. When applicable, the applicant must prepare and submit a Public Health

System Impact Statement. Applicants are required to submit the following

information to the head of the appropriate State and local health agencies in the

areas to be impacted no later than the application receipt due date:

• A copy of the application face page

• A summary of the project, not to exceed one page, which describes the

population to be served and the services to be provided, and describes the

coordination planned with the appropriate State and local health agencies

(the application abstract may be substituted for the one-page Public Health

System Impact Statement).

Although these requirements are specific to health care delivery programs, they are

related to the EO 12372 requirements. The linkage occurs when a State and/or local

health official wants to review an application, in whole or in part, submitted under

these programs. In that case, the official must contact the SPOC for a copy of the

application.

Use of Application Information

Applicants are discouraged from submitting information considered proprietary

unless it is deemed essential for proper evaluation of the application. However, if the

application contains information that the applicant organization considers to be trade

secrets, information that is commercial or financial, or information that is privileged

or confidential, the pages containing that information should be identified as

specified in the funding opportunity announcement or application instructions.

When non-Federal reviewers are used, the funding opportunity announcement or

application instructions will specify that applicants have the option of omitting

specific salary rates or amounts for individuals specified in the application budget

and, if required by the OPDIV, Social Security numbers for individuals. For hard-copy

applications, this can be accomplished by including the information in the original,

but omitting it from the application copies. The copies may include summary salary

information. For electronic applications, the information must be supplied to the

OPDIV as part of the submission. The funding opportunity announcement will specify

if the applicant should indicate, in the application or in a separate form, whether it

wants to use that option. If the detailed information is an integral part of the

application, the OPDIV will ensure that the information is not shared with reviewers.

The OPDIV will protect the information contained in an application from unauthorized

disclosure, consistent with the need for objective review of the application and the

requirements of the Freedom of Information Act and the Privacy Act. However, if a

grant is awarded as a result of or in connection with an application, the Federal

government has the right to use or disclose the information to the extent authorized

by law. Post-award considerations concerning release of information and access to

research data are addressed in Part II of this policy statement.

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Freedom of Information Act

The Freedom of Information Act, 5 U.S.C. 552, provides individuals with a right to

access certain records in the possession of the Federal government. The government

may withhold information pursuant to the exemptions and exclusions contained in

the act. The exact language of the exemptions can be found in the act. Additional

guidance on the exemptions and how they apply to certain documents can be found

in the HHS regulations implementing the FOIA (45 CFR part 5). (Also see the HHS

Web site http://www.hhs.gov/foia/.)

OPDIVs generally do not release trade secrets and commercial, financial, and

otherwise intrinsically valuable items of information that are obtained from a person

or organization and are privileged or confidential; information that, if released, would

adversely affect the competitive position of the person or organization; and patent or

other valuable commercial rights of the person or organization.

OPDIVs generally will withhold the following types of records or information related

to an application in response to a FOIA request:

• Pending competing grant applications

• Unfunded new and competing continuations and competing supplemental

applications

• Evaluative portions of site visit reports and objective review summary

statements, including scores.

If, after reviewing a FOIA request, an OPDIV has reason to believe that information

in its records could reasonably be considered releasable, the appropriate OPDIV

Freedom of Information office will notify the applicant (recipient), through the PI,

before the information is released. The PI/PD will be given an opportunity to identify

potentially patentable or commercially valuable information that the PI/PD believes

should not be disclosed. After OPDIV consideration of the response, the PI/PD and

applicant (recipient) will be informed if the OPDIV does not agree with the PI’s/PD’s

position. If a document contains both disclosable and nondisclosable information, the

nondisclosable information will be deleted and the balance of the document will be

disclosed. This restriction does not limit the Federal government’s right to use the

information if it is obtained without restriction from another source.

The HHS regulations implementing FOIA provide that only designated Freedom of

Information officers may deny requests for information. Requests for information,

the release of which is believed to be exempt under FOIA, are referred to the OPDIV

Freedom of Information officer along with written documentation of the rationale for

nondisclosure. If the Freedom of Information officer determines that the requested

information is exempt from release under FOIA, the requester may appeal that

determination to the Deputy Assistant Secretary for Public Affairs (Media), HHS.

Additional information on the FOIA process is available at OPDIV Web sites.

Post-award considerations concerning release of information and access to research

data are addressed in Part II of this policy statement.

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Privacy Act

The Privacy Act of 1974, 5 U.S.C. 552a, and its implementing regulations (45 CFR

part 5b) provide certain safeguards for information about individuals maintained in a

system of records (i.e., information may be retrieved by the individual’s name or

other identifying information). These safeguards include the rights of individuals to

determine what information about them is maintained in Federal agencies’ files (hard

copy or electronic) and how it is used; to have access to such records; and to

correct, amend, or request deletion of information in their records that is inaccurate,

irrelevant, or outdated.

Records maintained by OPDIVs with respect to grant applications, grant awards, and

the administration of grants may be subject to the provisions of the Privacy Act. For

example, OPDIVs that maintain or access any such records by name of an individual,

such as by the name of the PI/PD, are subject to the Privacy Act.

Parties other than PIs/PDs may request the release of Privacy Act records. Such

requests are processed in the same manner as FOIA requests. For example,

information requested by co-investigators in grant applications is released to them

only when required under FOIA because they have no right of access under the

Privacy Act. When releasing information about an individual to a party other than

that individual, OPDIVs will balance the individual’s right to privacy with the public’s

right to know as provided by the FOIA.

Records maintained by non-Federal parties ordinarily are not subject to the

requirements of 45 CFR part 5b.

Objective Review of Applications

Applications under discretionary grant programs, whether received in response to a

funding opportunity announcement, solicited from a single source, or received as

unsolicited requests for funding, are subject to objective review. Objective review is

an advisory review of discretionary grant applications conducted by a minimum of

three unbiased reviewers with expertise in the programmatic area for which

applications are submitted.

The review is intended to provide advice to the individuals responsible for making

award decisions. Objective review is essential to ensuring selection of applications

that best meet the needs of the program consistent with published evaluation criteria

and providing assurance to the public that the evaluation process is impartial and

fair.

Peer review is a form of objective review required by statute. It is an assessment of

scientific or technical merit of applications by individuals with knowledge and

expertise equivalent (peer) to that of the individuals whose applications of support

they are reviewing. The statute may specify the types of reviewers or composition of

review groups and include other requirements related to the approval of applications,

e.g., review by a National Advisory Council or equivalent body that performs a

second level of review for programmatic considerations that augments the results of

the peer review process.

Application review criteria must be published as part of the funding opportunity

announcement. Typical review criteria may include the approach to the proposed

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project or program, whether to meet a health need or carry out an investigator-

initiated research project; the potential of the program or project to contribute to

meeting the objectives or purpose of the supporting program; the method used to

evaluate project or program results; resources of the applicant organization, e.g.,

facilities, and the capabilities of its staff, including the PI/PD; and reasonableness

and appropriateness of the budget. Reviewers also will review proposed involvement

of human subjects and vertebrate animals, as applicable, and assess compliance with

specified public policy requirements, e.g., inclusion of women and minorities in

research. IRB approval may be required before objective review of a new or

competing continuation application unless the OPDIV has implemented just-in-time

procedures.

Applications received in response to the same funding opportunity announcement

generally are scored individually and then ranked with other applications reviewed by

the same review group in their order of relative programmatic, technical, or scientific

merit. The highest ranked applications are those that receive priority consideration

for award within available funding. Authorized program officials (“approving

officials”) make final award decisions from among those applications receiving a

favorable objective review and, where applicable, National Advisory Council

recommendation. OPDIV approving officials also may apply other factors, e.g.,

geographical distribution, as specified in the funding opportunity announcement. The

decision to fund an application will be communicated to the applicant by issuance of

a NoA. The decision not to fund an application will be communicated by letter.

Depending on OPDIV procedures, the letter may include a summary of the review

(“summary statement”) and may be sent to the PI/PD and/or to the person who

signed the application as the official authorized to obligate the applicant. A copy of a

letter transmitting a summary statement also will be provided to the individual

named as the PI/PD for the project covered by the application if that individual is not

the individual that signed the application.

If an application has received a favorable objective review but is not expected to be

funded in the current cycle due to funding constraints, the application may be held

for one or more additional cycles and compete with other applications submitted for

that subsequent cycle as long as the subsequent cycle(s) requirements remain

unchanged from those under which the application was originally submitted. If an

application is unsuccessful, under programs that have annual review cycles or

multiple reviews within a year, the applicant may submit a revised application for

review in a future review cycle. Some OPDIVs limit the number of times an

application may be revised and resubmitted (see Part IV for any OPDIV limitations).

Disposition of Applications

All incomplete applications, ineligible, or otherwise non-compliant applications, and

applications determined to be non-responsive to funding opportunity announcement

requirements will not be reviewed. An applicant may withdraw an application from

consideration at any time before an award is issued.

An applicant whose application receives a favorable review will be notified of

additional information that it may be required to submit or other actions it or the

OPDIV may or must take. The process leading to an award, including the business

management review performed by the GMO, is described in the next section,

“Business Management Reviews and Other Pre-Award Activities.”

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An unsuccessful applicant will be advised by letter (sent to the individual signing the

application on behalf of the organization) that its application will not be held for

further consideration or be funded. The decision not to award a grant, or to award a

grant at a particular funding level, is discretionary and is not subject to appeal to any

OPDIV or HHS official or board.

Business Management Reviews and Other Pre-Award Activities

Applications receiving a favorable objective review that an OPDIV is considering for

funding are reviewed for other considerations. These include, as applicable, cost

analysis of the project/program budget, assessment of the applicant’s management

systems, ensuring continued applicant eligibility, and compliance with any public

policy requirements, including those requiring just-in-time submissions. The

applicant may be asked to submit additional information (such as an updated budget

or “other support” information or verification of IACUC review) or to undertake

certain activities (such as negotiation of an indirect cost rate) in anticipation of an

award. However, even at this point in the process, such requests do not guarantee

that an award will be made. Following review of all applicable information, the OPDIV

approving and business management officials will determine whether an award can

be made, if special conditions are required, and what level of funding is appropriate.

Although these reviews and determinations occur before an awarding office makes a

new or competing extension award, recipients must continue to comply with

eligibility and public policy requirements and maintain adequate management

systems throughout the period of support.

Assurances of Compliance

Civil Rights

Before an awarding office may make an award to a domestic organization, the

authorized organizational representative must assure, by means of the signature on

the application, that the organization has on file with OCR an Assurance of

Compliance with the statutes enforced by OCR. The assurance, Form HHS 690, is

filed for the organization and is not required for each application. If the application

has been recommended for funding and the applicant organization does not have an

Assurance of Compliance on file with OCR, it will receive, from the awarding office,

the required form and instructions for completion and submission.

Domestic organizations that receive funding from recipients as subrecipients or

contractors under grants rather than directly from HHS also are required to file an

HHS 690. The recipient is responsible for determining whether those organizations

have the required assurance on file and, if not, ensuring that it is filed with OCR.

Human Subjects and Animal Welfare

Under just-in-time procedures, following objective review, applicant organizations

should proceed with IRB review for those applications that have not yet received IRB

approval and which the OPDIV has indicated may be in a fundable range.

If, at the time of award, a recipient does not have an applicable assurance approved

by OHRP and certification of IRB review and approval, the awarding office will place a

restriction on the award so that no human subjects research can be conducted or

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supported until the assurance and certification of IRB review and approval have been

obtained and accepted.

The PHS Policy on Humane Care and Use of Laboratory Animals (the PHS Policy)

requires applicants proposing to use vertebrate animals in HHS-supported activities

to file a written Animal Welfare Assurance with OLAW. An awarding office will not

make an award for research involving live vertebrate animals unless the applicant

organization and all performance sites are operating in accordance with an approved

Animal Welfare Assurance and provide verification that the IACUC has reviewed and

approved those sections of the application that involve use of vertebrate animals, in

accordance with the requirements of the PHS policy. If an application is selected for

award and the verification of IACUC review has not been submitted, the awarding

office will contact the organization with instructions for negotiating an assurance or

submitting the IACUC verification.

Cost Analysis

The GMO will ensure that a cost analysis is performed on any application that

requires a detailed budget. Cost analysis involves obtaining cost breakdowns,

validating cost data, evaluating specific elements of cost, and examining data to

determine the necessity for, and the reasonableness and allowability of, the costs

included in the application budget. The extent of cost analysis depends on the

complexity of the project, prior experience with the applicant, and other factors.

Information on the applicable cost principles and on allowable and unallowable costs

is provided in Part II.

Assessment of Financial and Other Management Systems

In addition to considering the specific information provided in the application, the

GMO determines the adequacy of the applicant’s financial and business management

systems, including property management and procurement systems, that will

support the expenditure of and accountability for grant funds if an award is made.

Applicants/recipients are expected to have systems, policies, and procedures in place

by which they manage grant funds and grant-supported activities. They may use

their existing systems for this purpose as long as organizational policies are

consistently applied regardless of the source of funds and systems meet the

standards and requirements set forth in 45 CFR part 74 or 92, as applicable (see

“Financial Management”).

If an applicant has no prior experience with Federal grants or cost-reimbursement

contracts, the GMO may review the applicant’s financial management and other

management systems before award, or within a reasonable time after award, to

determine their adequacy and acceptability. For an applicant with prior OPDIV or

other Federal cost-reimbursement awards, the GMO may review recent audit reports

and other available information to determine whether the applicant’s management

systems meet the established standards. The GMO will advise the applicant if

additional information is required. On the basis of the review results, the GMO will

determine the need for any corrective action and may impose special conditions on

the award. The OPDIV also will oversee the recipient’s systems as part of its routine

post-award monitoring.

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The Notice of Award

The NoA is the legal document issued to the receiving organization that indicates an

award has been made and that funds may be requested from the designated HHS

payment system or office. A NoA, showing the amount of Federal funds authorized

for obligation and any future-year commitments, is issued for each budget period in

the approved project period (see “Project Period and Budget Period” below). Until an

awarding office has issued a NoA for the initial budget period, any costs incurred by

the applicant for the project are incurred at its own risk. A revised NoA may be

issued during a budget period to effect an action resulting in a change in the period

or amount of support or other change in the terms and conditions of award. An

awarding office generally will not issue a revised NoA to reflect a recipient’s post-

award rebudgeting.

The NoA sets forth pertinent information about the grant, including, but not limited

to, the following:

• Grant identification number (“grant number”)

• Statutory authority for the award and any applicable program regulations

• Name of recipient organization

• Name of the PI/PD

• Approved project period and budget period start and end dates

• Amount of Federal funds authorized for obligation by the recipient

• Amount of matching or cost sharing (if applicable)

• Amount of anticipated future-year commitments (if applicable)

• Names of the cognizant OPDIV/awarding office, PO, GMO, and GMS

• Applicable terms and conditions of award, either by reference or inclusion.

• The HHS-assigned EIN (based on the IRS EIN), which must be used to

request payment.

A recipient indicates acceptance of an award and its associated terms and conditions

by drawing or requesting funds from the designated HHS payment system or office.

For cooperative agreement awards, an awarding office may require the recipient to

formally accept the award by signing and returning the NoA or separate document.

When signature is required, the authorized organizational representative must be the

signatory of the NoA. If a recipient cannot accept the award, including the legal

obligation to perform in accordance with award terms and conditions, the

organization should notify the GMO immediately upon receipt of the NoA. If

resolution cannot be reached, the GMO will void the grant. The OPDIV’s

determination of applicable terms and conditions of award or a GMO’s denial of a

request to change the terms and conditions is discretionary and not subject to

appeal. Once the award is accepted by the recipient, the contents of the NoA are

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binding on the recipient unless and until modified by a revised NoA signed by the

GMO.

Project Period and Budget Period

For most grants, HHS uses the project period system of funding. Under this system,

projects are programmatically approved for support in their entirety, but are funded

in annual increments called budget periods. The total project period consists of the

initial competitive segment, any additional competitive segments authorized by

approval of a competing continuation application, and any non-competing

extensions. A competitive segment generally will be no longer than 5 years

(exclusive of non-competing extensions). A single award covering the entire period

of support generally is used if the project is solely for construction (or major A&R of

real property) or if the total planned period of support will be less than 18 months.

The length of the project period (whether for one or more than one competitive

segment) is determined by the OPDIV on the basis of the following:

• Any statutory, regulatory, or administrative requirements

• The length of time requested by the applicant

• Any limitation on the length of the project period recommended by the

objective or reviewers

• The OPDIV’s programmatic determination of the frequency of objective review

necessary for managing the project, program, or activity

• The OPDIV’s funding principles as specified in the funding opportunity

announcement.

Most NoAs document approval of a project period that extends beyond the budget

period for which funds are provided, indicating the OPDIV’s intention to provide

continued financial support. The amounts shown for subsequent years represent

projections of future funding levels based on the information available at the time of

the initial award. Such projected levels of future support are contingent on

satisfactory progress, the availability of funds, and the continued best interests of

the Federal government. They are not guarantees that the project or program will be

funded or will be funded at those levels, and they create no legal obligation to

provide funding beyond the ending date of the current budget period as shown in the

NoA.

Recipients are required to submit a non-competing continuation application or annual

progress report as a prerequisite to approval and funding of each subsequent budget

period (non-competing continuation award) within an approved project period. A

decision to fund the next budget period will be formalized by the issuance of a NoA

indicating the new budget period and the amount of new funding. Part II explains

this process in greater detail.

Budget periods usually are 12 months long; however, shorter or longer budget

periods may be established for programmatic or administrative reasons. The NoA will

show the total approved budget for the applicable budget period, including direct

costs and, if applicable, indirect costs as well as any required matching or cost

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sharing. SBIR and STTR awards also may include a fee; however, no other HHS

awards may include profit or fee.

The initial and each subsequent NoA that provides funding sets forth the amount

awarded under that action, amounts previously awarded for that budget period, and,

after the initial budget period, any authorized carryover (see Part II). The amount

awarded also is shown generally with a categorical (line item) budget breakdown.

The recipient has certain rebudgeting flexibility within the overall amount awarded as

specified in Part II. However, the total amount awarded (direct and indirect costs and

fee, where applicable) is the OPDIV’s maximum financial obligation to the recipient

under that award; in other words, it is the ceiling on the amount payable to the

recipient under that award. Once an award is made, the OPDIV is not obligated to

make any supplemental or other award or to provide additional funding for indirect

costs or other purposes.

If an applicant/recipient waives reimbursement of the full indirect costs to which it is

otherwise entitled based on its negotiated rate, the awarding office will either not

award indirect costs or will award only partial indirect costs, as appropriate. In

general, regardless of the type of recipient, the negotiated indirect cost rate(s) in

effect at the beginning of the competitive segment will be used to determine the

amount budgeted for indirect costs for each year of the competitive segment. If the

rate agreement does not extend to the end of the project period, the last rate in

effect will be used to establish the total cost commitment for any remaining future

years.

Under limited circumstances, the GMO may award indirect costs where none were

previously awarded or may increase the amount previously awarded. If an award

does not include an amount for indirect costs because the applicant or recipient has

not established a rate or did not submit a timely rate proposal and the recipient

subsequently establishes a rate, the GMO may amend the award to provide an

appropriate amount for indirect costs if the amendment can be made using funds

from the same Federal fiscal year in which the award was made. However, the

amount will be limited to the indirect costs applicable to the period after the effective

date of the rate agreement. This provision does not affect local governmental

agencies that are not required to submit their indirect cost proposals to the Federal

government. They may charge indirect costs to grants based on the rate

computations they prepare and keep on file for subsequent Federal review.

Other Terms and Conditions

In addition to, or in lieu of, the standard terms and conditions of award specified in

the HHS GPS, the OPDIV may use terms and conditions for program-specific or

award-specific reasons. For example, if, on the basis of a recipient’s application or

other available information, the GMO finds—at the time of award or at any time

subsequent to award—that the recipient’s management systems and practices are

not adequate to ensure the appropriate stewardship of grant funds or to achieve the

objectives of the award, the GMO may impose special, more restrictive terms and

conditions on the award in accordance with 42 CFR 52.9 and 45 CFR 74.14 or 92.12.

For example, an OPDIV could require a recipient to obtain prior approval for

expenditures that ordinarily do not require such approval or to provide more

frequent reports. In addition to closer monitoring, the OPDIV may assist the recipient

with taking any necessary corrective action.

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Payment

HHS grant payments may be made by one of several advance payment methods,

including SMARTLINK II/ACH, CASHLINE/ACH, or cash request, or by cash request

on a reimbursement basis, as specified in the NoA and as described in this section.

Payments under grants generally are made as advance payments. Except as

indicated in this section, grant payments are made by the PMS, operated by HHS’s

DPM, in accordance with Department of the Treasury and OMB requirements, as

implemented by 45 CFR 74.22 and 92.21. These requirements are intended to

minimize the time elapsing between the transfer of funds from the Federal

government and disbursement by a recipient. Therefore, although the grant may be

financed by advance payments, the intent is that recipients draw funds as needed.

Federal funds advanced to the recipient should be fully disbursed (checks written,

signed, and issued to the payees) by the close of business the next work day after

receipt of the funds. The potential for excessive Federal cash on hand exists each

time a recipient does not disburse Federal funds timely. The recipient is responsible

for determining when the Federal funds have been deposited into its bank account

for each drawdown, ensuring that the funds are fully disbursed by the close of

business the next work day after they are received, and immediately returning

undisbursed Federal cash on hand to PMS. An OPDIV may use reimbursement as the

method of payment, in lieu of advance payment, if cash management requirements

are not met. Advances made by recipients to subrecipients and contractors under

grants must conform to substantially the same standards of timing and amount that

govern advances to the recipient.

Operational guidance for recipients is contained in the DHHS Manual for Recipients

Financed under the Payment Management System (available through the HHS Web

site at

http://www.dpm.psc.gov/doc/hhsrecmanual.pdf). Inquiries regarding

payments should be directed to DPM at the address shown in Part III.

OPDIVs make payments under awards to foreign or international organizations, if

those organizations do not have a U.S. bank account, and awards to agencies of the

Federal government.

SMARTLINK II/ACH

The SMARTLINK II/ACH method of advance payment makes direct deposit of funds

to a recipient’s bank account and requires recipients to have Internet access to

submit a request for funds to PMS. SMARTLINK II/ACH provides funds the day

following the request with direct deposit using the ACH process of the Federal

Reserve Bank (Richmond, Virginia).

CASHLINE/ACH

The CASHLINE/ACH method of advance payment provides for direct deposit of funds

to the recipient’s bank account using a touch-tone telephone to dial directly to a

“voice-response” computer located at PMS. CASHLINE/ACH makes funds available

the day following the request with direct deposit using the Federal Reserve Bank’s

ACH process.

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Cash Request

Recipients not eligible for an unrestricted advance of funds by SMARTLINK II/ACH or

CASHLINE/ACH must submit a cash request as specified in the NoA. Cash requests

usually are submitted monthly using SF 270, Request for Advance or

Reimbursement. The cash request may be on either an advance or reimbursement

basis, as specified by the awarding office. Cash requests are used when a recipient’s

cash management must be closely monitored (for example, recipients whose

financial management systems do not meet the standards specified in 45 CFR 74.21

or 92.20) or under programs where reimbursement financing is appropriate. A

recipient also may be converted from an unrestricted advance payment method to a

cash request basis if, during post-award administration, the GMO determines that

the recipient is not complying with the cash management requirements or other

requirements of the award, including the submission of complete and timely reports.

If the cash request is for an advance payment, the recipient may request funds

monthly on the basis of expected disbursements during the succeeding month and

the amount of Federal funds already on hand. A request for reimbursement may be

submitted more often, if authorized. For timely receipt of cash, a recipient must

submit the request through the awarding office early enough for it to be forwarded to

PMS at least 2 weeks before the cash is needed. PMS makes payment electronically

through the ACH process upon receipt of the approved payment request from the

awarding office.

Post-Award Administration

The recipient, as the direct and primary recipient of HHS grant funds, is responsible

for managing the day-to-day operations of grant-supported activities and is

accountable to the OPDIV for the performance of the project, program, or activity;

the appropriate expenditure of grant funds by all parties; and all other obligations of

the recipient. Recipients may use their established controls and policies, as long as

they are consistent with award requirements. HHS seeks to foster within recipient

organizations an organizational culture that is committed to compliance with Federal

and HHS grant regulations, policies, and procedures. Actions to achieve this result

should include a clear delineation of the roles and responsibilities of the

organization’s staff, both programmatic and administrative; written policies and

procedures; training; management controls and other internal controls; performance

assessment; administrative simplifications; and information sharing.

In addition, to fulfill their role in regard to the stewardship of Federal funds, OPDIVs

monitor their awards to identify potential problems and areas where technical

assistance might be necessary. This active monitoring is accomplished through

review of recipient-generated reports, including audit reports, and correspondence;

site visits; and other information available to the OPDIV. The names and telephone

numbers of the individuals responsible for monitoring the programmatic and business

management aspects of a project or activity will be provided to the recipient at the

time of award.

Monitoring will continue for as long as the OPDIV retains a financial interest in the

project, program, or activity as a result of property accountability, audit, and other

requirements that may continue for a period of time after the grant is

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administratively closed out and the OPDIV is no longer providing active grant

support.

Post-award requirements are addressed in detail in Part II.

Part II: Terms and Conditions of Award

Overview of Terms and Conditions of Award

General, Program-Specific, and Award-Specific Terms and

Conditions

The terms and conditions of award include general administrative and public policy

requirements that apply to all recipients or certain classes of awards or activities;

program-specific-requirements; and, as necessary, award-specific requirements. This

part of the HHS GPS serves as the general administrative and public policy terms and

conditions of HHS discretionary grant and cooperative agreement awards, as

referenced in NoAs. It addresses the applicability of those terms and conditions

based on the type of award, recipient, or grant-supported activity.

The HHS GPS is consistent with the requirements of 45 CFR parts 74 and 92, only

some of which are repeated or highlighted here, and is not intended to be all-

inclusive. All awards or a specified subset of awards also may be subject to

additional requirements, such as those included in appropriations acts and Executive

orders. Notice of requirements not specified in the HHS GPS generally will be

provided in the NoA, but such notice is not required for the award to be subject to

the requirements of pertinent statutes and regulations.

In addition to all of the applicable administrative requirements of 45 CFR part 74 or

92, as appropriate for the type of recipient, and other general terms and conditions,

each award also is subject to the requirements of the authorizing program legislation

and program regulations, if any. These requirements will be specified or incorporated

by reference in the NoA. An individual award also may contain award-specific terms

and conditions included in full text. For example, the GMO may include terms and

conditions necessary to address concerns about a recipient’s management systems.

For cooperative agreement awards, the NoA will specifically address the substantial

programmatic involvement of Federal staff and any other special terms (e.g.,

ownership of data and research results, and use of equipment) appropriate for the

cooperative agreement.

Effect and Order of Precedence

Any waivers of or deviations from these terms and conditions must be requested and

approved in writing by the GMO. OPDIV determination of applicable terms and

conditions of award or a GMO’s denial of a request to change the terms and

conditions is discretionary and not subject to appeal.

A recipient indicates acceptance of an award and its associated terms and conditions

by requesting and accepting funds from PMS or the designated HHS payment office

for that award. If a recipient cannot accept an award, including the legal obligation to

perform in accordance with its provisions, it should notify the GMO immediately upon

receipt of the NoA. If resolution cannot be reached, the GMO will void the grant.

Once an award is accepted by a recipient, the contents of the NoA are binding on the

recipient and the OPDIV unless and until modified by a revised NoA signed by the

GMO.

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If there is a perceived conflict between or among statutory and regulatory

requirements, the terms and conditions in this part of the HHS GPS, Part IV of the

HHS GPS and award-specific terms and conditions, or if the recipient has questions

concerning award terms and conditions, the recipient should request written

clarification from the GMO. This may be done at any time; however, if the inclusion

of the term or condition would cause the organization not to accept the award or to

be unable to comply, the question should be raised before award acceptance. In the

case of a conflict, statutes and regulations take precedence over requirements or

restatements of statutory or regulatory requirements in the HHS GPS, and OPDIV or

award-specific requirements take precedence over Part II of the HHS GPS.

Flow-Down of Requirements under Subawards and Contracts

under Grants

The terms and conditions in the HHS GPS apply directly to the recipient of HHS

funds. The recipient is accountable for the performance of the project, program, or

activity; the appropriate expenditure of funds under the award by all parties; and all

other obligations of the recipient, as cited in the NoA. In general, the requirements

that apply to the recipient, including public policy requirements, also apply to

subrecipients and contractors under grants, unless an exception is specified.

Public Policy Requirements

This section addresses public policy requirements applicable to some or all HHS

applications and/or awards. These requirements are in addition to the pre-award

requirements specified in Part I or supplement the coverage in Part I by indicating

how a requirement applies following award. The term “public policy” indicates that

the requirement is based on social, economic, or other objectives or considerations

that may be attached to the expenditure of Federal funds by recipients, subrecipients

(including consortium participants), or contractors under grants, in general, or may

relate to the expenditure of Federal funds for specified activities, e.g., research. In

addition to cross-cutting requirements based in statutes, regulations, or Executive

orders that some or all Federal agencies must apply to their grant programs, HHS

recipients also are subject to requirements that apply to the use of grant funds as

contained in HHS annual appropriations acts. Some of those requirements are

included here because they have been included in the appropriations acts for several

years without change, but those requirements may be changed or other

requirements may be added in the future.

As indicated in Part I, by signing the application, the authorized organizational official

certifies that the organization will comply with applicable public policies. Once a grant

is awarded, the recipient is responsible for establishing and maintaining the

necessary processes to monitor its compliance and that of its employees and, as

appropriate, subrecipients and contractors under the grant with these requirements;

taking appropriate action to meet the stated objectives; and informing the OPDIV of

any problems or concerns. If a grant is awarded on the basis of false or

misrepresented information, or if a recipient does not comply with these public policy

requirements, the OPDIV or other cognizant office may take any necessary and

appropriate action with respect to the recipient or the award.

Exhibit 3, which includes public policy requirements cited in Part I and in this section,

contains information to help the applicant/recipient determine what public policy

II-2

requirements and objectives apply to its activities. The exhibit indicates, by

exception, whether a requirement applies to less than all OPDIVs meeting the

threshold requirement; for example, if a requirement applies to research awards, it

applies to all OPDIVs awarding research grants unless otherwise specified. The table

indicates—by “Y” for Yes or “NA” for Not Applicable—whether a given public policy

requirement normally would apply to the recipient and under what conditions and

whether it is required to be flowed down under subawards or contracts under grants

for routine goods and services. However, even if the exhibit indicates that a

requirement is not applicable, that public policy requirement potentially could be

applicable in a specific situation, for example, if a contract under a grant involves

research activity. Therefore, this exhibit should be used as general guidance only.

The applicant/recipient should consult the funding opportunity announcement and

the NoA (if applicable) as well as the statute, regulations, or other cited policies or

documents for complete information and should contact the GMO if there is any

question concerning the applicability of a particular public policy requirement or

objective.

Exhibit 3. Public Policy Requirements

Requirement Applicability Recipient

Subrecipient

(including

consortium

participant)

Contractor under

grant (routine

goods/services)

Acknowledgment of

Federal Funding

All types of awards Y Y NA

Activities Abroad All types of awards Y Y Y

Age Discrimination

Act of 1975

All applications

from and awards

to domestic

entities

(NA to foreign

and international

organizations)

(NA to foreign and

international

organizations)

(NA to foreign and

international

organizations)

Animal Welfare Applications and

awards for

activities involving

warm-blooded

animals

Y Y Y

Certificates of

Confidentiality

Research awards

(includes research

training in each

case specified as

“research”)

Y Y Y

Civil Rights Act of

1964 (Title VI)

All applications

from and awards

to domestic

entities

(NA to foreign

and international

organizations)

(NA to foreign and

international

organizations)

(NA to foreign and

international

organizations)

Clean Air and Clean

Water Act

Construction

grants

Y Y Y

Confidentiality of

Patient/Client

Records

All research

awards and

awards to

substance abuse

programs

Y Y Y

II-3

Exhibit 3. Public Policy Requirements

Requirement Applicability Recipient

Subrecipient

(including

consortium

participant)

Contractor under

grant (routine

goods/services)

Controlled

Substances

All types of awards Y Y Y

Drug-Free Workplace All covered

applications and

awards

Y NA NA

Education

Amendments of 1972

(Title IX)

All applications

from and awards

to domestic

entities

(NA to foreign

and international

organizations

(NA to foreign and

international

organizations)

(NA to foreign and

international

organizations)

Elimination of

Architectural Barriers

to the Handicapped

All awards

involving

construction or

major alteration

and renovation

Y Y Y

Financial Conflict of

Interest

All applications

and awards for

research except

those for Phase I

of the SBIR/STTR

program and

awards to Federal

institutions/PHS

OPDIVs

(NA to Phase I of

the SBIR/STTR

programs and to

Federal

institutions)

Y NA

Flood Insurance Construction

awards

Y NA NA

Hatch Act Awards to State or

local governments

Y Y NA

Health Insurance

Portability and

Accountability Act

(HIPAA)

All awards to

covered entities

(if a covered

entity)

(if a covered

entity)

(if a covered entity)

Historic Properties/

Archaeological Sites

All awards that

include major or

minor A&R,

construction, or

any work that will

result in physical

changes to real

property

Y Y Y

Human Embryonic

Stem Cell Research

Research awards Y Y Y

Human Subjects Research

applications and

awards

Y Y Y

II-4

Exhibit 3. Public Policy Requirements

Requirement Applicability Recipient

Subrecipient

(including

consortium

participant)

Contractor under

grant (routine

goods/services)

Investigational New

Drug Applications/

Investigational Device

Exceptions

Research awards Y Y Y

Limited English

Proficiency

All types of awards Y Y NA

National

Environmental Policy

Act (including Public

Disclosure)

Applications and

awards for

construction and

major alteration

and renovation

Y Y NA

Pro-Children Act All awards

performed in

facilities where

children are

served

Y Y Y

Protection of

Research Subjects’

Identity

All research

awards/PHS

OPDIVs

Y Y Y

Protection of

Wetlands

Construction

awards

Y Y Y

Public Health Security

and Bioterrorism

Preparedness and

Response Act

All types of awards Y Y Y

Recombinant DNA

Molecules and

Human Gene

Transfer Research

Applications and

awards for

research

Y Y Y

Rehabilitation Act of

1973 (Section 504)

All applications

from and awards

to domestic

organizations

(NA to foreign

and international

organizations)

(NA to foreign and

international

organizations)

(NA to foreign and

international

organizations)

Research Misconduct Applications and

awards for

research and

research

training/PHS

OPDIVs

Y N NA

Research on Human

Fetal Tissue

Research awards Y Y Y

Research on

Transplantation of

Fetal Tissue

Research awards Y Y Y

II-5

Exhibit 3. Public Policy Requirements

Requirement Applicability Recipient

Subrecipient

(including

consortium

participant)

Contractor under

grant (routine

goods/services)

Resource

Conservation and

Recovery Act

All awards to

States or agency

of a political

subdivision of a

State (which for

this purpose

includes State and

local institutions of

higher education

or hospitals)

Y Y Y

Restriction on

Abortions

All types of awards Y Y Y

Restriction on

Distribution of Sterile

Needles

All types of awards Y Y Y

Safe Drinking Water

Act

Construction

awards

Y Y Y

Seat Belt Use All types of awards Y NA NA

Smoke-Free

Workplace

All awards Y NA NA

Standards of Conduct All types of awards Y NA NA

Uniform Relocation

Assistance and Real

Property Acquisition

Policies Act

All awards Y Y NA

U.S. Flag Air Carriers All types of awards Y Y Y

USA PATRIOT Act All types of awards Y Y Y

PHS OPDIVs awarding research grants include AHRQ, CDC, FDA, HRSA, OPHS, and NIH.

II-6

Standards of Conduct for Recipient Employees

HHS requires recipients to establish safeguards to prevent employees, consultants,

members of governing bodies, and others who may be involved in grant-supported

activities from using their positions for purposes that are, or give the appearance of

being, motivated by a desire for private financial gain for themselves or others, such

as those with whom they have family, business, or other ties. These safeguards must

be reflected in written standards of conduct. Except as provided below, HHS does not

require a recipient to establish separate standards of conduct if it maintains such

standards for its non-grant-supported activities, as long as those standards are

consistent with State and local laws and cover, at a minimum, expected conduct in

regard to financial interests, gifts, gratuities and favors, nepotism, and such other

areas for governmental organizations as political participation and bribery.

The standards also must do the following:

• Address the conditions under which outside activities, relationships, or

financial interests are proper or improper.

• Provide for advance notification of outside activities, relationships, or financial

interests to a responsible organizational official.

• Include a process for notification and review by the responsible official of

potential or actual violations of the standards.

• Specify the nature of penalties that the recipient may impose. These penalties

would be in addition to any penalties that HHS or a cognizant Federal agency

may impose for infractions that also violate the terms and conditions of

award.

Recipients are not required to submit its general standards of conduct to HHS for

review or approval. However, a copy must be made available to each of the

recipient’s officers; each employee and consultant working on the grant-supported

program, project, or activity; each member of the governing board, if applicable;

and, upon request, the OPDIV. The recipient is responsible for enforcing its standards

of conduct, taking appropriate action on individual infractions, and, in the case of

financial conflict of interest, informing the GMO if the infraction is related to a

research award (see “Other Research-Related Requirements—Financial Conflict of

Interest” for the specific regulatory requirements that apply to financial conflict of

interest under research grants).

If a suspension or separation action is taken by a recipient against a PI/PD or other

key personnel, the recipient must request prior approval of the proposed

replacement.

II-7

Hatch Act

The Hatch Act restricts political activity of executive branch employees of the federal

government and District of Columbia government employees (5 U.S.C. 7321–7328)

and State or local officers or employees (5 U.S.C. 1501–1528). “State or local officer

or employee” means an individual employed by a State or local agency whose

principal employment is in connection with an activity that is financed in whole or in

part by loans or grants made by the United States or a Federal agency. (Certain

State educational or research institutions are excluded from this definition.)

Age Discrimination Act of 1975

The Age Discrimination Act of 1975, 42 U.S.C. 6101 et seq., prohibits discrimination

on the basis of age in any program or activity receiving Federal financial assistance.

The HHS implementing regulations are codified at 45 CFR part 91.

Civil Rights Act of 1964

Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d et seq., provides that no

person in the United States will, on the grounds of race, color, or national origin, be

excluded from participation in, be denied the benefits of, or be subjected to

discrimination under any program or activity receiving Federal financial assistance.

The HHS implementing regulations are codified at 45 CFR part 80.

Education Amendments of 1972

Title IX of the Education Amendments of 1972, 20 U.S.C. 1681, 1682, 1683, 1685,

and 1686, provides that no person in the United States will, on the basis of sex, be

excluded from participation in, be denied the benefits of, or be subjected to

discrimination under any educational program or activity receiving Federal financial

assistance. The HHS implementing regulations are codified at 45 CFR part 86.

Rehabilitation Act of 1973

Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. 794, as amended, provides

that no otherwise qualified handicapped individual in the United States will, solely by

reason of the handicap, be excluded from participation in, be denied the benefits of,

or be subjected to discrimination under any program or activity receiving Federal

financial assistance. These requirements pertain to the provision of benefits or

services as well as to employment. The HHS implementing regulations are codified at

45 CFR parts 84 and 85.

II-8

Biological Agents and Toxins

USA PATRIOT Act

The Uniting and Strengthening America by Providing Appropriate Tools Required to

Intercept and Obstruct Terrorism Act (USA PATRIOT Act) amends 18 U.S.C. 175–

175c. Among other things, it prescribes criminal penalties for possession of any

biological agent, toxin, or delivery system of a type or in a quantity that is not

reasonably justified by a prophylactic, protective, bona fide research, or other

peaceful purpose. The act also establishes restrictions on access to specified

materials. “Restricted persons,” as defined by the act, may not possess, ship,

transport, or receive any biological agent or toxin that is listed as a select agent (see

“Public Health Security and Bioterrorism Preparedness and Response Act” in this

subsection).

Public Health Security and Bioterrorism Preparedness and Response Act

The Public Health Security and Bioterrorism Preparedness and Response Act of 2002,

42 U.S.C. 201 Note, is designed to provide protection against misuse of select agents

and toxins, whether inadvertent or the result of terrorist acts against the U.S.

homeland, or other criminal acts (see 42 U.S.C. 262a). The act was implemented, in

part, through regulations published by CDC at 42 CFR part 73, Select Agents and

Toxins. Copies of these regulations are available from the Import Permit Program

and the Select Agent Program, respectively, CDC, 1600 Clifton Road, MS E-79,

Atlanta, GA 30333; telephone: 404-498-2255. These regulations also are available at

http://www.cdc.gov/od/ohs/biosfty/shipregs.htm.

Research involving select agents and recombinant DNA molecules also is subject to

the NIH Guidelines for Research Involving DNA Molecules (see “Guidelines for

Research Involving DNA Molecules and Human Gene Transfer Research” in this

section).

Human Subjects

HHS regulations for the protection of human subjects, in 45 CFR part 46, implement

Section 491(a) of the PHS Act, 42 U.S.C. 289(a), and provide a systematic means,

based on established, internationally recognized ethical principles, to safeguard the

rights and welfare of individuals who participate as subjects in research activities

supported or conducted by HHS.

The Federal regulations require that each institution, domestic or foreign, engaged in

human subjects research provide OHRP with a satisfactory assurance of compliance

with the regulations, unless the research is exempt under 45 CFR 46.101(b). An

institution becomes engaged in human subjects research when its employees or

agents (1) intervene or interact with living individuals for research purposes, or (2)

obtain individually identifiable private information for research purposes (45 CFR

46.102(f)). For purposes of 45 CFR part 46, research means a systematic

investigation, including research, development, testing, and evaluation, designed to

develop or contribute to generalizable knowledge. Activities that meet this definition

constitute research for purposes of this policy, whether or not they are conducted or

supported under a program that is considered research for other purposes. For

example, some demonstration and service programs may include research activities.

II-9

The HHS regulations specify that departments and agencies cannot conduct or

support research covered by this policy unless the institution has an assurance

approved by OHRP, and only if the institution has certified to the OPDIV that the

research has been reviewed and approved by the IRB provided for in the assurance

and will be subject to continuing review by the IRB. Under no condition will research

covered by Section 46.03 of the regulations be supported prior to receipt of the

certification that the research has been reviewed and approved by the IRB (45 CFR

46.103(b) and (f)).

The regulations specify additional protections for research involving human fetuses,

pregnant women, and neonates (Subpart B); prisoners (Subpart C); and children

(Subpart D). The use of autopsy materials is governed by applicable State and local

law and is not directly regulated by 45 CFR part 46.

Office for Human Research Protections’ and Recipient Responsibilities

Assurances and Other OHRP Responsibilities

On behalf of the Secretary, HHS, OHRP negotiates assurances covering all of an

institution’s federally supported research activities involving human subjects.

Applicants proposing to involve human subjects in nonexempt research must file (or

have previously filed) a written assurance (FWA) with OHRP setting forth the

commitment of the institution to establish appropriate policies and procedures for the

protection of human subjects. For institutions proposing nonexempt research

involving human subjects and not currently holding an approved assurance, OHRP

will negotiate an FWA.

Each legally separate entity must file its own FWA even if the institution does not

operate its own IRB and designates another IRB (registered with OHRP and agreeing

to the designation) for that purpose. Affiliated institutions or organizations that will

serve as additional performance sites for the grant-supported research also must file

an FWA.

OHRP also has responsibility for oversight of recipient compliance with the HHS

human subjects regulations. In carrying out this responsibility, OHRP evaluates all

written substantive allegations or indications of non-compliance with the HHS

regulations it receives from any source. All compliance oversight evaluations are

based on the HHS regulations and the institution’s assurance of compliance. Any

corrective actions imposed as a result of compliance oversight evaluations are

intended to remedy identified non-compliance and prevent recurrence. Because each

case is different, OHRP tailors corrective actions to foster the best interests of human

research subjects and, to the extent possible, of the institution, research community,

and HHS. Most compliance oversight evaluations and resultant corrective actions are

resolved at the OHRP level. However, OHRP may recommend actions to be taken by

other HHS officials.

As of February 28, 2001, OHRP no longer accepts applications for Multiple

Project Assurances (MPAs) or Single Project Assurances (SPAs) limited to HHS-

supported research, to special categories of research, or to individual research

projects. All MPAs have been superseded. Current SPAs will remain in effect through

the expiration of their respective grant (or contract) award and any non-competing

continuation award.

II-10

Detailed information about FWA preparation and negotiation and about OHRP

activities related to oversight and compliance, as well as copies of the human

subjects regulations, may be obtained from OHRP at the address shown in Part III or

from its home page at http://www.hhs.gov/ohrp. OHRP also has produced a

publication, available through GPO,

and an instructional videotape, the OHRP

Assurance Training Module, which is available on the OHRP Web site.

Institutional Review Board Certification and Other Recipient Responsibilities

The recipient bears ultimate responsibility for protecting human subjects under the

award, including human subjects at all sites, and for ensuring that an assurance

approved by OHRP and certification of IRB review and approval have been obtained

before human subjects research can be conducted at each collaborating site. HHS

will not award a grant for nonexempt research in which human subjects are involved

unless the applicant/recipient provides a certification to the OPDIV that the research

has been approved by an appropriate IRB, consistent with 45 CFR part 46, within 12

months before the budget period start date.

It also is the recipient’s responsibility to comply with prior-approval requirements

related to the addition of sites not included in the approved application. The list of

organizations with approved assurances is available at the OHRP Web site

(http://www.hhs.gov/ohrp). Recipients may not draw funds from the payment

system, request funds from the paying office, or make obligations against Federal

funds for research involving human subjects at any site engaged in nonexempt

research for any period not covered by both an OHRP-approved assurance and IRB

approval consistent with 45 CFR part 46. Costs associated with IRB review of human

research protocols are not allowable as direct charges under grants unless such costs

are not covered by the organization’s indirect cost rate.

Regardless of when the IRB review occurs (before objective review or just-in-time as

specified in Part I or before award of a non-competing continuation award), the IRB

should ensure that the research described in the application is consistent with any

corresponding protocols reviewed and approved by the IRB. As specified in 45 CFR

46.111, the IRB review must include a determination that, for research covered by

the regulations, the following conditions are met:

• The procedures to be used will minimize risks to subjects.

• Risks to subjects are reasonable in relation to expected benefits, if any, to

subjects and the importance of the knowledge that may reasonably be

expected to result.

• Selection of subjects is equitable.

• Informed consent is sought from each prospective subject or the subject’s

legally authorized representative and is appropriately documented in

accordance with, and to the extent required by, the regulation.

Protecting Human Research Subjects: Institutional Review Board Guidebook,

1993, Stock No. 017-040-00525-3, may be ordered from the Superintendent of

Documents, telephone: 202-512-1800. This guidebook is also available from OHRP’s

website (http://www.hhs.gov/ohrp/irb/irb_guidebook.htm

II-11

• When appropriate, the research plan makes adequate provision for monitoring

the data collected to ensure the safety of subjects, the protection of privacy,

and the confidentiality of data.

• When some or all of the subjects are likely to be vulnerable to coercion or

undue influence, such as children, prisoners, pregnant women, people with

acute or severe physical or mental illness, or people who are economically or

educationally disadvantaged, appropriate additional safeguards are included

in the study to protect the rights and welfare of these subjects.

Protection of Research Subjects’ Identities

HHS expects recipients and others involved in grant-supported research to take

appropriate actions to protect the confidentiality of information about and the privacy

of individuals participating in the research. Investigators, IRBs, and other

appropriate entities should ensure that policies and procedures are in place to

protect identifying information and must oversee compliance with those policies and

procedures.

Animal Welfare

As specified in Part I of the HHS GPS, the PHS Policy on Humane Care and Use of

Laboratory Animals requires applicants proposing to use vertebrate animals in HHS-

supported activities to file a written Animal Welfare Assurance with OLAW. The PHS

policy defines “animal” as “any live, vertebrate animal used or intended for use in

research, research training, experimentation, biological testing, or related purposes.”

The PHS policy implements and supplements the U.S. Government Principles for

Utilization and Care of Vertebrate Animals used in Testing, Research, and Training.

The PHS policy also requires the applicant to establish appropriate policies and

procedures for the humane care and use of animals, based on the Guide for the Care

and Use of Laboratory Animals, and to comply with the Animal Welfare Act, as

amended, 7 U.S.C. 2131 et seq., and its implementing regulations. This includes

appointing an IACUC with specified responsibilities. The PHS policy does not affect

applicable State or local laws or regulations that impose more stringent standards for

the care and use of laboratory animals.

Verification of the IACUC review of proposed research involving animals may be filed

at any time before award unless required earlier by the OPDIV. Regardless of when

the review occurs, the IACUC should ensure that the research described in the

application is consistent with any corresponding protocols reviewed and approved by

the IACUC. When organizations collaborate and multiple recognized IACUCs may be

involved, only one of those IACUCs is required to review the research project or

evaluate a program facility. In such cases, organizations must define their respective

responsibilities to ensure compliance with the policy. If both organizations have full

Animal Welfare Assurances, they may exercise discretion in determining which

IACUC will review the research protocol and under which organization’s program the

research will be performed. An applicant/recipient without an animal care and use

program or IACUC may enter into an inter-organizational agreement to use the

IACUC of an organization with an assurance. Assured organizations also have the

option, with OLAW approval, to amend their Animal Welfare Assurances to cover

performance sites without such assurances. Foreign organizations proposing

activities involving vertebrate animals are required to comply with the PHS policy or

II-12

provide evidence that acceptable standards for the humane care and use of animals

will be met.

Information about preparing and submitting Animal Welfare Assurances and copies

of the PHS policy and other relevant materials are available from OLAW (see Part III

for contact information).

Other Research-Related Requirements

Research Misconduct

The recipient is responsible for the actions of its employees and other research

collaborators, including third parties, involved in the project. The recipient will

inquire into and, if necessary, investigate and resolve promptly and fairly all

instances of alleged or apparent research misconduct. 42 CFR part 93, “Public Health

Service Policies on Research Misconduct,”

specifies recipient responsibilities for

dealing with and reporting possible research misconduct. The regulation is available

from ORI on its home page (http://www.ori.dhhs.gov) and in hard copy at the

address shown in Part III.

The recipient must carry out its responsibilities with extra care if a research

misconduct inquiry has been initiated as specified in 42 CFR 93.307 or if the recipient

or ORI has made a finding of research misconduct. The recipient must report

promptly to ORI any incident of alleged or apparent research misconduct that it

judges as warranting investigation and must advise ORI of any decision to initiate an

investigation. The recipient also must notify ORI if it intends to close a case at the

inquiry or investigation stage based on an admission of responsibility, settlement, or

for any other reason. The regulations also require that the recipient submit an annual

report.

If a misconduct investigation has been initiated, the recipient must take any

necessary steps, in addition to its normal and ongoing responsibilities under the

grant, to protect the scientific integrity of the project, protect human subjects and

animals, provide reports to ORI, and ensure the proper expenditure of funds and

continuation of the project during the investigation, if appropriate. ORI staff

members are available to help recipients with investigating and reporting on research

misconduct, and POs are available to provide technical assistance and to work with

recipients to protect funded projects from the adverse effects of research

misconduct.

If the recipient finds research misconduct by anyone working on an HHS grant-

supported project, whether at its organization or at a third-party organization, the

recipient must assess the effect of that finding on the ability to continue that project,

as originally approved, and must promptly request OPDIV prior approval of any

intended change of PI or other key personnel (see “Prior Approval Requirements—

OPDIV Prior Approval”). In addition, the awarding office may impose sanctions, such

as withdrawal of approval of the PI/PD or other key personnel, disallowance of costs

associated with the invalid or unreliable research, withholding a non-competing

For this purpose and financial conflict of interest in the next subsection, PHS

includes the following OPDIVs with research programs: NIH, CDC, FDA, HRSA, OPHS,

and AHRQ.

II-13

continuation award, suspension or termination, in whole or in part, of the current

award, or debarment.

If research misconduct has affected data validity or reliability, ORI or the OPDIV may

require the recipient and its employee/collaborator authors to submit a correction or

retraction of the data to a journal, publish the corrected data, or both. If the

recipient does not comply with this requirement, the OPDIV may invoke its rights,

under 45 CFR part 74 or 92, to access the data (including copyrightable material

developed under the award), have the data reviewed, and submit the correction.

The recipient must promptly report issues involving potential civil or criminal fraud,

such as false claims or misappropriation of Federal funds, to the HHS OIG (see Part

III).

Financial Conflict of Interest

Recipients and investigators must comply with the requirements of 42 CFR part 50,

Subpart F, “Responsibility of Applicants for Promoting Objectivity in Research for

Which PHS Funding Is Sought.” That subpart promotes objectivity in research by

establishing standards to ensure that the design, conduct, and reporting of research

funded under PHS grants or cooperative agreements will not be biased by any

conflicting financial interest of an investigator. These requirements do not apply to

Phase I of the SBIR/STTR programs.

Under those requirements the organization must do the following:

• Have a written and enforced administrative process to identify and manage,

reduce, or eliminate conflicting financial interests with respect to research

projects for which PHS funding is sought

• Before spending any PHS funds awarded under a new award, inform the GMO

of the existence of any conflicting financial interests it identified of the type

covered by 42 CFR 50.605 and assure that the interest been managed,

reduced, or eliminated in accordance with the regulations

• Continue to make similar reports on subsequently identified conflicts within 60

days of identifying them

• Make additional information available to the OPDIV, upon request, as to how

it handled conflicting interests in accordance with the regulations.

As described in the regulations, examples of how financial conflicts of interest might

be addressed include the following:

• Public disclosure of significant financial interests

• Monitoring of research by independent reviewers

• Modification of the research plan

• Disqualification from participation in all or a portion of the research funded by

PHS

• Divestiture of significant financial interests

II-14

• Severance of relationships that create actual or potential conflicts.

Recipients also must ensure that subawards in the form of consortium agreements

address whether the consortium participant’s employees will be subject to the

financial conflict of interest requirements of the consortium participant or to those of

the recipient.

Some IRBs also consider investigator financial conflict of interest in their

deliberations, although they are not required to do so. If an IRB considers the impact

of potential financial (or other) conflicts of interest on the research and the

protection of human subjects, it should refer to the organization’s policies and

procedures for identifying and monitoring conflicts of interest.

Following are some strategies used by IRBs:

• Make IRB members aware of the organization’s conflict of interest policies and

procedures

• Include a statement in the informed consent form that all investigators

comply with the organizational guidelines

• Ask investigators to complete a short questionnaire about whether they—or

any person responsible for the design, conduct, or reporting of research—

have an economic interest in or act as an officer or a director of any outside

entity whose financial interest could reasonably appear to be affected by the

research

• Instruct IRB members during their orientation on how to identify and respond

to a perceived financial, academic, or other conflict of interest.

Suggestions for recipients to consider when implementing the requirements of this

regulation are available in an NIH publication,

Financial Conflict of Interest–

Objectivity in Research: Institutional Policy Review, available on the NIH Web site at

http://grants.nih.gov/grants/policy/coi/nih_review.htm.

Recombinant DNA and Human Gene Transfer Research

The NIH Guidelines for Research Involving Recombinant DNA Molecules (NIH

Guidelines) (April 2002 or latest revision) apply to (1) all research projects that

involve recombinant DNA and are conducted at or sponsored by an organization that

receives support for recombinant DNA research, or (2) research projects involving

testing in humans of materials containing recombinant DNA developed with HHS

funds, if the organization that developed the materials sponsors or participates in

those projects. The NIH guidelines are available at

http://www4.od.nih.gov/oba/rac/guidelines/guidelines.html. As defined by the NIH

guidelines, recombinant DNA molecules are either (1) molecules that are constructed

outside of living cells by joining natural or synthetic DNA segments to DNA molecules

that can replicate in a living cell or (2) molecules that result from the replication of

those described in (1).

The NIH guidelines apply to both basic and clinical research studies. Recombinant

DNA research involving select agents also is subject to pertinent CDC and USDA

II-15

regulations.

Specific guidance for the conduct of human gene transfer studies

appears in Appendix M of the NIH guidelines. Failure to comply with these

requirements may result in suspension or termination of an award for recombinant

DNA research at the organization, or a requirement for OPDIV prior approval of any

or all recombinant DNA projects at the organization. The recipient should carefully

review the NIH guidelines in their entirety to ensure compliance with all of the

requirements for projects involving recombinant DNA techniques.

Human Embryonic Stem Cell Research and Cloning

HHS funds may not be used to support human embryo research under any

extramural award instrument. HHS funds may not be used for the creation of a

human embryo for research purposes or for research in which a human embryo is

destroyed, discarded, or knowingly subjected to risk of injury or death greater than

that allowed for research on fetuses in utero under 45 CFR 46.204 and 46.207 and

Subsection 498(b) of the PHS Act 42 U.S.C. 289g(b). The term “human embryo”

includes any organism not protected as a human subject under 45 CFR part 46, as of

the date of enactment of the governing appropriations act, that is derived by

fertilization, parthenogenesis, cloning, or any other means from one or more human

gametes or human diploid cells.

In addition to the statutory restrictions on human fetal research under Subsection

498((b) of the PHS Act, HHS is prohibited, by a March 4, 1997, Presidential

memorandum, from using Federal funds for cloning human beings.

Research on Human Fetal Tissue

Human fetal tissue is defined as tissue or cells obtained from a dead human embryo

or fetus after a spontaneous or induced abortion or stillbirth. This definition does not

include established human fetal cell lines. Research involving the transplantation of

human fetal tissue must be conducted in accordance with applicable State and local

laws and with the following guidance.

The scientific and ethical challenges associated with research utilizing human fetal

tissue make it imperative that researchers and their organizations be fully aware of

and in compliance with the Federal requirements, particularly Section 498B of the

PHS Act, 42 U.S.C. 289g-2. The statute specifically prohibits any person from

knowingly acquiring, receiving, or transferring any human fetal tissue for valuable

consideration. The term “valuable consideration” is a concept similar to profit and

does not include reasonable payment for costs associated with the collection,

processing, preservation, storage, quality control, or transportation of these tissues.

Violation of this statute carries criminal penalties that apply to both those that supply

and those that acquire human fetal tissue.

See 42 CFR part 73, Select Agents and Toxins; and 7 CFR part 331 and 9 CFR

part 121, Possession, Use, and Transfer of Biological Agents and Toxins.

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Sections 498A and 498B of the PHS Act, 42 U.S.C. 289g-1 and 289g-2, contain

additional legal requirements for research on the transplantation of human fetal

tissue for therapeutic purposes conducted or supported by PHS. Under Section 498A,

the recipient must adhere to the following provisions:

• The woman who donates the fetal tissue must sign a statement declaring that

the donation is being made

h for therapeutic transplantation research,

h without any restriction regarding the identity of individuals who may

receive the transplantation, and

h without the donor knowing the identity of the individual receiving the

transplantation.

• The attending physician must sign a statement that he/she has

h obtained the tissue in accordance with the donor’s signed statement and

h fully disclosed to the donor his or her intent, if any, to use the tissue in

research and any known medical risks to the donor or risks to her privacy

associated with the donation that are in addition to risks associated with

the woman’s medical care.

In the case of tissue obtained pursuant to an induced abortion, the physician’s

statement also must state that he/she

h obtained the woman’s consent for the abortion before requesting or

obtaining consent for the tissue to be used;

h did not alter the timing, method, or procedures used to terminate the

pregnancy solely for the purpose of obtaining the tissue for research; and

h performed the abortion in accordance with applicable State and local laws.

• The PI must sign a statement certifying that he/she is aware that the tissue is

human fetal tissue obtained in a spontaneous or induced abortion, or

pursuant to a stillbirth, and that the tissue was donated for research

purposes. The PI also must certify that this information has been shared with

others who have responsibilities regarding the research and, before eliciting

informed consent from the transplantation recipient, will obtain written

acknowledgment that the patient is aware of the aforementioned information.

• The PI must certify in writing that he/she has had no part in any decisions as

to the timing, method, or procedures used to terminate the pregnancy.

The recipient must certify that the physician’s statement, the PI’s statement, and the

acknowledgment of the transplantation recipient must be available for audit by the

HHS Secretary or designee.

Information for organizations conducting research on human fetal tissue, including

information on the governing Federal statutes, Sections 498A and 498B of the PHS

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Act, 42 U.S.C. 289g-1 and 298g-2, is available on the NIH Web site at

http://grants.nih.gov/grants/guide/notice-files/not93-235.html.

Transplantation of Human Fetal Tissue

If research on the transplantation of human fetal tissue is conducted under the

grant-supported project, the recipient must make available for audit by the HHS

Secretary or designee, the physician statements and informed consents required by

Subsections 498A(b)(2) and (c) of the PHS Act, 42 U.S.C. 289g-1(b)(2) and (c) or

must ensure HHS access to those records, if maintained by an entity other than the

recipient. This requirement is in addition to the requirements concerning human

subjects in research.

In addition, FDA issued a letter on November 30, 2000, indicating that it has

jurisdiction over fetal cells and tissues intended for use in humans. FDA requests that

investigators contact it to determine whether any planned or ongoing clinical

research would require submission of an IND application. Additional information and

FDA contact information is available at http://www.fda.gov/cber/ltr/fetal113000.htm.

Certificates of Confidentiality

Section 301(d) of the PHS Act, 42 U.S.C. 241, provides that the Secretary may

authorize people engaged in biomedical, behavioral, clinical, or other research

activities to protect the privacy of research subjects by withholding the names and

other identifying characteristics of those subjects from individuals not engaged in the

research. Individuals that have authorization may not be compelled to disclose

subjects’ identities in any Federal, State, or local civil, criminal, administrative,

legislative or other proceeding. CoCs may be granted for studies collecting

information that, if disclosed, could have adverse consequences for subjects or

damage their financial standing, employability, insurability, or reputation. By

protecting researchers from being compelled to disclose information that would

identify research subjects, CoCs contribute to achieving research objectives and

promote participation in studies by helping to ensure confidentiality and privacy to

participants. Information on CoCs is available on the NIH Web site at the CoC Kiosk

at http://grants.nih.gov/grants/policy/coc/index.htm. Requests for CoCs should be

submitted to the GMO, and, subject to OPDIV review and approval, a certificate may

be issued pursuant to Section 301(d).

Investigational New Drug Applications/Investigational Device Exceptions

To be eligible for funding, all clinical research involving INDs, drugs approved for a

different indication, or experimental combinations of drugs must meet FDA IND

regulations, FDA human subjects’ protection requirements, and HHS human subjects’

requirements. As provided in the FDA regulations, an IND or IDE also may apply to

biologics or devices. The FDA regulations are published in 21 CFR parts 50 and 312.

The official sponsor of the IND/IDE, whether a Federal agency, a recipient, or a third

party, is legally responsible for meeting the FDA requirements. If the IND/IDE

sponsor is a third party, such as a pharmaceutical company or research organization

under contract to a recipient or to a pharmaceutical company, the legal responsibility

for monitoring the clinical trial and reporting to FDA rests with the sponsor rather

than the recipient. This generally will be the case for larger, multi-site clinical trials.

If the recipient is the IND/IDE holder, commonly referred to as an “investigator-

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initiated IND/IDE,” the recipient or the investigator serves as the sponsor and

assumes the legal responsibility. In any case, the recipient is ultimately responsible

for ensuring compliance with the requirements for protection of human subjects,

including compliance with FDA’s requirements.

Following the filing of an IND, FDA has a 30-day period in which to review it. FDA

may allow the IND to proceed or may defer approval of the IND until changes it

deems acceptable are made. FDA also may order a clinical trial to be suspended or

terminated, at any time, based on information it receives about that clinical trial.

When HHS funds all, or part of, a clinical study involving an IND or an IDE, the

OPDIV must be aware of any significant communications with FDA concerning the

study. The recipient must report certain types of FDA communications to the OPDIV

within 72 hours of receiving a copy of or upon being informed of the FDA

communication (through the PI or another person acting on behalf of the recipient),

whichever occurs first. This notification requirement applies to any of the following

communications from FDA with the sponsor of the IND or IDE:

• Warning letters (whether sent to the recipient or to the commercial sponsor)

• Notice of Initiation of Disqualification Proceedings and Notice of Opportunity

to Explain

• Notice of Opportunity for Hearing

• Notice of Disqualification

• Consent agreements

• Clinical hold letters that pertain to breaches of good manufacturing practices,

good clinical practices, or other major issue requiring significant changes in

the protocol.

The notification should be made in writing, but also may be done by telephone if a

written notice would delay the notification. It should include a statement of the

action taken or contemplated and the assistance needed to resolve the situation.

These requirements apply to the recipient even if the recipient or the funded PI is the

sponsor. Failure to comply with this requirement may result in HHS imposing a

corrective and/or enforcement action. FDA communications are considered grant-

related records for purposes of retention and access.

Controlled Substances

Grantees are prohibited from knowingly using appropriated funds to support

activities that promote the legalization of any drug or other substance included in

Schedule I of the schedule of controlled substances established by section 202 of the

Controlled Substances Act, 21 U.S.C. 812. This limitation does not apply if the

recipient notifies the GMO that there is significant medical evidence of a therapeutic

advantage to the use of such drug or other substance or that federally sponsored

clinical trials are being conducted to determine therapeutic advantage.

If controlled substances are proposed to be administered as part of a research

protocol or if research is to be conducted on the drugs themselves,

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applicants/recipients must ensure that the DEA requirements, including registration,

inspection, and certification, as applicable, are met. Regional DEA offices can supply

forms and information concerning the type of registration required for a particular

substance for research use. The main registration office in Washington, DC, may be

reached at 800-882-9539. Information also is available from the National Institute

on Drug Abuse at 301-443-6300.

Construction-Related Requirements

In addition to those requirements specified in “Requirements Related to

Construction, Modernization, and Other Designated Activities,” the following public

policy requirements apply to grants that involve construction or A&R.

Flood Insurance

The Flood Disaster Protection Act of 1973, as amended, 42 U.S.C. 4001 et seq.,

provides that no Federal financial assistance to acquire, modernize, or construct

property may be provided in identified flood-prone communities in the United States,

unless the community participates in the National Flood Insurance Program and flood

insurance is purchased within 1 year of the identification. The flood insurance

purchase requirement applies to both public and private applicants for HHS support.

Lists of flood-prone areas that are eligible for flood insurance are published in the

Federal Register by FEMA.

Architectural Barriers

The Architectural Barriers Act of 1968, 42 U.S.C. 4151 et seq., as amended, the

Federal Property Management Regulations (see 41 CFR 102-76), and the Uniform

Federal Accessibility Standards issued by GSA (see 36 CFR 1191, Appendixes C and

D) set forth requirements to make facilities accessible to, and usable by, the

physically handicapped and include minimum design standards. All new facilities

designed or constructed with HHS grant support must comply with these

requirements. These minimum standards must be included in the specifications for

any HHS-funded new construction unless the recipient proposes to substitute

standards that meet or exceed these standards. Where HHS assistance is provided

for alteration or renovation (including modernization and expansion) of existing

facilities, the altered facility (or part of the facility) must comply, including use of the

minimum standards in the specifications. The recipient is responsible for conducting

inspections to ensure compliance with these standards by any contractor performing

construction services under the grant.

Clean Air and Clean Water Act

42 U.S.C. 7606 and EO 11738 provide for the protection and enhancement of the

quality of the nation’s air resources to promote public health and welfare and for

restoring and maintaining the chemical, physical, and biological integrity of the

nation’s waters.

Safe Drinking Water Act

42 U.S.C. 300h-3 provides for the protection of underground sources of drinking

water that have an aquifer, which is the sole source of drinking water. Specifically,

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no grant may be entered into for any project that the EPA Administrator determines

may contaminate such aquifer.

Health, Safety, and Related Requirements

Restriction on Funding Abortions

HHS funds may not be spent for an abortion.

Restriction on Distribution of Sterile Needles/Needle Exchange

Funds appropriated for HHS may not be used to carry out any program of

distributing sterile needles or syringes for the hypodermic injection of any illegal

drug.

Standards for Privacy of Individually Identifiable Health Information

The “Standards for Privacy of Individually Identifiable Health Information” (the

Privacy Rule) implement the Health Insurance Portability and Accountability Act

(HIPAA) of 1996, 42 U.S.C. 1320d et seq., which governs the protection of

individually identifiable health information. The Privacy Rule is administered and

enforced by HHS’s OCR and is codified at 45 CFR parts 160 and 164. Not all HHS

recipients are subject to the Privacy Rule. The Privacy Rule applies only to “covered

entities,” as defined by the rule, which include health plans and most health-care

providers.

The OCR Web site (http://www.hhs.gov/ocr/hipaa

) provides information on the

Privacy Rule, including the complete text of the regulation and a set of decision tools

for determining whether a particular entity is subject to the rule. An educational

booklet, Protecting Health Information in Research: Understanding the HIPAA Privacy

Rule, is available through OCR’s Web site and at

http://privacyruleandresearch.nih.gov/. That Web site also includes other

educational materials approved by OCR and the HHS Office of the General Counsel.

Confidentiality of Patient/Client Records

Section 543 of the PHS Act, 42 U.S.C. 290dd-2, requires that records of substance

abuse patients be kept confidential except under specified circumstances and

purposes. The covered records are those that include the identity, diagnosis,

prognosis, or treatment of any patient maintained in connection with any program or

activity relating to substance abuse education, prevention, training, treatment,

rehabilitation, or research that is conducted, regulated, or directly or indirectly

assisted by any department or agency of the United States. This requirement is

implemented in 42 CFR part 2.

Drug-Free Workplace

The Drug-Free Workplace Act of 1988, 42 U.S.C. 701 et seq., requires that all

organizations receiving grants from any Federal agency agree to maintain a drug-

free workplace. The recipient must notify the awarding office if an employee of the

recipient is convicted of violating a criminal drug statute. Failure to comply with

these requirements may be cause for debarment. HHS implementing regulations are

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set forth in 45 CFR part 82, “Governmentwide Requirements for Drug-Free

Workplace (Financial Assistance).”

Pro-Children Act

The Pro-Children Act of 1994, 20 U.S.C. 7183, imposes restrictions on smoking in

facilities where federally funded children’s services are provided. HHS grants are

subject to these requirements only if they meet the Act’s specified coverage. The Act

specifies that smoking is prohibited in any indoor facility (owned, leased, or

contracted for) used for the routine or regular provision of kindergarten, elementary,

or secondary education or library services to children under the age of 18. In

addition, smoking is prohibited in any indoor facility or portion of a facility (owned,

leased, or contracted for) used for the routine or regular provision of federally

funded health care, day care, or early childhood development, including Head Start

services to children under the age of 18. The statutory prohibition also applies if such

facilities are constructed, operated, or maintained with Federal funds. The statute

does not apply to children’s services provided in private residences, facilities funded

solely by Medicare or Medicaid funds, portions of facilities used for inpatient drug or

alcohol treatment, or facilities where WIC coupons are redeemed. Failure to comply

with the provisions of the law may result in the imposition of a civil monetary penalty

of up to $1,000 per violation and/or the imposition of an administrative compliance

order on the responsible entity. Any questions concerning the applicability of these

provisions to an HHS grant should be directed to the GMO.

Smoke-Free Workplace

HHS strongly encourages recipients to provide smoke-free workplaces and to

promote the nonuse of tobacco products. HHS defines the term “workplace” to mean

office space (including private offices and other workspace), conference or meeting

rooms, corridors, stairways, lobbies, rest rooms, cafeterias, and other public spaces.

Health and Safety

Recipients are responsible for meeting Federal, State, and local health and safety

standards and for establishing and implementing necessary measures to minimize

their employees’ risk of injury or illness in activities related to HHS grants. In

addition to applicable Federal, State, and local laws and regulations, the following

regulations must be followed when developing and implementing health and safety

operating procedures and practices for both personnel and facilities:

• 29 CFR 1910.1030, Bloodborne pathogens; 29 CFR 1910.1450, Occupational

exposure to hazardous chemicals in laboratories; and other applicable

occupational health and safety standards issued by the Occupational Health

and Safety Administration and included in 29 CFR part 1910. These

regulations are available at http://www.osha.gov/comp-links.html

• Nuclear Regulatory Commission Standards and Regulations, pursuant to the

Energy Reorganization Act of 1974 (42 U.S.C. 5801 et seq.). Copies may be

obtained from the U.S. Nuclear Regulatory Commission, Washington, DC

20555-0001.

Recipients are not required to submit documented assurance of their compliance with

or implementation of these requirements. However, if requested by the OPDIV,

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recipients should be able to provide evidence that applicable Federal, State, and local

health and safety standards have been considered and have been put into practice.

Acknowledgment of Federal Funding

As required by HHS appropriations acts, all HHS recipients must acknowledge Federal

funding when issuing statements, press releases, requests for proposals, bid

invitations, and other documents describing projects or programs funded in whole or

in part with Federal funds. Recipients are required to state (1) the percentage and

dollar amounts of the total program or project costs financed with Federal funds and

(2) the percentage and dollar amount of the total costs financed by nongovernmental

sources.

Activities Abroad

HHS recipients must ensure that project activities carried on outside the United

States are coordinated as necessary with appropriate government authorities and

that appropriate licenses, permits, or approvals are obtained.

Limited English Proficiency

Recipients of Federal financial assistance must take reasonable steps to ensure that

people with limited English proficiency have meaningful access to health and social

services and that there is effective communication between the service provider and

individuals with limited English proficiency. To clarify existing legal requirements,

HHS published “Guidance to Federal Financial Assistance Recipients Regarding Title

VI Prohibition Against National Origin Discrimination Affecting Limited English

Proficient Persons.” This guidance, which is available at

http://www.hhs.gov/ocr/lep/revisedlep.html, provides a description of the factors

that recipients should consider in determining and fulfilling their responsibilities to

individuals with limited English proficiency under Title VI of the Civil Rights Act of

1964.

Resource Conservation and Recovery Act

Under RCRA (42 U.S.C. 6901 et seq.), any State agency or agency of a political

subdivision of a State using appropriated Federal funds must comply with 42 U.S.C.

6962. This includes State and local institutions of higher education or hospitals that

receive direct HHS awards. Section 6962 requires that preference be given in

procurement programs to the purchase of specific products containing recycled

materials identified in guidelines developed by EPA (40 CFR parts 247–254).

Seat Belts

Pursuant to EO 13043 (April 16, 1997), Increasing the Use of Seat Belts in the

United States, HHS recipients are encouraged to adopt and enforce on-the-job seat

belt policies and programs for their employees when operating vehicles, whether

organizationally owned or rented or personally owned.

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Cost Considerations

General

This section addresses the general principles underlying the allowability of costs,

differentiates direct costs from indirect costs, and highlights a number of specific

costs and categories of cost. It is not intended to be all-inclusive and should be used

as a supplement to the applicable cost principles.

The Cost Principles

Cost principles establish general standards for the allowability of costs, provide

detailed guidance on the cost accounting treatment of costs as direct or indirect

costs, and set forth allowability principles for selected items of cost. Applicability of a

particular set of cost principles depends on the type of organization making the

expenditure. For example, a non-profit organization receiving a subaward from a

State recipient would be subject to the cost principles for non-profit organizations,

while the State would be subject to the cost principles for States, local governments,

and Indian tribal governments.

The cost principles are set forth in the following documents and are incorporated by

reference in 45 CFR 74.27 and 92.22:

• OMB Circular A-21—Cost Principles for Educational Institutions (2 CFR part

220)

• OMB Circular A-87—Cost Principles for State, Local, and Indian Tribal

Governments

(2 CFR part 225)

• OMB Circular A-122—Cost Principles for Non-Profit Institutions

(2 CFR part

230)

• 45 CFR part 74, Appendix E—Principles for Determining Costs Applicable to

Research and Development under Grants and Contracts with Hospitals

• 48 CFR subpart 31.2 (Federal Acquisition Regulation)—Contract Cost

Principles and Procedures—Contracts with Commercial Organizations

Additional information on cost allocation plans and indirect cost rates is found

in HHS’s A Guide for State, Local and Indian Tribal Governments: Cost Principles and

Procedures for Developing Cost Allocation Plans and Indirect Cost Rates for

Agreements with the Federal Government – Implementation Guide for Office of

Management and Budget Circular A-87 (ASMB C-10), which is available on the

Internet at http://www.hhs.gov/grantsnet/state

, and Review Guide for State and

Local Governments State/Local-Wide Central Service Cost Allocation Plans and

Indirect Cost Rates, which is available at http://rates.psc.gov/.

Non-profit organizations that are specifically listed in Attachment C to OMB Circular A-122 are

subject to the Federal cost principles applicable to commercial organizations (48 CFR subpart 31.2) rather

than to the cost principles for non-profit organizations.

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Recipients can use their own accounting systems, policies, and procedures to

implement the cost principle requirements as long as the standards prescribed in 45

CFR 74.21 or 92.20 for financial management systems are met (see “Financial

Management”).

The cost principles address four tests in determining the allowability of costs. The

tests are as follows:

• Reasonableness (including necessity). A cost is reasonable if, in its nature or

amount, it does not exceed that which would be incurred by a prudent person

under the circumstances prevailing at the time the decision was made to incur

the cost. The cost principles elaborate on this concept and address

considerations such as whether the cost is of a type generally necessary for

the organization’s operations or the grant’s performance, whether the

recipient complied with its established organizational policies in incurring the

cost or charge, and whether the individuals responsible for the expenditure

acted with due prudence in carrying out their responsibilities to the Federal

government and the public at large as well as to the organization.

• Allocability. A cost is allocable to a specific grant, function, department, or

other component, known as a cost objective, if the goods or services involved

are chargeable or assignable to that cost objective in accordance with the

relative benefits received or other equitable relationship. A cost is allocable to

a grant if it is incurred solely in order to advance work under the grant; it

benefits both the grant and other work of the organization, including other

grant-supported projects or programs; or it is necessary to the overall

operation of the organization and is deemed to be assignable, at least in part,

to the grant.

• Consistency. Recipients must be consistent in assigning costs to cost

objectives. They must be treated consistently for all work of the organization

under similar circumstances, regardless of the source of funding, so as to

avoid duplicate charges.

• Conformance. This test of allowability—conformance with limitations and

exclusions contained in the terms and conditions of award, including those in

the cost principles—may vary by the type of activity, the type of recipient,

and other characteristics of individual awards. “

Allowable Costs and Activities”

below provides information common to most HHS grants and, where

appropriate, specifies some of the distinctions if there is a different treatment

based on the type of grant or recipient.

These four tests apply regardless of whether the particular category of costs is one

specified in the cost principles or one governed by other terms and conditions of an

award. These tests also apply regardless of treatment as a direct cost or an indirect

cost. The fact that a proposed cost is awarded as requested by an applicant does not

indicate a determination of allowability.

Direct Costs and Indirect Costs

Direct costs are costs that can be identified specifically with a particular award,

project or program, service, or other organizational activity or that can be directly

assigned to such an activity with a high degree of accuracy. Direct costs include, but

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are not limited to, salaries, travel, equipment, and supplies directly benefiting the

grant-supported project or program. Indirect costs (also known as “facilities and

administrative costs”) are costs incurred for common or joint objectives that cannot

be identified specifically with a particular project, program, or organizational activity.

Facilities operation and maintenance costs, depreciation, and administrative

expenses are examples of costs that usually are treated as indirect costs. The

organization is responsible for presenting costs consistently and must not include

costs associated with its indirect rate as direct costs.

Reimbursement of Indirect Costs

HHS considers activities conducted by recipients that result in indirect charges a

necessary and appropriate part of HHS grants. OPDIVs reimburse their share of

those costs either as a fixed amount or through use of a rate. The amount may be

specified in statute, regulations, or policy or be determined based on a rate

negotiated by DCA, DFAS in the Office of Acquisition Management and Policy, NIH

(responsible for negotiating indirect cost rates for for-profit entities receiving awards

from HHS), or other cognizant Federal agency and reflected in a formal rate

agreement. For certain governmental organizations, amounts claimed are based on

documentation retained by the governmental organization. State and local

governmental organizations also may be eligible for reimbursement of costs

associated with provision of central services as provided in OMB Circular A-87.

an applicant is advised by the GMO of the need to establish a rate prior to issuance

of a NoA, the GMO will indicate the responsible office to be contacted.

If reimbursement of indirect costs is allowable under an award, HHS will not

reimburse those costs unless the recipient has established an indirect cost rate

covering the applicable activities and period of time unless indirect costs are

reimbursed at a fixed rate (e.g., HHS indirect cost reimbursement for training grants

to other than governmental recipients) or the applicant is not required to submit a

proposal to the Federal government as specified in OMB Circular A-87. The awarding

office uses the applicable indirect cost rate covering the award budget period (or part

thereof) in calculating the amount to be shown or to be included on the NoA. If, on

the basis of statute, regulation, or policy, allowable indirect cost reimbursement is

restricted to an amount less than full indirect cost reimbursement, the difference

between those two amounts may be used to satisfy a recipient’s matching or cost-

sharing requirement (see “Matching or Cost Sharing”).

Indirect cost proposals must be prepared in accordance with the applicable cost

principles and guidance provided by the cognizant office or agency. Further

information concerning the establishment of indirect cost rates and the

reimbursement of indirect costs may be obtained from DCA or DFAS (see Part III).

DCA should be consulted to determine the need to submit a Disclosure Statement

(DS-2) pursuant to the requirements of OMB Circular A-21.

If the GMO determines that a recipient does not have a currently effective indirect

cost rate, the award may not include an amount for indirect costs unless the

organization has never established an indirect cost rate (usually a new recipient) and

OMB Circular A-87 also addresses public assistance cost allocation plans;

however, the types of programs eligible for such costs are not covered by this HHS

GPS.

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intends to establish one. In such cases, the award shall include a provisional amount

equaling one-half of the amount of indirect costs requested by the applicant, up to a

maximum of 10 percent of direct salaries and wages (exclusive of fringe benefits). If

the recipient fails to provide a timely proposal, indirect costs paid in anticipation of

establishment of a rate will be disallowed.

There are several other limited circumstances under which the GMO may award

indirect costs if none were previously awarded or may increase the amount

previously awarded. If an award does not include an amount for indirect costs

because the recipient did not submit a timely indirect cost proposal and the recipient

subsequently establishes a rate, the GMO may amend the award to provide an

appropriate amount for indirect costs if the amendment can be made using funds

from the same Federal fiscal year in which the award was made. However, the

amount will be limited to the indirect costs applicable to the period after the effective

date of the rate agreement. This provision does not affect those local governmental

agencies that are not required to submit their indirect cost proposals to the Federal

government. They may charge indirect costs to HHS grants based on the rate

computations they prepare and keep on file for subsequent Federal review.

Rebudgeting within the direct cost category may affect the amount of eligible indirect

cost reimbursement, depending on the direct cost base on which indirect costs are

calculated (for example, salaries and wages). The recipient is expected to

accommodate such changes within the ceiling amount of the award. If permissible

direct cost rebudgeting or unobligated balances of Federal funds result in the need

for a lesser amount of indirect costs than awarded or a higher permanent rate results

in a need for additional indirect costs beyond those awarded, recipients may

rebudget between direct and indirect costs (in either direction) to accommodate such

an increase or decrease without OPDIV prior approval unless it would constitute a

change in the scope of the project (see “Prior-Approval Requirements—OPDIV Prior

Approval”).

Generally, award amounts will not be adjusted based on a negotiated indirect cost

rate different from that used at the time of the award (whether competitive segment

or budget period).

If funds are available, a GMO may, but is not obligated to, amend an award to

provide additional funds for indirect costs, but only under the following

circumstances:

• An error was made in computing the award. This includes situations in which

a higher rate than the rate used in the grant award is negotiated and the date

of the rate agreement for the higher rate is on or before 1 calendar month

prior to the beginning date of the grant budget period.

• The awarding office restores funds previously recaptured as part of a

recipient’s unobligated balance.

• The recipient is eligible for additional indirect costs associated with additional

direct costs awarded, e.g., a supplemental award.

For all recipients other than those subject to OMB Circular A-21, the negotiated rate

in effect at the beginning of each budget period will be used as the basis for

determining indirect costs for that budget period. For recipients subject to OMB

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Circular A-21, the rate in effect at the beginning of a competitive segment will be

used to determine indirect cost funding levels for the entire segment. If the rate

agreement in effect at the outset of the competitive segment does not cover the

entire competitive segment, then the rate in effect for the last year of the negotiated

agreement will be used to determine indirect cost funding for the duration of the

competitive segment. For all recipients, if the rate in effect at the beginning of the

competitive segment or budget period, as applicable, was provisional and is

superseded by a permanent rate, whether higher or lower, the latter rate will be

used to determine indirect cost reimbursement. The award will not be adjusted

downward, based on a lower permanent indirect cost rate than a provisional rate

used in calculating the award, unless the indirect cost proposal that served as the

basis for the negotiation included unallowable costs. The OPDIV also is not required

to provide any additional funding to accommodate this situation but may do so if an

error was made in computing the award as indicated above.

The recipient is responsible for establishing indirect cost rates for its subrecipients if

those subrecipients do not have a current, applicable rate negotiated by a cognizant

Federal agency.

Applicable Credits

The term “applicable credits” refers to those receipt or negative expenditure types of

transactions that operate to offset or reduce direct or indirect cost items. Typical

examples are purchase discounts, rebates or allowances, recoveries or indemnities

on losses, and adjustments for overpayments or erroneous charges. Additional

information concerning applicable credits is included in the cost principles.

Applicable credits to direct charges made to HHS grants must be treated as an

adjustment on the recipient’s FSR, whether those credits accrue during or after the

period of grant support. The awarding office will notify the recipient of any additional

actions that may be necessary.

Allowable Costs and Activities

The governing cost principles address selected items of cost, some of which are

mentioned in this subsection for emphasis. This subsection is not intended to be all-

inclusive. The cost principles should be consulted for the complete explanation of the

allowability or unallowability of costs they address. The allowability of costs under

individual OPDIV awards also may be governed by requirements specified in the

program legislation, regulations, or the specific terms and conditions of the award,

which will take precedence over the general discussion provided here (see “Overview

of Terms and Conditions of Award—Effect and Order of Precedence”). Recipients that

have questions concerning the allowability of costs should contact the GMO.

If a cost is allowable, it is allocable as either a direct cost or an indirect cost,

depending on the recipient’s accounting system. For some costs addressed in this

subsection, the text specifies whether the cost is usually a direct cost or an indirect

cost.

Unless otherwise indicated in the NoA, an award based on an application that

includes specific information concerning any direct costs or activities that require

OPDIV prior approval constitutes the prior approval for those costs or activities. The

recipient is not required to obtain any additional approval for those costs/activities. If

II-28

a cost or activity requiring OPDIV prior approval is not included or fully described in

the approved application, the recipient must obtain post-award prior approval as

described in “Prior Approval Requirements—OPDIV Prior-Approval”).

Subrecipients and contractors under grants are subject to the requirements of the

cost principles otherwise applicable to their type of organization and to any

requirements placed on them by the recipient to be able to comply with the terms

and conditions of the award.

The cost principles do not address profit or fee. HHS policy allows the payment of fee

on SBIR/STTR grants, but HHS will not provide profit or fee to any other type of

recipient under any other grant program. A fee may not be paid by a recipient to a

subrecipient/consortium participant, including a for-profit organization. However, a

fee (profit) may be paid to a contractor providing routine goods or services under a

grant in accordance with normal commercial practice.

Exhibit 4 describes selected cost items.

II-29

Exhibit 4. Selected Items of Cost

Item Description

Advertising Allowable only for recruitment of staff or trainees, procurement of goods and services, disposal of

scrap or surplus materials, and other specific purpose necessary to meet the requirements of the

grant-supported activity.

Alcoholic

Beverages

Unallowable as an entertainment expense. Allowable if within the scope of an approved project.

Alteration and

Renovation

A&R costs are allowable unless the program legislation, implementing regulations, or other terms

and conditions of the award specifically exclude such activity. See “Prior Approval Requirements—

OPDIV Prior-Approval” for A&R costs requiring GMO prior approval. A&R costs that do not exceed

the prior approval thresholds specified in that section (or in Part IV, as applicable) generally are

considered “minor A&R” and those exceeding that amount generally are considered “major A&R.”

Major A&R is allowable only if the authorizing statute specifically permits that type of activity, whether

characterized as modernization, remodeling, or A&R (see “Construction” in this exhibit).

A&R must be consistent with the following criteria and documentation requirements:

¡ The building has a useful life consistent with program purposes and is architecturally and

structurally suitable for conversion to the type of space required.

¡ The A&R is essential to the purpose of the grant-supported project or program.

¡ The space involved will be occupied by the project or program.

¡ The space is suitable for human occupancy before A&R work is started except where the purpose

of the A&R is to make the space suitable for some purpose other than human occupancy, such as

storage.

¡ For minor A&R, if the space is rented, evidence is provided that the terms of the lease are

compatible with the A&R proposed and cover the duration of the project period.

¡ If the A&R will affect a site listed in (or eligible for inclusion in) the National Register of Historic

Places, the requirements specified in “Preservation of Cultural and Historic Resources” have been

followed.

Routine maintenance and repair of the organization’s physical plant or its equipment, which is

allowable and is ordinarily treated as an indirect cost, is not considered A&R.

Work necessary to obtain an initial occupancy permit for the intended use is not an allowable A&R

cost. Certain allowable costs of installing equipment, such as the temporary removal and

replacement of wall sections and door frames to place equipment in its permanent location, or the

costs of connecting utility lines, replacing finishes and furnishings, and installing any accessory

devices required for the equipment’s proper and safe utilization, may be considered either equipment

costs or A&R costs, depending on the recipient’s accounting system.

A&R costs are not allowable under grants in support of scientific meetings (conference grants).

Animals Allowable for the acquisition, care, and use of animals for use in research and research-related

activities, contingent upon compliance with the applicable requirements of the PHS Policy on

Humane Care and Use of Laboratory Animals. If the recipient operates an animal resource facility,

charges for use of the facility should be determined in accordance with the Cost Analysis and Rate

Setting Manual for Animal Resource Facilities (May 2000), available from NIH’s National Center for

Research Resources (NCRR) (http://www.ncrr.nih.gov/newspub/CARS.pdf) or from NCRR’s Office of

Science Policy and Public Liaison (e-mail: [email protected].gov).

II-30

Exhibit 4. Selected Items of Cost

Item Description

Audiovisual

Activities

Allowable for the production of an audiovisual. “Audiovisual” means any product containing visual

imagery, sound, or both, such as motion pictures, films, videotapes, live or recorded radio or

television programs or public service announcements, slide shows, filmstrips, audio recordings,

multimedia presentations, or exhibits where visual imagery, sound, or both are an integral part.

“Production” refers to the steps and techniques used to create a finished audiovisual product,

including, but not limited to, design, layout, scriptwriting, filming or taping, fabrication, sound

recording, and editing.

A recipient with in-house production capability must determine whether it would be more efficient and

economical to use that capability or to contract for the production of an audiovisual.

If an audiovisual intended for members of the general public (i.e., people who are not researchers,

health professions, or service delivery personnel or who are not directly involved in project activities

as employees, trainees, or participants, such as clients, volunteers or patients) is produced under an

HHS grant-supported project or program, the recipient must submit two prints or tapes of the finished

product along with its annual or final progress report. The costs of such prints or tapes are allowable

costs.

Audiovisuals produced under a grant-supported project or program must bear an acknowledgment

and disclaimer, such as the following:

The production of this [type of audiovisual (motion picture, television program, etc.)] was supported

by Grant [number of grant] from [name of OPDIV]. Its contents are solely the responsibility of [name

of recipient] and do not necessarily represent the official views of [name of OPDIV].

Audit Costs Allowable (as specified in Section 230 of OMB Circular A-133). The charges may be treated as a

direct cost when the audit’s scope is limited to a single HHS grant-supported project or program, as

specified in 45 CFR 74.26(d), or when it includes more than one project but the costs can be

specifically identified with, and allocated to, each project on a proportional basis, and this practice is

followed consistently by the recipient. Otherwise, charges for audits should be treated as indirect

costs. In addition, a pass-through entity may charge an HHS award for the cost of a limited scope

audit to monitor a subrecipient provided the subrecipient is not required to have a single audit and

the other conditions of Section 230(b) (2) of OMB Circular A-133 are met.

Bad Debts Unallowable.

Bid and

Proposal Costs

Allowable as an indirect cost. See 45 CFR 74.27(b)(1) for policy for non-profit organizations covered

by OMB Circular A-122.

Bonding Allowable. See 45 CFR 74.21, 74.48(c) and 92.36 for policies and requirements concerning bonding.

Books and

Journals

Allowable. If an organization has a library, books and

ournals generally should be provided as part of

normal library services and treated as indirect costs.

Capital

expenditures

for land or

buildings

See “Land or Building Acquisition” in this exhibit.

Child-Care

Costs

Allowable if within the scope of an approved project or program or as incidental costs of a project or

program if incurred to enable individuals to participate as subjects in research projects or to receive

health services. Such costs also may be allowable as a fringe benefit for individuals working on a

grant-supported project (see “Fringe Benefits” in this exhibit).

Communica-

tions

Allowable. Such costs include local and long-distance telephone calls, telegrams, express mail,

postage, messenger, and electronic or computer transmittal services and usually are treated as

indirect costs.

Compliance

with Historic

Preservation

Requirements

Allowable. May include hiring special consultants to research and document the historic value of

proposed performance sites and costs associated with preparation and presentation of required

materials to inform the public and others.

II-31

Exhibit 4. Selected Items of Cost

Item Description

Construction/

Modernization

Allowable only when program legislation specifically authorizes new construction, modernization, or

other activities considered major A&R, and the OPDIV specifically authorizes such costs in the NoA.

When authorized, construction activities may include construction of a new facility or projects in an

existing building that are considered to be construction, such as relocation of exterior walls, roofs,

and floors; attachment of fire escapes; or completion of unfinished shell space to make it suitable for

human occupancy.

Consultant

Services

Allowable. A consultant is an individual retained to provide professional advice or services for a fee

but usually not as an employee of the requiring organization. The term “consultant” also includes a

firm that provides paid professional advice or services. Recipients must have written policies

governing their use of consultants that are consistently applied regardless of the source of support.

Such policies should include the conditions for paying consulting fees. The general circumstances of

allowability of these costs, which may include fees and travel and subsistence costs, are addressed

in the applicable cost principles under “professional services costs.”

In unusual situations, a person may be both a consultant and an employee of the same party,

receiving compensation for some services as a consultant and for other work as a salaried employee

as long as those separate services are not related to the same project and are not charged to the

same project. For example, consulting fees that are paid by an educational institution to a salaried

faculty member as extra compensation above that individual’s base salary are allowable, provided

the consultation is across departmental lines or involves a separate or remote operation and the

work performed by the consultant is in addition to his or her regular departmental workload.

For employee consulting costs to be allowable under grant-supported projects (including subawards

or contracts under the grant), recipients, subrecipients, and contractors must establish written

guidelines permitting such payments regardless of the source of funding and indicating the

conditions under which the payment of consulting fees to employees is proper. Unless subject to

OMB Circular A-21, the recipient, subrecipient, or contractor also must document that it would be

inappropriate or infeasible to compensate the individual for those services through payment of

additional salary. Under no circumstances can an individual be paid as a consultant and an

employee under the same HHS grant.

Authorization for consulting fees paid to individuals serving as both employees and consultants of the

same party must be provided in writing, on a case-by-case basis, by the head of the recipient,

subrecipient, or contractor organization incurring the costs, or his/her designee. If the designee is

personally involved in the project, the authorization may be given only by the head of the

organization. This authorization must include a determination that the required conditions are present

and that there is no apparent or actual conflict of interest.

Recipients, subrecipients, and contractors under grants are encouraged to obtain written reports

from consultants unless such a report is not feasible given the nature of the consultation or would not

be useful. Documentation maintained by the receiving organization should include the name of the

consulting firm or individual consultant; the nature of the services rendered and their relevance to the

grant-supported activities, if not otherwise apparent from the nature of the services; the period of

service; the basis for calculating the fee paid (e.g., rate per day or hour worked or rate per unit of

service rendered); and the amount paid. This information may be included in the consultant’s invoice,

in the report, or in another document.

II-32

Exhibit 4. Selected Items of Cost

Item Description

Consumer/

Provider Board

Participation

Allowable in accordance with applicable program regulations. When not specifically authorized by

program regulations, only the following costs are allowable with OPDIV prior approval:

¡ Reasonable and actual out-of-pocket costs incurred solely as a result of attending a scheduled

meeting, including transportation, meals, babysitting fees, and lost wages.

¡ The reasonable costs of necessary meals furnished by the recipient to consumer or provider

participants during scheduled meetings if not reimbursed to participants as per diem or otherwise.

Where programmatic regulations permit such payments but establish a maximum annual income for

eligibility for reimbursement of consumer/provider board members for wages lost by reason of their

participation in board activities, the determination of eligibility will be made on the basis of gross

rather than net income.

Members of consumer/provider boards are not considered employees or consultants of the recipient.

Therefore, they may not be compensated for their services other than as above, nor are they eligible

for associated fringe benefits. Although not eligible for individual insurance coverage, board

members may be covered by an organizational insurance policy while acting in their official

capacities as board members.

Contingency

Funds

Contributions set aside for events whose occurrence cannot be foretold with certainty as to time,

intensity, or assurance of their happening are unallowable under nonconstruction grants.

Contingency funds do not include pension funds, self-insurance funds, and normal accruals for

severance and post-retirement health costs (also see “Reserve Funds” in this exhibit). Construction

grants may include a contingency fund in initial construction contract cost estimates to provide for

unanticipated charges. These funds will be limited to 5 percent of construction and equipment costs

before bids or proposals are received and must be reduced to 2 percent after a construction contract

has been awarded.

Customs and

Import Duties

Allowable under grants to domestic organizations when performance will take place entirely within

the United States, its possessions, or its territories, or when foreign involvement in the project is

incidental to the overall grant-supported project. Charges may include consular fees, customs

surtaxes, value-added taxes, and other related charges. (Also see “Requirements for Specific Types

of Recipients” of this part for the allowability of these costs.)

Depreciation

or Use

Allowances

Allowable. Such costs usually are treated as indirect costs. Depreciation or use charges on

equipment or buildings acquired under a federally supported project are not allowable.

Donor Costs Allowable for payment to volunteers or research subjects who contribute blood, urine samples, and

other body fluids or tissues that are specifically project related.

Drugs Allowable if within the scope of an approved project. Project funds may not be used to purchase

drugs classified by FDA as “ineffective” or “possibly effective” except in approved clinical research

projects or in cases where there is no alternative other than therapy with “possibly effective” drugs.

Recipient acquisition practices for drugs used in outpatient treatment must meet Federal

requirements regarding cost-effectiveness and reasonableness as found in 42 CFR part 40, Subpart

E, and OMB Circulars A-122 and A-87.

Dues or

Membership

Fees

Allowable as an indirect cost for organizational membership in business, professional, or technical

organizations or societies. Payment of dues or membership fees for an individual’s membership in a

professional or technical organization is allowable as a fringe benefit or an employee development

cost, if paid according to an established organizational policy consistently applied regardless of the

source of funds.

Entertainment

Costs

Unallowable. This includes the cost of amusements, social activities, and related incidental costs.

II-33

Exhibit 4. Selected Items of Cost

Item Description

Equipment Allowable for purchase of new, used, or replacement equipment as a direct cost or as part of indirect

costs, depending on the intended use of the equipment. OPDIV prior approval may be required as

specified in “Prior-Approval Requirements.” Funds provided under a conference grant may not be

used to purchase equipment.

For policies governing the classification, use, management, and disposition of equipment, see

“Property Management.” For policies governing the allowability of costs for rental of equipment, see

“Rental or Lease of Facilities and Equipment” in this exhibit.

Federal (U.S.

Government)

Employees

Only four types of costs—consultant fees, outpatient or subject costs, salary or fringe benefits, and

travel costs—can be charged to HHS grants on behalf of Federal employees, and only under the

conditions specified. Recipients should advise any Federal employees with whom these types of

arrangements may be made to consult with their employing agency concerning their ability to meet

the required conditions.

Regardless of whether costs will be charged to the grant, special requirements apply when a Federal

employee will be involved in an HHS grant-supported activity in any capacity other than as an

employee working on a grant to a Federal institution, an outpatient, or a study subject. The

requirements of that section do not apply to individuals that are classified as special government

employees because of service on advisory groups or as a result of a formal consulting arrangement

with a Federal agency. (See the HHS Standards of Conduct at 45 CFR part 73, Subpart J for

additional guidance.) See “Requirements for Specific Types of Recipients—Grants to Federal

Institutions and Allowable Costs and Payments to (or on Behalf of) Federal Employees under Grants”

for the allowability of payments made to, or on behalf of, Federal employees under HHS grants.

Fines and

Penalties

Unallowable except when resulting from violations of, or failure of the organization to comply with,

Federal, State, or local laws and regulations and incurred as a result of compliance with specific

provisions of an award, or when such payments are authorized in advance in writing by the GMO.

Fringe Benefits Allowable as part of overall employee compensation in proportion to the amount of time or effort an

employee devotes to the grant-supported project or program, provided such costs are incurred under

formally established and consistently applied policies of the organization (see “Salaries and Wages”

in this exhibit).

Tuition or tuition remission for regular employees is allowable as a fringe benefit. For organizations

subject to OMB Circular A-21, tuition benefits for family members other than the employee are

unallowable. For policies applicable to tuition remission for students working on grant-supported

research projects, see “Salaries and Wages” in this exhibit.

Fundraising

Costs

Unallowable.

Hazardous

Waste

Disposal

Allowable. Usually treated as an indirect cost.

Honoraria Unallowable when the primary intent is to confer distinction on, or to symbolize respect, esteem, or

admiration for, the recipient of the honorarium. A payment for services rendered, such as a speaker’s

fee under a conference grant, is allowable.

Hospitalization See “Research Patient Care” in this exhibit.

Incentive

Costs

Incentive payments to volunteers or patients participating in a grant-supported project or program are

allowable. Incentive payments to individuals to motivate them to take advantage of grant-supported

health care or other services are allowable if within the scope of an approved project. See “Salaries

and Wages” in this exhibit for incentive payments to employees.

Indemnification Allowable to the extent expressly provided in the award for indemnification against liabilities to third

parties and any other loss or damage not compensated by insurance or otherwise. The Federal

government is obligated to indemnify the institution only to the extent expressly provided for in the

NoA.

II-34

Exhibit 4. Selected Items of Cost

Item Description

Independent

Research and

Development

Costs

Unallowable, including their proportionate share of indirect costs.

Insurance Allowable. Insurance usually is treated as an indirect cost. In certain situations, however, where

special insurance is required as a condition of the grant because of risks peculiar to the project, e.g.,

provision of health services, the premium may be charged as a direct cost if doing so is consistent

with organizational policy. If so, the insurance should be treated as a direct cost and assigned to

individual grants based on the manner in which the insurer allocates the risk to the population

covered by the insurance. Medical liability (malpractice) insurance is an allowable cost of research

programs at educational institutions only if the research involves human subjects.

The cost of insuring equipment, whether purchased with grant funds or furnished as federally owned

property, normally should be included in indirect costs but may be allowable as a direct cost if this

manner of charging is the normal organizational policy.

Interest Allowable as an indirect cost for certain assets as specified in the applicable cost principles.

Unallowable for hospitals.

Invention,

Patent, or

Licensing

Costs

Unallowable as a direct cost unless specifically authorized in the NoA. May be allowable as indirect

costs provided they are authorized under applicable cost principles and are included in the

negotiation of indirect cost rates. Such costs include licensing or option fees, attorney’s fees for

preparing or submitting patent applications, and fees paid to the U.S. Patent and Trademark Office

for patent application, patent maintenance, or recordation of patent-related information.

Land or

Building

Acquisition

Not allowable unless acquisition or construction is specifically authorized by program legislation and

provided for in the NoA. Under those programs that have authority to permit recipients to acquire

facilities, considerations such as the type of program being supported and the Federal interest in

purchased property will be taken into account by the awarding office in determining whether property

should be leased or purchased. For real property acquired with grant support, the cost of title

insurance may be charged to the grant in proportion to the Federal share of the acquisition cost.

Filing fees incurred with the recordation in appropriate official records of the applicable jurisdiction of

the Federal interest in the real property also may be charged to the grant. Use allowance or

depreciation on buildings that were not acquired under a Federal project are allowable, usually as an

indirect cost.

Leave Allowable for employees as a fringe benefit (see “Fringe Benefits” in this exhibit). See program

guidance or Part IV for policy on leave for fellows and trainees.

Legal Services Allowable. Generally treated as an indirect cost but, subject to the limitations described in the

applicable cost principles, may be treated as a direct cost for legal services provided by individuals

who are not employees of the recipient. Before a recipient incurs legal costs that are extraordinary or

unusual, the recipient should make an advance agreement regarding the appropriateness and

reasonableness of such costs with the GMO. Legal costs incurred in defending or prosecuting

claims, whether equitable or monetary, including administrative grant appeals, are unallowable

charges, except as provided in the applicable cost principles.

Library

Services

General library support is not allowable as a direct cost but may be included in a recipient’s indirect

cost pool. These services are allowable as a direct cost when specifically required for the conduct of

the project and when identifiable as an integral part of the grant-supported activity (e.g., in those

programs designed to develop and support such services).

Lobbying Generally unallowable, including costs of lobbying activities to influence the introduction, enactment,

or modification of legislation by the U.S. Congress or a State legislature. Under certain

circumstances, as provided in the applicable cost principles, costs associated with activities that

might otherwise be considered “lobbying” that are directly related to the performance of a grant may

be allowable. The recipient should obtain an advance understanding with the GMO if it intends to

engage in these activities.

II-35

Exhibit 4. Selected Items of Cost

Item Description

Meals Generally unallowable except for the following:

¡ Subjects and patients under study

¡ Where specifically approved as part of the project or program activity, e.g., in programs providing

children’s services

¡ When an organization customarily provides meals to employees working beyond the normal

workday, as a part of a formal compensation arrangement

¡ As part of a per diem or subsistence allowance provided in conjunction with allowable travel

¡ Under a conference grant, when meals are a necessary and integral part of a conference,

provided that meal costs are not duplicated in participants’ per diem or subsistence allowances.

Guest meals are not allowable. (See “Consumer/Provider Board Participation” in this exhibit

regarding the allowability of the cost of meals for consumer and provider board participants in grant-

supported activities.)

Moving See “Recruitment Costs,” “Relocation Costs,” and “Transportation of Property” in this exhibit.

NEPA Analysis Costs associated with evaluation of the environmental effects of a proposed activity and producing

the Environmental Impact Statement (EIS) are allowable.

Overtime See “Salaries and Wages” in this exhibit.

Pension Plan

Costs

Allowable. For institutions of higher education and non-profit organizations, the following applies:

¡ Such costs must be incurred according to the established policies of the organization consistently

applied regardless of the source of funds.

¡ The organization’s policies must meet the test of reasonableness.

¡ The methods of cost allocation must be equitable for all activities.

¡ The amount assigned to each fiscal year must be determined in accordance with generally

accepted accounting principles.

¡ The cost assigned to a given fiscal year must be paid or funded for all plan participants within 6

months after the end of that fiscal year.

State, local, or Indian tribal governments or hospitals may use the “pay-as-you-go” cost method

(i.e., when pension benefits are paid by the recipient directly to, or on behalf of, retired employees or

their beneficiaries) in lieu of the method described above. Under this method, the benefits may be

charged in the recipient’s fiscal year in which the payments are made to, or on behalf of, retired

employees or their beneficiaries, provided that the recipient follows a consistent policy of treating

such payments as expenses in the year of payment.

See the applicable cost principles for additional information on the allowability of costs associated

with pension plans.

II-36

Exhibit 4. Selected Items of Cost

Item Description

Pre-Award

(Pre-

Agreement)

Costs

Allowable. Where authorized by the OPDIV as an expanded authority (see Part IV of the HHS GPS),

a recipient may, at its own risk and without OPDIV prior approval, incur obligations and expenditures

to cover costs up to (and including) 90 days before the beginning date of the initial budget period of a

new or competing continuation award if such costs

¡ are necessary to conduct the project or program, and

¡ would be allowable under the grant, if awarded.

However, even if authorized as an expanded authority, if a specific expenditure would otherwise

require prior approval, the cost or activity must meet the same tests of allowability as if incurred after

award.

If not authorized as part of expanded authorities, the applicant/recipient must seek OPDIV prior

approval before incurring pre-award costs. OPDIV prior approval is required for any costs to be

incurred more than 90 days before the beginning date of the initial budget period of a new or

competing continuation award.

Recipients may incur pre-award costs before the beginning date of a non-competing continuation

award without regard to the time parameters stated above and without prior approval. The incurrence

of pre-award costs in anticipation of a competing or non-competing award imposes no obligation on

the OPDIV either to make the award or to increase the amount of the approved budget if an award is

made for less than the amount anticipated and is inadequate to cover the pre-award costs incurred.

Recipients are expected to be fully aware that pre-award costs result in borrowing against future

support and that such borrowing must not impair the recipient’s ability to accomplish the project or

program objectives in the approved time frame or in any way adversely affect the conduct of the

project or program.

Public

Relations

Costs

Allowable only for costs specifically required by the award or for costs of communicating with the

public and the press about specific activities or accomplishments under the grant-supported activity

or other appropriate matters of public concern. Such costs may be treated as direct costs but should

be treated as indirect costs if they benefit more than one sponsored agreement or if they benefit the

grant and other work of the organization.

Publications Allowable. Page charges for publication in professional journals are allowable if the published paper

reports work supported by the grant and the charges are levied impartially on all papers published by

the journal, whether or not by government-sponsored authors. The costs of reprints and publishing in

other media, such as books, monographs, and pamphlets, also are allowable.

Publications and journal articles produced under an HHS grant-supported activity must bear an

acknowledgment and disclaimer, as appropriate, as provided in “Intellectual Property—Publications.”

Recruitment

Costs

Allowable subject to the conditions and restrictions contained in the applicable cost principles. These

costs may include help-wanted advertising costs, costs of travel by applicants for interviews for

prospective employment, and travel costs of employees while engaged in recruiting personnel. Grant

funds may not be used for a prospective trainee’s travel costs to or from the recipient organization for

the purpose of recruitment. However, other costs incurred in connection with recruitment under

training programs, such as advertising, may be allocated to a grant-supported project according to

the provisions of the applicable cost principles (also see “Travel” and “Relocation Costs” in this

exhibit).

Registration

Fees

Allowable for attendance at conferences, symposiums, or seminars if necessary to accomplish

project or program objectives.

II-37

Exhibit 4. Selected Items of Cost

Item Description

Relocation

Costs

Allowable—in other than change of grantee organization situations—when such costs are incurred

incidental to a permanent change of duty assignment (for an indefinite period or for a stated period of

no less than 12 months) for an existing employee working on a grant-supported project, or when a

new employee is recruited for work on the project, provided that the move is for the recipient’s benefit

rather than the individual’s and that payment is made according to established organizational policies

consistently applied regardless of the source of funds. Relocation costs may include the cost of

transporting the employee and his or her family, dependents, and household goods to the new

location and certain expenses associated with the sale of the former home. If relocation costs have

been incurred in connection with the recruitment of a new employee, whether as a direct cost or an

indirect cost, and the employee resigns for reasons within his or her control within 12 months after

hire, the recipient must credit the grant account for the full cost of the relocation charged to the grant.

When there is a change in the grantee organization, the personal relocation expenses of the PI/PD

and others moving to the new recipient are not allowable charges.

Rental or

Lease of

Facilities and

Equipment

Allowable subject to the limitations below. Rental costs are allowable to the extent that the rates are

reasonable at the time of the decision to lease in light of such factors as rental costs of comparable

property, if any; market conditions in the area; the type, life expectancy, condition, and value of the

property leased; and available alternatives. Because of the complexity involved in determining the

allowable amount under certain types of leases, recipients are encouraged to consult the GMO

before entering into leases that will result in direct charges to an award. In general, the rental costs

for facilities and equipment applicable to each budget period should be charged to that period.

However, see “Property Management” for an exception to this general rule.

Rental costs under leases that create a material equity in the leased property, as defined in the

applicable cost principles, are allowable only up to the amount that would be allowed had the

recipient purchased the property on the date the lease agreement was executed. This would include

depreciation or use allowances, maintenance, taxes, and insurance, but would exclude unallowable

costs.

When a recipient transfers property to a third party through sale, lease, or otherwise and then leases

the property back from that third party, the lease costs that may be charged to an HHS grant

generally may not exceed the amount that would be allowed if the recipient continued to own the

property.

Rental costs under “less-than-arms-length” leases are allowable only up to the amount that would be

allowed under the applicable cost principles had title to the property been vested in the recipient. A

less-than-arms-length lease is one in which one party to the lease agreement is able to control or

substantially influence the actions of the other. Such leases include, but are not limited to, those

between divisions of an organization; between organizations under common control through common

officers, directors, or members; and between an organization and its directors, trustees, officers, or

key employees (or the families of these individuals), directly or through corporations, trusts, or similar

arrangements in which they hold a controlling interest.

Research

Patient Care

The costs of routine and ancillary services provided by hospitals to individuals, including patients and

volunteers, participating in research programs are allowable if included in the NoA or approved as a

post-award change as specified in “Prior-Approval Requirements—OPDIV Prior Approval.”

“Routine services” include the regular room services, minor medical and surgical supplies, and the

use of equipment and facilities for which a separate charge is not customarily made. “Ancillary

services” are those special services for which charges customarily are made in addition to routine

services, e.g., x-ray, operating room, laboratory, pharmacy, blood bank, and pathology. See

“Research Patient Care Costs” for policy concerning reimbursement of these costs.

The following otherwise allowable costs are not classified as research patient care costs: items of

personal expense reimbursement, such as patient travel; consulting physician fees; and any other

direct payments to individuals, including inpatients, outpatients, subjects, volunteers, and donors.

Reserve Funds Contributions to a reserve fund for self-insurance are allowable as specified in the governing cost

principles (also see “Contingency Funds” in this exhibit).

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Exhibit 4. Selected Items of Cost

Item Description

Sabbatical

Leave Costs

Sabbatical leave costs may be included in a fringe benefit rate or in the organization’s indirect cost

rate. Costs of leave of absence by employees for performance of graduate work or sabbatical study,

travel, or research are allowable as a direct charge provided the organization has a uniform policy on

sabbatical leave for people engaged in research and the salary is proportional to the service

rendered. Where sabbatical leave is included in fringe benefits for which a cost is determined for

assessment as a direct charge, the aggregate amount of such assessments applicable to all work of

the organization during the base period must be reasonable in relation to the organization’s actual

practice under its sabbatical leave policy. Sabbatical leave paid by an individual’s employer, in

combination with other compensation (e.g., partial salary from an HHS grant), may not exceed

100 percent of that individual’s regular salary from his or her organization.

Salaries and

Wages

Allowable. Compensation for personal services covers all amounts, including fringe benefits, paid

currently or accrued by the organization for employee services rendered to the grant-supported

project or program. Compensation costs are allowable to the extent that they are reasonable,

conform to the established policy of the organization consistently applied regardless of the source of

funds, and reflect no more than the percentage of time actually devoted to the OPDIV-funded project

or program. Where restricted by language in the HHS appropriations act, OPDIVs will not reimburse

recipients for the direct salaries of individuals at a rate in excess of the level specified. Direct salary

is exclusive of fringe benefits and indirect costs. If there is a salary limitation, it does not apply to

consultant payments or to contracts for routine goods and services, but it does apply to subrecipients

(including consortium participants). Specific considerations are addressed below.

Payroll

Distribution

Salary and wage amounts charged to grant-supported projects or programs for personal services

must be based on an adequate payroll distribution system that documents such distribution in

accordance with generally accepted practices of like organizations. Standards for payroll distribution

systems are contained in the applicable cost principles (other than those for for-profit organizations).

Briefly summarized, acceptable systems are as follows:

Hospitals

¡ Monthly after-the-fact reports of the distribution of time or effort for professional staff members.

¡ Time and attendance and payroll distribution records for non-professional employees.

Non-profit organizations

¡ Monthly after-the-fact reports, including a signed certification, by the employee, or by a

responsible supervisory official having first-hand knowledge of the work performed, that the

distribution of activity represents a reasonable estimate of the actual work performed by the

employee during the period covered by the report. Each report must account for the total activity

required to fulfill the employee’s obligations to the organization as well as the total activity for

which he or she is compensated.

¡ For non-professional employees, additional supporting reports, indicating the total number of

hours worked each day, must be maintained in conformance with DoL regulations implementing

the Fair Labor Standards Act (29 CFR part 516).

¡ The distribution of salaries and wages must be supported by personnel activity reports as

described above, except when a substitute system has been approved, in writing, by the Federal

cognizant agency designated under OMB Circular A-122.

State, local, and Indian tribal governments

¡ Time and attendance or equivalent records for all employees.

¡ Time distribution records for employees whose compensation is chargeable to more than one

grant or other cost objective.

II-39

Exhibit 4. Selected Items of Cost

Item Description

Educational institutions

¡ A plan confirmation system for professorial and other professional staff members that is based on

budgeted, planned, or assigned work activity and that is updated to reflect any significant changes

in work distribution. This system must be incorporated into the organization’s official records and

must identify activity applicable to each sponsored agreement and to each category needed to

identify indirect costs and the functions to which they are allocable. At least annually, the

employee, PI/PD, or responsible officials will verify, by suitable means, that the work was

performed and that the salaries and wages charged to sponsored agreements, whether as direct

charges or in other categories of cost, are reasonable in relation to the work performed.

¡ A system, supported by after-the-fact activity reports, that reflects the distribution of covered

employees’ activity allocable to each grant and includes identification and recording of significant

changes in work activity when initial charges were based on estimates. The system also must

specify each category of activity needed to identify indirect costs and the functions to which they

are allocable. For professorial and other professional staff members, the activity reports will be

prepared each academic term, but at least every 6 months. For other employees, unless the

OPDIV agrees to alternate arrangements, the reports will be prepared at least monthly and will

coincide with one or more pay periods.

¡ A multiple confirmation records system, for professorial and other professional staff members, that

is supported by records certifying costs separately for direct costs and indirect costs, with reports

prepared each academic term, but at least every 6 months, that confirm the activities as allocable

to direct or indirect costs.

¡ By mutual agreement, any other method meeting the criteria specified in Section J.10 of OMB

Circular A-21.

For-profit organizations

HHS requires for-profit organizations to conform with industry standards to support salary and wage

charges to HHS grants. Therefore, unless an alternate system is approved by the GMO, the recipient

must maintain a time-and-effort reporting system for both professional and other-than-professional

staff reflecting daily after-the-fact reporting of hours expended on individual projects or indirect

activities. The system must record both hours worked and hours absent. This information must be

certified by an authorized organizational representative no less frequently than every pay period.

Overtime

Premiums

Premiums for overtime generally are allowable; however, such payments are not allowable for faculty

members at institutions of higher education. If overtime premiums are allowable, the categories or

classifications of employees eligible to receive overtime premiums should be determined according

to the formal policies of the organization consistently applied regardless of the source of funds.

Bonuses/

Incentive

Payments

Allowable for employees as part of a total compensation package, provided such payments are

reasonable and are made according to a formal policy of the recipient that is consistently applied

regardless of the source of funds.

Payments

for Dual

Appointments

For investigators with university and clinical practice plan appointments, compensation from both

sources may be considered the base salary if the following criteria are met:

¡ Clinical practice compensation must be guaranteed by the university.

¡ Clinical practice effort must be shown on the university appointment form and must be paid

through the university.

¡ Clinical practice effort must be included and accounted for on the university’s effort report.

II-40

Exhibit 4. Selected Items of Cost

Item Description

Compensation

of Students

Tuition remission and other forms of compensation paid as, or in lieu of, wages to students (including

fellows and trainees) under research grants are allowable, provided the following conditions are met:

¡ The individual is performing activities necessary to the grant.

¡ Tuition remission and other forms of compensation are consistently provided, in accordance with

established institutional policy, to students performing similar activities conducted in non-

sponsored as well as in sponsored activities.

¡ During the academic period, the student is enrolled in an advanced degree program at a recipient

or affiliated institution and the activities of the student in relation to the federally sponsored

research project are related to the degree program.

¡ The tuition or other payments are reasonable compensation for the work performed and are

conditioned explicitly upon the performance of necessary work.

¡ It is the institution’s practice to similarly compensate students in non-sponsored as well as

sponsored activities.

Charges for tuition remission and other forms of compensation paid to students as, or in lieu of,

salaries and wages are subject to the reporting requirements in Section J.10 of OMB Circular A-21,

or an equivalent method for documenting the individual’s effort on the research project. Tuition

remission may be charged on an average rate basis.

Payments made for educational assistance (e.g., scholarships, fellowships, and student aid costs)

are allowable only when the purpose of the grant is to provide training to selected participants and

the charge is approved by the OPDIV. These costs are unallowable charges to research grant funds

even when they would appear to benefit the research project.

Service

Charges

Allowable. The costs to a user of organizational services and central facilities owned by the recipient,

such as central laboratory and computer services, are allowable and must be based on

organizational fee schedules consistently applied regardless of the source of funds.

Severance Pay Allowable only to the extent that such payments are required by law, are included in an employer-

employee agreement, are part of an established policy effectively constituting an implied agreement

on the part of the organization, or meet the circumstances of the particular employment. The amount

of severance pay to be provided should be determined according to established organizational policy

consistently applied regardless of the source of funds and should be reasonable, taking into

consideration the practice of similar types of organizations and the extent of the organization’s

dependence on Federal funds. The applicable cost principles should be consulted regarding the

different treatment of severance pay in regular and mass termination situations.

Stipends Allowable as cost-of-living allowances for trainees and fellows if permitted by a program’s statute

authorizing or implementing regulations. The specific amounts may be established by policy.

Generally, these payments are made according to a pre-established schedule based on the

individual’s experience and level of training. (See “Traineeships, Fellowships, and Similar Awards

Made to Organizations on Behalf of Individuals—Allowable Costs.”) A stipend is not a fee-for-service

payment and is not subject to the cost accounting requirements of the cost principles. Stipends are

not allowable under research grants even when they appear to benefit the research project.

Subawards/

Contracts

under Grants

Allowable to carry out a portion of the programmatic effort or for the acquisition of routine goods or

services under the grant. Such arrangements may be in the form of consortium agreements or

commercial contracts and may require OPDIV approval (see “Prior-Approval Requirements”).

Supplies Allowable.

Taxes Allowable. Such costs include taxes that an organization is required to pay as they relate to

employment, services, travel, rental, or purchasing for a project. Recipients must avail themselves of

any tax exemptions for which activities supported by Federal funds may qualify. State sales and use

taxes for materials and equipment are allowable only when the State does not grant a refund or

exemption on such taxes.

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Exhibit 4. Selected Items of Cost

Item Description

Termination or

Suspension

Costs

Unallowable except as follows. If a grant is terminated or suspended, the recipient may not incur new

obligations after the effective date of the termination or suspension and must cancel as many

outstanding obligations as possible. The awarding office will allow full credit to the recipient for the

Federal share of otherwise allowable costs if the obligations were properly incurred before

suspension or termination—and not in anticipation of it—and, in the case of termination, are not

cancelable. The GMO may authorize other costs in, or subsequent to, the notice of termination or

suspension. See 45 CFR 74.62(c) and 92.43.

Toys and

Nursery Items

Allowable for the purchase of items such as toys and games to allow patients to participate in

research protocols or, if age appropriate, in programs or projects serving children.

Trailers and

Modular Units

Allowable only if considered equipment as provided below. A “trailer” is defined as a portable vehicle

built on a chassis that is designed to be hauled from one site to another by a separate means of

propulsion and that serves, wherever parked, as a dwelling or place of business. A “modular unit” is

a prefabricated portable unit designed to be moved to a site and assembled on a foundation to serve

as a dwelling or a place of business. The determination of whether costs to acquire trailers or

modular units are allowable charges to HHS grant-supported projects depends on whether such

units are classified as real property or equipment. The classification will depend on whether the

recipient’s intended use of the property is permanent or temporary.

A trailer or modular unit is considered real property when the unit and its installation are designed or

planned to be installed permanently at a given location so as to seem fixed to the land as a

permanent structure or appurtenance thereto. Units classified as real property may not be charged to

an HHS grant-supported project unless authorizing legislation permits construction or acquisition of

real property and the specific purchase is approved by the OPDIV.

A trailer or modular unit is considered equipment when the unit and its installation are designed or

planned to be used at any given location for a limited time only. Units classified as equipment may be

charged to HHS grant-supported projects only if the terms and conditions of the award do not prohibit

the purchase of equipment and OPDIV prior approval is obtained, as appropriate.

A trailer or modular unit properly classified as real property or as equipment at the time of acquisition

retains that classification for the life of the item, thereby determining the appropriate accountability

requirements under 45 CFR 74.32 or 74.34 or 92.31 or 92.32, as applicable.

Trainee Costs Allowable if permitted by statute, regulation, or program policy, as defined in the authorizing

document, and included in the NoA.

Transportation

of Property

Allowable for freight, express, cartage, postage, and other transportation services relating to goods

either purchased, in process, or delivered, including instances when equipment or other property is

moved from one recipient to another. In a change-of-grantee situation, the cost of transportation may

be charged to the grant at either the original or the new organization, depending on the

circumstances and the availability of funds in the appropriate active grant account.

Travel Allowable as a direct cost where such travel will provide direct benefit to the project or program.

Employees Consistent with the organization’s established travel policy, costs for employees working on the

grant-supported project or program may include associated per diem or subsistence allowances and

other travel-related expenses, such as mileage allowances if travel is by personal automobile.

Domestic travel is travel performed within the recipient’s own country. For U.S. and Canadian

recipients, it includes travel within and between any of the 50 States of the United States and its

possessions and territories and also travel between the United States and Canada and within

Canada.

II-42

Exhibit 4. Selected Items of Cost

Item Description

Foreign travel is defined as any travel outside of Canada and the United States and its territories and

possessions. However, for an organization located outside Canada and the United States and its

territories and possessions, foreign travel means travel outside that country.

In all cases, travel costs are limited to those allowed by formal organizational policy; in the case of air

travel, the lowest reasonable commercial airfares must be used. For-profit recipients’ allowable travel

costs may not exceed those established by the FTR, issued by GSA, including the maximum per

diem and subsistence rates prescribed in those regulations. This information is available at

http://www.gsa.gov. If a recipient organization has no formal travel policy, those regulations will be

used to determine the amount that may be charged for travel costs.

Recipients are strongly encouraged to take advantage of discount fares for airline travel through

advance purchase of tickets if travel schedules can be planned in advance (such as for national

meetings and other scheduled events).

Recipients must comply with the requirement that U.S. flag air carriers be used by domestic

recipients to the maximum extent possible when commercial air transportation is the means of travel

between the United States and a foreign country or between foreign countries. This requirement

must not be influenced by factors of cost, convenience, or personal travel preference. The cost of

travel under a ticket issued by a U.S. flag air carrier that leases space on a foreign air carrier under a

code-sharing agreement is allowable if the purchase is in accordance with GSA regulations on U.S.

flag air carriers and code shares (see http://www.gsa.gov/gsa/cm_attachments/GSA_DOCUMENT/

110304_FTR_R2QA53_0Z5RDZ-i34K-pR.pdf). (A code-sharing agreement is an arrangement

between a U.S. flag carrier and a foreign air carrier in which the U.S. flag carrier provides passenger

service on the foreign air carrier’s regularly scheduled commercial flights.)

Patients or

Service

Beneficiaries

If patient care, including research patient care, or other direct health or social services are approved

activities of the grant-supported project or program, the costs of transporting individuals participating

in the program or project to the site where services are being provided, including costs of public

transportation, are allowable. The purchase of motor vehicles for this purpose also may be allowable.

Cost Transfers

Cost transfers by recipients between grants, whether as a means to compensate for

cost overruns or for other reasons, generally are unallowable; however, cost

transfers by recipients (or subrecipients or cost-type contractors) may sometimes be

necessary to correct bookkeeping or clerical errors. Recipients (and subrecipients

and contractors) should have systems in place to detect such errors within a

reasonable time frame. Untimely discovery of errors could be an indication of poor

internal controls.

Permissible cost transfers should be made promptly after the error occurs but no

later than 90 days following occurrence unless a longer period is approved in

advance by the GMO. The transfer must be supported by documentation, pursuant to

45 CFR 74.53 or 92.42, that fully explains how the error occurred and a certification

of the correctness of the new charge by a responsible official of the recipient,

subrecipient, or contractor. An explanation merely stating that the transfer was

made “to correct error” or “to transfer to correct project” is not sufficient. This

information need not be submitted to the GMO but is subject to audit. If the transfer

affects a previously submitted FSR, a revised FSR must be submitted.

Frequent errors in recording costs may indicate the need for accounting system

improvements, enhanced internal controls, or both. If such errors occur,

II-43

organizations are encouraged to evaluate the need for improvements and to make

whatever improvements are deemed necessary to prevent reoccurrence. An

awarding office also may require a recipient to take corrective action by imposing

additional terms and conditions on an award.

Cost Overruns and Rate of Expenditure

Transfers of costs from one project to another or from one competitive segment to

the next solely to cover cost overruns are not allowable. The GMO monitors

expenditure rates under individual awards during each budget period and within the

overall project period. Although HHS allows its recipients certain flexibilities with

respect to rebudgeting, HHS expects the rate and types of expenditures to be

consistent with the approved project/program and budget and may question or

restrict expenditures that appear inconsistent with these expectations. In addition,

recipients are expected to monitor their fund drawdowns and amounts reported on

financial reports (e.g., PMS 272) to ensure that they do not exceed the amount

authorized on the NoA.

The GMO may review recipient cash drawdowns to determine whether they indicate

any pattern of accelerated or delayed expenditures. Expenditure patterns are of

particular concern because they may indicate a deficiency in the recipient’s financial

management system or internal controls. Accelerated or delayed expenditures may

result in an inability to complete the approved project or program within the

approved budget and period of performance. In these situations, the GMO may seek

additional information from the recipient and may make any necessary and

appropriate adjustments.

Allocation of Costs

When salaries or other activities are supported by two or more sources, issues arise

as to how the direct costs should be allocated among the sources of support. In

general, a cost that benefits two or more projects or activities in proportions that can

be determined without undue effort or cost should be allocated to the projects on the

basis of the proportional benefit.

A cost that benefits two or more projects or activities in proportions that cannot be

determined because of the interrelationship of the work involved may be allocated or

transferred to the benefiting projects on any reasonable basis as long as the costs

charged are allowable, allocable, and reasonable under the applicable cost principles

and the recipient’s financial management system includes adequate internal controls.

Costs may be assigned entirely to one project, with written prior approval from the

GMO, under the following conditions only:

• The projects are scientifically and technically related.

• The projects are under the direction of the same PI/PD.

• The projects have been funded by the same OPDIV or OPDIV component.

• There is no change in the scope of the individual grants involved.

• The relating of costs will not be detrimental to the conduct of work approved

under each individual award.

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• The relatedness will not be used to circumvent the terms and conditions of an

individual award.

Services Provided by Affiliated Organizations

A number of universities and other organizations have established closely affiliated,

but separately incorporated, organizations to facilitate the administration of research

and other programs supported by Federal funds. Such legally independent entities

are often referred to as “foundations,” although this term does not necessarily

appear in the name of the organization. Typically, the parent organization provides

considerable support services, in the form of administration, facilities, equipment,

accounting, and other services, to its foundation, and the latter, acting in its own

right as a recipient, includes the cost of these services in its indirect cost proposal.

Costs incurred by an affiliated, but separate, legal entity in support of a recipient

foundation (foundation) are allowable for reimbursement under HHS grants only if at

least one of the following conditions is met:

• The foundation is charged for, and is legally obligated to pay for, the services

provided by the parent organization.

• The affiliated organization is subject to State or local law that prescribes how

Federal reimbursement for the costs of the parent organization’s services will

be expended and requires that a State or local official acting in his or her

official capacity approves such expenditures.

• There is a valid written agreement between the affiliated organizations

whereby the parent organization agrees that the foundation may retain

Federal reimbursement of parent organization costs. The parent organization

may either direct how the funds will be used or permit the foundation that

discretion.

If none of the above conditions is met, the costs of the services provided by the

parent organization to the foundation are not allowable for reimbursement under an

HHS grant. However, the services may be acceptable for cost-sharing (matching)

purposes.

Matching or Cost Sharing

All required matching or cost sharing, whether required by statute or regulation, will

be shown as part of the total approved budget in the NoA and becomes an award

requirement enforceable through the NoA. The costs that the recipient incurs in

fulfilling its matching or cost-sharing requirement are subject to the same

requirements, including the cost principles, that are applicable to the use of Federal

funds, including prior approval requirements and other rules for allowability

described in 45 CFR 74.23 and 45 CFR 92.24. Third-party in-kind contributions must

meet the requirements specified 45 CFR 74.23 and 45 CFR 92.24.

If a recipient does not meet the specified level of matching or cost sharing as

reflected in the NoA, an OPDIV may take one or more of the following actions:

• Make a downward adjustment in the Federal award amount

II-45

• Take an enforcement action affecting the current or future awards to that

recipient (see “Enforcement Actions”)

• If the amount in the NoA exceeds the statutory (or implementing regulatory

requirement) for matching, where justified, reduce the matching to no less

than the statutory or regulatory requirement

• If the amount in the NoA exceeds a regulatory cost-sharing requirement,

where justified and authorized by the regulation, reduce the cost sharing to

no less than the regulatory requirement.

If a recipient provides matching or cost sharing that exceeds that required by the

NoA, the excess amount is not subject to the requirements of 45 CFR part 74 or 92

unless the amount is used to offset otherwise unallowable matching or cost-sharing

amounts.

When satisfying a matching or cost-sharing requirement by not claiming the full

indirect cost reimbursement to which the recipient is otherwise entitled, the recipient

should reduce its charge to the grant to reflect the amount claimed. The amount of

the reduction qualifies as matching or cost sharing. The recipient should include an

explanation in the “Remarks” section of the Financial Status Report (see “Reporting—

Financial Reporting”).

Valuation of Donated Goods and Services

Donated Supplies, Equipment, Space, or Land

Donated supplies may include such items as expendable property, office supplies

(unless treated as an indirect cost), laboratory supplies, or workshop and classroom

supplies. The value assigned to donated supplies must be reasonable and cannot

exceed the fair market value of the supplies at the time of donation.

The value of donated equipment cannot exceed the fair market value of equipment

of the same age and condition at the time of donation. The value of loaned

equipment cannot exceed its fair rental value. If any part of the donated property

was acquired with Federal funds, only the non-Federal share of the property may be

counted as matching or cost sharing.

If a third party donates equipment, buildings, or land and title passes to a recipient

or subrecipient, the treatment of the donated property depends upon the purpose of

the grant or subgrant as follows:

• If the purpose of the grant or subgrant is to assist the recipient with the

acquisition of property, the market value of that property at the time of

donation may be counted as matching.

• If the purpose of the grant or subgrant is other than to assist with the

acquisition of property, the following applies:

h With GMO approval, the market value at the time of donation of the

donated equipment or buildings and the fair rental rate of the donated

land may be counted as matching or cost sharing. In the case of a

subgrant, the terms of the grant award may require that the approval be

II-46

obtained both from the GMO and from the recipient. In either case,

approval may be given only if purchase of the equipment or rental of the

land would be allowable as a direct cost.

h If any part of the donated property was acquired with Federal funds, only

the non-Federal share of the property may be counted as matching or cost

sharing.

h Unless GMO approval is obtained, no amount may be counted for donated

land and only depreciation or use allowances may be counted for donated

equipment and buildings. The depreciation or use allowances for such

property are not treated as third party in-kind contributions. Instead, they

are treated as costs incurred by the recipient or subrecipient. The

allowances are computed and allocated (usually as indirect costs) in

accordance with the cost principles in the same way as depreciation or use

allowances for purchased equipment and buildings. The amount of

depreciation or use allowances for donated equipment and buildings is

based on the property’s market value at the time it was donated.

• If a recipient or subrecipient donates real property for a construction or

facilities acquisition project, the current market value of that property may be

counted as matching or cost sharing. If any part of the donated property was

acquired with Federal funds, only the non-Federal share of the property may

be counted as matching or cost sharing.

The value of donated space cannot exceed the fair rental value of comparable space

as established by an independent appraisal of comparable space and facilities in a

privately-owned building in the same locality.

The awarding office may require that the market value of land or buildings or the fair

rental rate of land or of space in a building be established by an independent

property appraiser or by a GSA representative and certified by a responsible official

of the recipient, subrecipient, or contractor.

Volunteer Services

Rates for donated services used to satisfy a matching or cost-sharing requirement

must be consistent with those paid for similar work in the organization. In those

instances in which the required skills are not found in the recipient’s organization,

rates must be consistent with those paid for similar work in the labor market in

which the recipient would compete for the kind of services involved. When an

employer other than the recipient furnishes the services of an employee, the services

must be valued at the employee’s regular rate of pay. Only the amount representing

an amount consistent with the function performed are allowable, e.g., if a doctor

serves as a receptionist, only the amount that would be allowable for a receptionist is

allowable as a contribution to the grant. Fringe benefits consistent with those that

would be paid by the employing organization that are reasonable, allowable, and

allocable may be included in the valuation.

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Using Program Income to Meet a Matching or Cost-Sharing

Requirement

Costs financed by program income may not count toward satisfying a matching or

cost-sharing requirement unless they are expressly permitted by the NoA (see

“Financial Management—Program Income”).

Documentation

The basis for determining the valuation of personal services, materials, equipment,

buildings, and land must be verifiable from the records of the recipient, subrecipient,

or contractor under the grant. Volunteer services, to the extent feasible, should be

supported by the same level of documentation used by the recipient for its own

employees, including time and attendance records.

Prior-Approval Requirements

HHS anticipates that the recipient may need to modify its award budget or other

aspects of its approved application during performance to accomplish the award’s

programmatic objectives. In general, recipients are allowed a certain degree of

latitude to rebudget within and between budget categories to meet unanticipated

needs and to make other types of post-award changes. In some cases, OPDIV prior

written approval may be required. When OPDIV prior approval is required, the

requirement applies whether the costs/activities are proposed in the application or in

a separate request following award. If an application includes general language

about a cost or activity that requires OPDIV prior approval, approval of the

application does not necessarily mean that the prior-approval requirement has been

satisfied. The recipient is still required to obtain any applicable OPDIV prior approval

when specific details are known.

This section addresses the post-award prior-approval requirements related to making

certain direct cost budget modifications or undertaking specified activities. Other

post-award changes may be made without OPDIV prior approval as long as they are

within the limits established by HHS (see “Expanded Authorities” in this section) or

may be subject to different procedures as specified in other parts of the HHS GPS

(e.g., as specified in “Property Management—Nonexempt Property,” the OPDIV must

approve any proposal to convey, transfer, assign, mortgage, lease, or in any other

manner encumber the property while the recipient remains accountable to the OPDIV

for the use of the property). Also, prior approval of costs considered indirect costs is

governed by the procedures of the cognizant agency rather than those of the OPDIV.

The post-award changes that are considered changes to budgets or program plans

and require OPDIV approval and the changes that may be made under the recipient’s

authority are outlined below. If OPDIV approval is required, it must be requested of,

and obtained from, the GMO in advance of the change or obligation of funds as

specified in “Requesting OPDIV Prior Approval” in this section.

OPDIV Prior Approval

OPDIV prior-approval requirements are summarized in Exhibit 5, which is provided

for guidance only. For the post-award prior-approval requirements specified in the

exhibit, approval is required whether or not the change has a budgetary impact

II-48

except as indicated (e.g., if provided as an expanded authority). The circumstances

under which prior approval is required also are summarized in the exhibit.

Supplementary policy or procedural information related to certain of these categories

follows the exhibit. Recipients also should see Part IV of this HHS GPS for OPDIV-

specific prior-approval requirements that apply to specific types of grants and types

of recipients. Any questions about the need for prior approval for an activity or cost

under a specific OPDIV award should be directed to the GMO.

Exhibit 5. Summary of Actions Requiring OPDIV Prior Approval

OPDIV prior

approval is

required for Under the following circumstances

A&R Rebudgeting into A&R costs in a single budget period that would exceed the lesser

of $150,000 (or amount specified by the OPDIV in Part IV of the HHS GPS) or 25

percent of the total approved budget (direct and indirect costs) for a budget period

(also see “Allowable Costs and Activities”).

Any single A&R project exceeding $150,000 (or amount specified by the OPDIV in

Part IV of the HHS GPS).

Aggregate costs that would exceed the lesser of $150,000 (or amount specified by

the OPDIV in Part IV of the HHS GPS) or 25 percent of the total costs reasonably

expected to be awarded by the awarding office for a project period (or competitive

segment under programs that entertain competing continuation applications).

Carryover of

unobligated

balances

If not provided as an expanded authority. Also see “Carryover of Unobligated

Balances” below for potential OPDIV actions if provided as an expanded authority.

Change of

grantee

organization

All instances. Recipients must notify the awarding office of other changes in

organizational status. See “Change of Grantee Organization” below.

Change in scope All instances. See “Change in Scope” below for a discussion of the post-award

changes that may indicate a change in scope: transfer of substantive

programmatic work to a third party; significant rebudgeting; incurrence of research

patient care costs; purchase of a unit of general- or special-purpose equipment

exceeding $25,000.

Changes in status

of PI, PD, or other

key personnel

named in the NoA

For PIs/PDs, replacement; absence for any continuous period of 3 months or

more; reduction of time devoted to project by 25 percent or more from level in

approved application.

For other key personnel, substitution for named personnel.

See “Change in Status, including Absence, of PI/PD and Other Key Personnel”

below.

Construction,

land, or building

acquisition

All instances when purchase proposed; any proposal to convey, transfer, assign,

mortgage, lease, or in any other manner encumber real property acquired with

OPDIV grant funds.

Cost principles

prior-approval

requirements

All instances unless provided as an expanded authority (not available for

construction, land, or building acquisition or indemnification of third parties).

Deviation from

award terms and

conditions

All instances. Includes undertaking any activities disapproved or restricted as a

condition of the award.

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Exhibit 5. Summary of Actions Requiring OPDIV Prior Approval

OPDIV prior

approval is

required for Under the following circumstances

Foreign

component added

to a grant to a

domestic

organization

All instances.

Indemnification of

third parties

All instances.

Need for

additional OPDIV

funding

All instances whether or not additional time is needed, including extension of a

final budget period of a project period with additional funds. See “Need for

Additional OPDIV Funding” below.

No-cost extension All instances unless authority to approve a one-time extension of up to 12 months

without a change in scope is provided as an expanded authority. See “Need for

Additional Time to Complete Project- or Program-Related Activities (‘No-Cost

Extension’)” below.

Pre-award costs All instances before the effective date of the initial budget period of a new or

competing continuation award unless the authority to approve pre-award costs up

to (and including) 90 days before the beginning date is provided as an expanded

authority. In either case, the costs are incurred at the applicant’s/recipient’s own

risk.

Research patient

care costs

For States, local governments, and tribal governments, all instances.

For institutions of higher education, non-profit organizations, and commercial

organizations, any instance in which such costs were not part of the approved

budget shown in the NoA or a recipient wants to rebudget out of the approved

research patient care category.

Retention of

research grant

funds when

career award

made

All instances.

Transfer of

amounts for

training

allowances

(stipends, tuition,

and fees) to other

budget categories

All instances unless provided as an expanded authority to States, local

governments, or tribal governments. (The training allowance does not include

trainee travel, which HHS does not consider to be a trainee cost, and other

training-related expenses.)

Transfer of funds

between

construction and

nonconstruction

work

All instances.

Transfer of

substantive

programmatic

work

All instances if the recipient is a governmental entity or, for recipients subject to 45

CFR part 74, the grant is a construction grant; otherwise considered an indicator of

change in scope. See “Transfer of Substantive Programmatic Work” below.

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Carryover of Unobligated Balances

Recipients should be aware of the difference between unliquidated obligations and

unobligated balances. Unliquidated obligations are commitments of the recipient and

are considered to be obligations and, therefore, should not be reported as

unobligated balances.

To ensure the timely use of unobligated balances, recipients must use the “first-

in/first-out” principle for recognizing and recording obligations and expenditures of

those funds. Upon receipt of the annual FSR, the GMO will compare the total of any

unobligated balance shown and the funds awarded for the current budget period with

the OPDIV share of the approved budget for the current budget period. If the funds

available exceed the OPDIV share of the approved budget for the current budget

period, the GMO may select one of the following options:

• In response to a written request from the recipient, revise the current NoA to

authorize the recipient to spend the excess funds for additional approved

purposes (approval is intended to cover only prospective costs, not costs

already incurred by the recipient)

• Offset the current award or a subsequent award by an amount representing

some or all of the excess

• For awards subject to expanded authorities, restrict the recipient’s authority

to automatically carry over unobligated balances in the future, use the

balance to reduce or offset OPDIV funding for a subsequent budget period, or

use a combination of these actions.

Change of Grantee Organization

OPDIV prior approval is required for the transfer of the legal and administrative

responsibility for a grant-supported project or program from one legal entity to

another before the expiration of the approved project period (competitive segment

for grants where there may a competing continuation for the same project). For

other changes in organizational status, e.g., a name change, the recipient must

notify the awarding office as specified in “Changes in Organizational Status.”

A change of grantee organization may be accomplished under most OPDIV grants,

including construction grants, if any of the following conditions are met and the

OPDIV determines that the purpose and scope of the approved grant will not change

and the transfer is consistent with Federal appropriations law requirements:

• The grant to be transferred has been terminated at the original organization

in accordance with 45 CFR 74.61 or 92.43.

• A non-competing continuation award that is within an approved project period

has been withheld for a reason other than project performance, e.g., the

recipient’s management of the grant or non-compliance with award terms and

conditions.

• The original recipient has agreed to relinquish responsibility for an active

project before the expiration of the approved project period. This includes any

proposed change of grantee as a result of a PI on a research project

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transferring from one organization to another organization. The project under

the same PI may be supported at a new organization for a period up to the

remainder of the previously approved project period in an amount not to

exceed that previously recommended for direct costs (plus applicable indirect

costs) for the remainder of the approved project period.

A request for a change of grantee organization (change of grantee) must be

submitted to the GMO before the anticipated start date at the new organization and

preferably several months in advance. Failure to provide timely notification may

result in disapproval of the request or a delay in processing. As part of the request,

the original organization must submit PHS 3734, “Official Statement Relinquishing

Interests and Rights in a Public Health Service Research Grant,” or equivalent form

as specified by the OPDIV, and, if the request involves a research grant, a “Final

Invention Statement and Certification.” The request also must include an application

from the proposed recipient organization. (The relinquishing organization must

submit a final FSR to the awarding office no later than 90 days after the end of HHS

support.)

The application from the proposed recipient should include the following, as

applicable:

• Face page

• Budget pages (current and future years)

• Updated biographical sketches for the PI/PD and existing key personnel and

biographical sketches for any proposed new key personnel

• Statement indicating whether the overall plans/aims or objectives have

changed from the original submission, and, if so, how

• For research grants

h Updated “other support” pages, if necessary

h Resources page

h Checklist page

h Certification of IRB/IACUC approval, if applicable

• Detailed list of any equipment purchased with grant funds being transferred

to the new organization (inclusion of this list in the transfer application from

the new organization indicates its acceptance of title to that equipment).

The OPDIV may request additional information necessary to accomplish its review of

the request. Acceptance of a relinquishing statement by the OPDIV does not

guarantee approval of a transfer application for the continued funding of a project.

A change of grantee request normally will be permitted only when all of the

permanent benefits attributable to the original grant can be transferred, including

equipment purchased in whole or in part with grant funds. In reviewing a request to

transfer a grant, an OPDIV will consider whether there is a continued need for the

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grant-supported project or program and whether there will be any a change in scope

of the previously approved project. A change of grantee may be made without

objective review, provided the PI/PD plans no change in scope and the facilities and

resources at the new organization will allow for successful performance of the project

or program. If the change involves a change in scope, the request may not be

processed as a change of grantee, will require objective review, and may be subject

to a different process, e.g., treated as an exception to competition. A change of

grantee that involves the transfer of a grant to or between foreign organizations or

international organizations also may require special OPDIV approval, e.g., approval

by an Advisory Council or Board. If these conditions or other programmatic or

administrative requirements are not met, the OPDIV may require objective review or

may disapprove the request and, if appropriate, terminate the award.

The OPDIV will accomplish a change of grantee organization by issuing a revised NoA

to the original recipient reflecting the revised budget and project period end dates,

deletion of any future-year support, and deobligation of remaining funds, if

applicable. (A deobligation of funds will be based on the estimated grant

expenditures through the relinquishment date, as determined from the relinquishing

statement.) Concurrently, the new recipient will receive a NoA reflecting the balance

reported on the relinquishing statement or, if the change of grantee organization

occurs on the anniversary date of the project, the NoA to the new recipient will

reflect the previously committed direct cost level plus applicable indirect costs. This

amount is subject to change as a result of the closeout of the original grant and may

be adjusted downward. If a change of grantee involves the transfer of equipment

purchased with grant funds, the transfer may be accomplished as part of the original

recipient’s relinquishment of the grant or HHS may transfer title to equipment to the

new organization using its right to transfer title (see “Property Management”).

Change in Scope

In general, the PI/PD may make changes in the methodology, approach, or other

aspects of the project/program objectives. However, the recipient must obtain prior

approval from the GMO for a proposed change in scope. A change in scope occurs

when the recipient proposes to change (or changes) the objectives, aims, or

purposes identified in the approved application, such as shifting the research

emphasis from one disease area to another, changing the service area, applying a

new technology (e.g., changing assays from those approved to a different type of

assay), changing the approved design under a construction grant, eliminating a

primary care delivery site, or making budget changes that cause a project to change

substantially from that which was approved. Also see the indicators specified below.

The recipient must make the initial determination of whether a proposed change

would be considered a change in scope and should consult with the GMO as

necessary.

In addition to explicit changes in the objectives, aims, or purposes identified in the

approved grant application, post-award changes that are clear indicators of a change

in scope or that are likely to be considered a change in scope include, but are not

limited to, the following:

• Any change from the approved use of animals or human subjects.

• Transfer of the performance of substantive programmatic work to a third

party through a subaward, contract, or any other means, if the authority for

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such activities is not included in the approved application. If the third party is

a foreign component, this type of action always requires OPDIV prior

approval.

• Significant rebudgeting, whether or not the particular expenditures require

prior approval. Significant rebudgeting occurs when, under a grant with a

Federal share exceeding $100,000, cumulative transfers among direct cost

budget categories for the current budget period exceed 25 percent of the total

approved budget (which includes direct and indirect costs, whether

chargeable to Federal funds or required matching or cost sharing) for that

budget period or $250,000, whichever is less.

• Incurrence of research patient care costs if costs in that category were not

previously approved by the OPDIV or if a recipient wants to rebudget funds

out of the research patient care category.

• Purchase of a unit of general-purpose or special-purpose equipment

exceeding $25,000.

Change in Status, including Absence, of Principal Investigator/Project

Director and Other Key Personnel

The recipient is required to notify the GMO in writing if the PI/PD or key personnel

specifically named in the NoA will withdraw from the project entirely, be absent from

the project during any continuous period of 3 months or more, or reduce time

devoted to the project by 25 percent or more from the level that was approved at

the time of award (for example, a proposed change from 40 percent effort to 30

percent or less effort). The OPDIV must approve any alternate arrangement

proposed by the recipient, including any replacement of the PI/PD or key personnel

named in the NoA.

The request for approval of a substitute PI/PD/key person should include a

justification for the change, the biographical sketch of the individual proposed, other

sources of support (if applicable), and any budget changes resulting from the

proposed change. If the arrangements proposed by the recipient, including the

qualifications of any proposed replacement, are not acceptable to the OPDIV, the

grant may be suspended or terminated. If the recipient wants to terminate the

project because it cannot make suitable alternate arrangements, it must notify the

GMO, in writing, of its wish to terminate, and the GMO will forward closeout

instructions.

The requirement to obtain OPDIV prior approval for a change in status pertains only

to the PI/PD and those key personnel the OPDIV names in the NoA regardless of

whether the applicant organization designates others as key personnel for its own

purposes.

Need for Additional OPDIV Funding

A request for additional funding for a current budget period to meet increased costs

that are within the scope of the approved application, but that were unforeseen when

the new or competing continuation application (or progress report for non-competing

continuation support) was submitted, is a non-competing supplemental application.

Such requests must be submitted, in writing, directly to the GMO and are not

II-54

required to compete with other applications for funding. Other recipient-initiated

requests for supplemental funding during a current budget period are considered to

change the scope of the approved project or program and are required to compete

for funding with other applications.

A request for a non-competing extension of the final budget period of a project

period with a minimal amount of additional funds should be submitted to the GMO, in

writing, at least 30 days before the project period is scheduled to expire. Such

requests usually are for a period of up to 12 months, based on a need to provide

continuity of project or program activities while a competing continuation application

is being reviewed or to permit orderly phase-out of activities for which there will be

no further HHS support. The request must specify the proposed revised ending date

and must include justification for both the extension and the additional funds

requested.

Need for Additional Time to Complete Project- or Program-Related Activities

(“No-Cost Extension”)

Unless provided as an expanded authority, OPDIV prior approval is required for any

extension of up to 12 months. All extensions that would exceed 12 months, whether

as part of an initial request or a subsequent request that would result in an

aggregate period of that duration, require special justification. The OPDIV will not

approve any extension request if the primary purpose of the proposed extension is to

permit the use of unobligated balances of funds. All terms and conditions of the

award apply during the extended period.

Significant Rebudgeting

The base used for determining significant rebudgeting excludes carryover balances

but includes any amounts awarded as competing or non-competing supplements. For

example, the significant rebudgeting threshold has been reached if, under a grant in

which the Federal share for a budget period is $100,000, the total approved budget

is $300,000 and cumulative changes within that budget period exceed $75,000.

Once the significant rebudgeting threshold is reached, the recipient must request and

receive OPDIV prior approval for the changes that cause the recipient to exceed the

threshold.

The OPDIV will determine if there has been a change in scope and do one of the

following:

• Modify the award, as appropriate, to reflect an approved change in scope

• Advise the recipient that the change is not approved and specify the

consequences of having rebudgeted to that extent without prior approval

• Advise the recipient that each subsequent budget change in that budget

period—regardless of type or dollar value—requires OPDIV prior approval.

The calculation generally begins anew with each subsequent budget period unless

the OPDIV has concerns with the overall extent of the recipient’s rebudgeting and,

on the basis of a high-risk designation, uses an alternate condition in an award.

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Transfer of Substantive Programmatic Work

The transfer of substantive programmatic work does not include contracting for

routine goods or services used in or in support of a grant. Subgranting is allowable

only if authorized by statute or regulation and specified in the NoA. Unless the

program is intended as a pass-through program (i.e., one in which the recipient’s

role is to select subrecipients that are expected to provide the services that are the

purpose of the grant, coordinate and oversee their activities, and provide the

administrative support needed to meet OPDIV requirements), the recipient is

expected to perform a substantive role in the project or program. In the case of a

pass-through program, prior approval for the transfer of substantive programmatic

work generally is not required. In all other cases, prior approval is required to ensure

that the recipient is not acting as a conduit to another party (that may not be eligible

to receive OPDIV funding directly) and remains eligible for the award.

When prior approval is required, the request must include the following information:

• A description of the activities or functions involved

• A justification for their performance by a third party

• A breakdown of and justification for the estimated costs, including the manner

in which indirect costs, if any, will be reimbursed

• The method to be used to select the subaward and the type of

contract/agreement expected to be awarded

• The kinds of entities to be solicited (if selection has already taken place,

identification of the organization and the reasons for selection).

Requesting OPDIV Prior Approval

All requests for OPDIV prior approval other than a request for carryover of an

unobligated balance must be made in writing (which includes submission by e-mail)

to the GMO no later than 30 days before the proposed change. Requests for

carryover of unobligated balances should be initiated once the actual unobligated

balance is known (generally during the period allowed for preparation and

submission of the FSR). Requests for carryover of unobligated balances must include

only prospective costs and activities, i.e., ones that will be incurred or undertaken

following OPDIV review and approval of the request. Prior-approval requests must be

signed by both the PI/PD and the authorized organizational representative. Failure to

make a timely request and obtain required OPDIV prior approval from the GMO may

result in the disallowance of costs, termination of the award, or other enforcement

action within the OPDIV’s authority.

All requests must include the name of the recipient; the name of the initiating PI/PD;

the PI/PD’s telephone number, fax number, and e-mail address; and comparable

identifying information for the authorized organization official. E-mail requests must

be clearly identified as prior-approval requests, must reflect the complete grant

number in the subject line, and should be sent by or through the authorized

organizational representative to the GMO that signed the NoA. If the entire message

of the request cannot be included in the body of the e-mail, the request should be

submitted to the GMO in hard copy.

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The OPDIV will review the request and the GMO will provide a response to the

authorized organizational representative, with a copy to the PI/PD, indicating the

final disposition of the request. Only responses provided by the GMO are to be

considered valid. Recipients that proceed on the basis of actions by unauthorized

officials do so at their own risk, and HHS is not bound by such responses.

Whenever a recipient contemplates rebudgeting or other post-award changes and is

uncertain about the need for prior approval, the recipient is strongly encouraged to

consult, in advance, with the GMO.

Under a subaward or contract under a grant, the prior-approval authority usually is

the recipient. However, the recipient may not approve any action or cost that is

inconsistent with the purpose or terms and conditions of the HHS grant. If an action

by a subrecipient or contractor will result in a change in the project/program scope

or budget requiring OPDIV approval, the recipient must obtain that approval from the

OPDIV before giving its approval to the subrecipient or contractor.

Expanded Authorities

OPDIVs may waive certain direct cost-related and other prior-approval requirements

and provide authority for the recipient to undertake these activities and expenditures

without the need for OPDIV prior approval. These operating authorities are termed

“expanded authorities.” Exhibit 6 presents a summary of the expanded authorities

that may be provided by an OPDIV. Procedures for implementing several of these

authorities follow the exhibit. The recipient should consult Part IV for detailed

applicability of expanded authorities to specific award instruments and types of

recipients.

Certain grants or recipients are not eligible for expanded authorities, including those

that require closer monitoring or technical assistance. In addition, one or more of

these authorities may be overridden by a special term or condition of the award. The

NoA will indicate the applicability of expanded authorities by reference to the HHS

GPS and the OPDIV supplement in Part IV, or through specific terms and conditions

of the award. Therefore, recipients must review the NoA to determine whether and

to what extent they are permitted to use expanded authorities.

When using expanded authorities, recipients must ensure that they exercise proper

stewardship over Federal funds and that costs charged to awards are allowable,

allocable, reasonable, necessary, and consistently applied regardless of the source of

funds. HHS may disallow the costs if it determines, through audit or otherwise, that

the costs do not meet the tests of allowability, including allocability, reasonableness,

necessity, and consistency.

Several expanded authorities have specific deadlines for submission of reports or for

timely notification to the awarding office. Recipients should be aware that a

consistent pattern of failure to adhere to those deadlines for reporting or notification

will be grounds for excluding that recipient from expanded authorities.

II-57

Exhibit 6. Summary of Expanded Authorities

May exercise as expanded authority Except

Carryover of unobligated balances from one budget

period to the next successive budget period

If the NoA indicates otherwise

Cost-related prior approvals for direct cost items,

including research patient care costs and equipment

If the scope would change

Extension of final budget period of a project period

without additional funds

If the recipient already has given itself one extension of

up to 12 months

Pre-award costs up to (and including) 90 days before

the beginning date of the initial budget period of a new

or competing continuation award

If the NoA indicates otherwise

Transfer of performance of substantive programmatic

work to a third party (by subaward or a contract under

the grant)

If the transfer would be to a foreign component or it

would result in a change in scope

Carryover of Unobligated Balances

Under expanded authorities, OPDIV prior approval is not required to carry forward an

unobligated balance from one budget period to the subsequent budget period.

However, if the GMO determines that some or all of the unobligated funds are not

necessary to complete the project or perform the program activity, the GMO may

restrict the recipient’s authority to automatically carry over unobligated balances in

the future, use the balance to reduce or offset OPDIV funding for a subsequent

budget period, or use a combination of these actions. The GMO’s decision about the

disposition of the reported unobligated balance will be reflected in the NoA.

Extension of Final Budget Period of a Previously Approved Project Period

The recipient may extend the final budget period of a previously approved project

period one time for a period of up to 12 months beyond the original expiration date

shown in the NoA if

• no additional funds are required to be obligated by the awarding office; and

• the originally approved scope will not change; and

• any one of the following applies:

h additional time beyond the established expiration date is required to

ensure adequate completion of the originally approved project or program,

h continuity of grant support is required while a competing continuation

application is under review, or

h the extension is necessary to permit an orderly phase-out of a project or

program that will not receive continued support.

The fact that funds remain at the expiration of the grant is not, in itself, sufficient

justification for an extension without additional funds.

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The recipient must notify the awarding office, in writing, of the extension 10 days

before the expiration date of the project period. Upon notification, the awarding

office will revise the project period ending date and provide an acknowledgment to

the recipient. All terms and conditions of the award apply during the extended period

and, by extending the final budget period of the project period, the recipient agrees

to update all required certifications and assurances, including those pertaining to

human subjects and animal welfare, in accordance with applicable regulations and

policies. A recipient may not extend a project period previously extended by the

awarding office. Any additional project period extension beyond the one-time

extension of up to 12 months requires OPDIV prior approval.

Financial Management

Financial Management System

Recipients are required to meet the standards and requirements for financial

management systems set forth or referenced in 45 CFR 74.21 or 92.20, as

applicable. The adequacy of the financial management system is integral to the

ability of the recipient to account for the expenditure of grant funds. These standards

are intended to ensure that Federal funds are handled in a responsible manner that

includes adequate internal controls, cash management consistent with Department of

the Treasury requirements (see “HHS Grants Process—Payment”).

States may expend and account for funds in accordance with State laws and

procedures that apply to the expenditure of and the accounting for the State’s own

funds as long as those procedures are sufficient to permit preparation of required

reports and tracing of expenditures to a level adequate to establish that award funds

have not been used in violation of any applicable statutory restrictions or

prohibitions.

All other types of recipients must use financial systems that enable the recipient to

do the following:

• Provide accurate, current, and complete financial information about Federal

awards and, for subawards, reasonable procedures for ensuring that

subrecipients provide financial reports in sufficient time to allow preparation

of OPDIV-required reports.

• Maintain records that adequately identify the sources of funds for federally

assisted activities and the purposes for which the award was used, including

authorizations, obligations, unobligated balances, assets, liabilities, outlays or

expenditures, and any program income. Accounting records must be

supported by source documentation such as canceled checks, paid bills,

payrolls, and time and attendance records.

• Maintain effective control over and accountability for all cash, real and

personal property, and other assets under the award; adequately safeguard

those assets; and ensure that they are used only for authorized purposes.

• Compare actual expenditures or outlays with the approved budget for the

award.

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• Determine the allowability of costs in accordance with the applicable Federal

cost principles, program regulations, and other requirements cited in the NoA.

This includes the ability to readily identify unobligated balances, accelerated

or delayed expenditures, and cost transfers.

• Minimize the time elapsing between any advance payment under this award

and the disbursement of the funds for direct program costs and the

proportionate share of any allowable indirect or facilities and administrative

costs, and ensure that the timing and amount of any payments to

subrecipients conform to this standard.

Recipients must notify the GMO when financial management problems are

discovered. Deficiencies in a recipient’s financial management system, whether

reported by the recipient or identified by the OPDIV, may result in the imposition of

special award conditions, use of the reimbursement payment method, or other

increased monitoring by the awarding office.

Program Income

Accountability and Alternatives for Use

Program income is gross income—earned by a recipient, subrecipient, or a contractor

under a grant—directly generated by the grant-supported activity or earned as a

result of the award. Program income includes, but is not limited to, income from fees

for services performed; charges for the use or rental of real property, equipment, or

supplies acquired under the grant; the sale of commodities or items fabricated under

an award; charges for research resources; and license fees and royalties on patents

and copyrights.

The requirements for accountability for the various types of income under HHS

grants are specified in this section. However, the NoA governs the disposition of

royalties and other income earned from a copyrighted work, patents, patent

applications, trademarks, or inventions. Generally such income is not subject to the

requirements of this section.

Accountability refers to whether the OPDIV specifies how the income is to be used

and whether the income needs to be reported to the OPDIV and for what length of

time. Program income earned during the project period must be reported by the

recipient as discussed in this section.

Each NoA will indicate the alternative for disposition of program income. For non-

research grants, if no alternative is specified, the program income must be used

under the deductive alternative. The default alternative for research grants (except

for awards to commercial organizations under programs other than the Small

Business Innovation Research and Small Business Technology Transfer programs) is

the addition alternative as provided in 45 CFR 74.24(d). Regardless of the alternative

applied, program income may be used only for allowable costs in accordance with

the applicable cost principles and the terms and conditions of the award. Subawards

and contracts under grants are subject to the terms of the subaward or contract with

regard to any income generated, but the terms specified by the recipient must be

consistent with the requirements of the NoA.

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Program income earned during the period of grant support—other than income

earned as a result of copyrights, patents, or inventions (see “Intellectual Property—

Rights in Data”) or as a result of the sale of real property, equipment, or supplies

(“Property Management”)—must be retained by the recipient and, as specified in the

NoA, may be used in one or a combination of the ways indicated in Exhibit 7. Unless

otherwise specified in the terms and conditions of the award, recipients are not

accountable for program income earned after the period of grant support.

Exhibit 7. Use of Program Income Alternatives

Alternative Use of program income

Additive Added to funds committed to the project or program and used to further eligible project

or program objectives

Deductive Deducted from total allowable costs of the project or program to determine the net

allowable costs on which the Federal share of costs will be based

Combination Uses all program income up to (and including) $25,000 as specified under the additive

alternative and any amount of program income exceeding $25,000 under the deductive

alternative

Matching Used to satisfy all or part of the non-Federal share of a project or program

Exhibit 8 summarizes the accountability requirements related to the timing of

earning and use of program income.

Exhibit 8. Summary of Accountability Requirements for Program Income

If program income is earned… and that income is … then the recipient is…

During the project period Received and expended during the

project period

Required to use program income

as provided in the NoA

During the project period Received and expended after the

project period

Required to adjust the final FSR

to reflect receipt and use of the

income as directed by the GMO

During the project period Received during the project period

but expended after the project

period because (1) earned during

the final budget period of the

project period or (2) with GMO

approval

(1) Required to use income as

provided in the NoA and adjust

final FSR accordingly (if earned

during the final budget period of

the project period) or (2) use the

income under addition alternative

and report as specified by the

GMO

After the project period Received and expended after the

project period

Not accountable for that program

income unless specifically

provided in the NoA

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Reporting of Program Income

The amount of program income earned and the amount expended must be reported

on the FSR (SF 269—Long Form). Any costs associated with the generation of the

gross amount of program income that are not charged to the grant should be

deducted from the gross program income earned, and the net program income

should be the amount reported. Program income subject to the additive alternative

must be reported on lines 10r and 10s, as appropriate, of the FSR; program income

subject to the deductive alternative must be reported on lines 10c and 10q of the

FSR; and program income subject to the matching alternative must be reported on

lines 10g and 10q of the FSR.

Income earned from the sale of equipment must be reported on the FSR for the

period in which the proceeds are received in accordance with the reporting

requirements for the program income alternative specified. Amounts due the OPDIV

for unused supplies must be reflected as a credit to the grant on line 10c of the FSR.

Reporting requirements for accountable income accrued after grant support ends will

be specified in the NoA.

Interest Earned on Advances of Grant Funds

The Treasury and OMB policies also establish requirements for recipients to account

for interest earned on advances of grant funds and provide for use of the

reimbursement method if cash management requirements are not met. Except as

provided in 45 CFR 74.22(k), any HHS recipient subject to the requirements of

45 CFR part 74 that receives advance payments must maintain those advances in an

interest-bearing account.

Interest earned on advances of Federal funds must be handled as follows:

• Nongovernmental recipients. Any interest earned by nongovernmental

recipients on advances of Federal funds under all Federal grant awards and

subawards that, in the aggregate, exceeds $250 per year (based on the

recipient’s or subrecipient’s fiscal year) must be remitted annually to PMS (as

the government-wide agent for collection). Recipients with electronic funds

transfer (EFT) capability should use an electronic medium to remit interest.

• Governmental recipients other than States. Except as provided in 45 CFR

92.21(i), any interest earned by local governments or Indian tribal

governments on advances of Federal funds under all Federal grant awards

and subawards that, in the aggregate, exceeds $100 per year (based on the

recipient’s or subrecipient’s fiscal year) must be remitted promptly, and at

least quarterly, to PMS.

• State governments. State governments operating under Treasury-State

agreements are subject to the payment and receipt of interest as specified in

their agreements. All other State recipients are expected to follow sound

financial management practices that minimize the potential for excessive

Federal cash on hand and to comply with the cash management requirements

of 45 CFR 92.20 and 21.

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Property Management

Generally, recipients may use their own property management policies and

procedures for property purchased, constructed, or fabricated as a direct cost using

HHS grant funds, provided they observe the requirements in 45 CFR 74.31 through

74.37 or 92.31 through 92.34, as applicable. State governments may use and

manage equipment acquired under a grant in accordance with State laws and

procedures as specified in 45 CFR 92.32. Unless otherwise indicated, the following

requirements for use and management of equipment and supplies do not apply to

State governments. See “Intellectual Property” for requirements related to that type

of property.

These property management requirements do not apply to equipment for which only

depreciation or use allowances are charged or to equipment acquired primarily for

sale or rental rather than for use. When acquiring replacement equipment, the

recipient may use the equipment to be replaced as a trade-in or may sell the

equipment and use the proceeds to offset the costs of the replacement equipment

subject to the approval of the OPDIV.

The dollar threshold for determining the applicability of several of the requirements

in 45 CFR part 74 or 92 is based on the unit acquisition cost of an item of equipment.

As defined in 45 CFR 74.2, the cost of an item of equipment includes necessary

modifications and attachments that make it usable for the purpose for which it was

acquired or fabricated. When such accessories or attachments are acquired

separately and serve to replace, enhance, supplement, or otherwise modify the

equipment’s capacity and when they individually meet the definition of equipment,

required OPDIV prior approval for equipment must be observed for each item (see

“Prior-Approval Requirements”). However, the aggregate acquisition cost of a piece

of equipment will be used to determine the applicable provisions of 45 CFR 74.34 or

92.32. Fixed equipment that is part of a construction grant also is subject to these

requirements. If property is fabricated from individual component parts, each

component must itself be classified as equipment if it meets the definition of

equipment. In this case, the aggregate acquisition cost of the resulting piece of

equipment will determine the appropriate accountability requirements in 45 CFR

74.34 or 92.32.

In general, title to equipment and supplies acquired by a recipient or subrecipient

with HHS funds vests in the recipient or subrecipient upon acquisition, subject to the

property management requirements of 45 CFR 74.31, 74.34, 74.35, and 74.37 or of

45 CFR 92.32 and 92.33.

Recipients (and subrecipients, as applicable) are required to be prudent in the

acquisition of property under a grant-supported project. It is the recipient’s

responsibility to conduct a prior review of each proposed property acquisition to

ensure that the property is needed and that the need cannot be met with property

already in the possession of the organization. If prior approval is required for the

acquisition, the recipient must ensure that appropriate approval is obtained in

advance of the acquisition. The recipient also must follow appropriate procurement

procedures in acquiring property as specified in “Procurement Management.”

Recipients of HHS grants other than Federal institutions cannot be authorized to use

Federal supply sources except that States may acquire hardware and software from

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Federal Supply Schedules consistent with the terms and conditions of those

schedules.

Recipients of HHS grants must not use equipment acquired with grant funds to

provide services for a fee to compete unfairly with private companies that provide

equivalent services, unless the NoA provides otherwise.

Exempt Property

Under the Federal Grant and Cooperative Agreement Act, 31 U.S.C. 6306, HHS may

permit non-profit institutions of higher education and non-profit organizations whose

primary purpose is the conduct of scientific research to obtain title to equipment and

supplies acquired under grants for support of basic or applied scientific research

without further obligation to the Federal government. However, an OPDIV has the

right to require transfer of title to equipment with an acquisition cost of $5,000 or

more to the Federal government or to an eligible third party named by the OPDIV

under the conditions specified in 45 CFR 74.34(h). An OPDIV may exercise this right

within 120 days of the completion or termination of an award or within 120 days of

receipt of an inventory, as provided in 45 CFR 74.34(h)(2), whichever is later.

Nonexempt Property

All other equipment and supplies acquired under all other HHS grant-supported

projects by any other type of non-State recipient are subject to the full range of

acquisition, use, management, and disposition requirements of 45 CFR 74.34 and

74.35 or of 45 CFR 92.32 and 92.33. Property acquired or used under an HHS grant-

supported project, including any federally owned property, also is subject to the

requirements for internal control specified in 45 CFR 74.21 or 92.20. Pursuant to 45

CFR 74.37, for recipients subject to those regulations, equipment (and intangible

property and debt instruments) acquired with, or improved with, HHS funds may not

be encumbered without OPDIV approval.

Equipment Management System

The recipient’s management system for equipment must meet the requirements of

45 CFR 74.34(f) or 92.32, which include the following:

• Records that adequately identify (according to the criteria specified in the

regulations) items of equipment owned or held by the recipient and state the

current location of each item

• A physical inventory of the equipment, at least once every 2 years, to verify

that the items in the records exist and either are usable and needed or are

surplus (a statistical sampling basis is acceptable)

• Control procedures and safeguards to prevent loss, damage, and theft

• Adequate maintenance procedures to keep the equipment in good condition

• Proper sales procedures when the recipient is authorized to sell the

equipment.

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For items of equipment having a unit acquisition cost of $5,000 or more, an OPDIV

has the right to require transfer title to the equipment to the Federal government or

to an eligible third party named by the OPDIV under the conditions specified in 45

CFR 74.34(h) and 92.32, respectively. This right applies to nonexempt property

acquired by all types of recipients, including State governments and Federal

institutions, under all types of grants under the stipulated conditions.

Sale of Equipment and Supplies

For equipment and supplies purchased under HHS grants for basic or applied

research by non-profit institutions of higher education or non-profit organizations

whose principal purpose is the conduct of scientific research, the recipient is exempt

from any requirement to account for proceeds from their sale; however, OPDIVs

have certain rights with respect to such property as specified in “Exempt Property” in

this section.

All other types of grants and recipients are subject to the requirements in 45 CFR

74.34 or 92.32, if title to the equipment vests in the recipient rather than in the

OPDIV. These requirements also apply to donated property used to meet a matching

or cost-sharing requirement. If the grant-supported project or program for which

equipment was acquired is still receiving OPDIV funding at the time of sale, the

recipient must credit the OPDIV share of the proceeds to the grant and use that

amount under the deductive alternative for program income. If the recipient is no

longer receiving OPDIV grant support, the amount due should be paid in accordance

with instructions from the OPDIV.

If there is a residual inventory of unused supplies exceeding $5,000 in aggregate fair

market value upon termination or completion of the grant and if the supplies are not

needed for other federally sponsored programs or projects, the recipient may either

retain them for use on other than federally sponsored activities or sell them, but, in

either case, the recipient must compensate the OPDIV for its share as a credit to the

grant.

These grants and recipients also are subject to the requirements in 45 CFR 74.35 or

92.33 with respect to the use or sale of unused supplies. If the recipient retains the

supplies for use on other than federally sponsored activities, an amount is due the

OPDIV as if they were sold.

Revocable License

In some cases, federally owned tangible personal property may be made available to

a recipient under a revocable license agreement. The revocable license agreement

between the OPDIV and the recipient provides for recipient use of the property for

the period of grant support under the following conditions:

• Title to the property remains with the Federal government.

• The OPDIV reserves the right to require the property to be returned to the

Federal government should it be determined to be in the best interests of the

Federal government to do so.

• The use to which the recipient puts the property does not permanently

damage it for Federal government use.

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• The property is controlled and maintained in accordance with the

requirements of the NoA.

Debt Instruments

Under certain programs and when authorized in the NoA, recipients may be allowed

or required to enter into financing arrangement with third parties. Under such

circumstances, the NoA will address the OPDIV’s role; provisions to be included in

agreements with third parties; the recipient’s role with respect to the third parties,

including responsibilities and liabilities in the event of non- or late payment by a third

party; and the recipient’s accountability during and after the project period.

Real Property

Acquisition, Use, and Management

Real property may be acquired only when authorized by statute and when specifically

provided for in the NoA. In addition, activities under individual grants that constitute

major renovation of real property or purchase of a trailer or modular unit that will be

used as real property may be charged to HHS grants only with specific statutory

authority and GMO approval.

Real property constructed or acquired under an HHS grant is subject to the

requirements of 45 CFR 74.30 through 74.32 and 74.37 or of 45 CFR 92.31, as

applicable, regarding use, transfer of title, and disposition, unless alternate

requirements are specified in the governing statute. For example, the governing

statute for a construction grant program may contain usage and disposition

requirements that are in addition to or different from the usage and disposition

requirements of the governing regulations. To the extent statutory provisions differ

from the requirements of 45 CFR part 74 or 92, including those described in this

subsection, the statutory provisions, as reflected in the NoA, apply. In addition,

statutory provisions or implementing program regulations may specify the duration

of the recipient’s accountability obligations (e.g., 20 years) or allow for waivers.

Real property constructed or renovated with HHS grant support may not be

conveyed, transferred, assigned, mortgaged, leased, or in any other manner

encumbered by the recipient, except as expressly authorized in writing by OPDIV. If

the recipient defaults in any way on a mortgage, the recipient must immediately

notify the GMO by telephone and in writing. If the mortgagor intends to foreclose,

the recipient must notify the GMO in writing at least 30 days before the foreclosure

action is initiated.

The mortgage agreement must specifically allow, in the case of default, that HHS or

its designee may assume the role of mortgagor and continue to make payments. If

HHS (or its designee) chooses not to assume the role of mortgagor in the case of

default, the recipient must pay HHS an amount equal to the share of the sales

proceeds otherwise due the recipient multiplied by the HHS share of the property.

Any assignment of the property and mortgage responsibilities to any party other

than HHS is subject to prior approval of the mortgagor.

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Disposition

The recipient is accountable to the OPDIV for use of grant-supported real property as

long as it owns the property or until it requests disposition instructions from the

OPDIV. See Part IV to determine if an OPDIV has statutory or regulatory provisions

that specify a different accountability period.

For disposition of property acquired on an amortized acquisition basis, the formulas

in 45 CFR 74.32 and 92.31 do not apply in determining the Federal share. In cases of

amortized acquisition, the Federal share will be determined by multiplying the

amount of mortgage principal already repaid at the time of disposition by the

average Federal participation (taken from the FSR) plus the increase in value over

the purchase price multiplied by the average Federal participation plus the Federal

participation in the down payment. The computation of the Federal share of real

property acquired with long-term debt financing must be computed for each year of

grant support in which Federal funds are used to meet all or a portion of the down

payment, the principal on the mortgage, or both.

If a real estate transaction funded in whole or in part by HHS requires the use of a

real estate appraisal (including, but not limited to, appraisals to determine the

Federal share of real property and appraisals to determine required insurance

levels), the appraisal must be performed by appraisers certified or licensed by the

applicable State in accordance with the requirements established by Title XI of the

Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended

(P.L. 101-73).

Notice of Federal Interest

To protect the Federal interest in real property that has been constructed or has

undergone major renovation with HHS grant funds, recipients must record an NFI in

the appropriate official records of the jurisdiction in which the property is located.

Recordation must occur when construction or renovation begins. Fees charged for

recording or modifying the NFI may be charged to the grant. A copy of the NFI must

be provided to the awarding office.

Insurance

Immediately upon completion of construction, a nongovernmental recipient must, at

a minimum, provide the same type of insurance coverage as it maintains for other

property it owns, consistent with the minimum coverage specified below.

“Completion of construction” means either the point at which the builder turns the

facility over to the recipient (e.g., the date of the final acceptance of the building) or

the date of beneficial occupancy, whichever comes first.

If title to real property acquired with HHS grant funds vests in the recipient, the

following minimum insurance coverage is required:

• Title insurance policy that insures the fee interest in the real property for an

amount not less than the full appraised value of the property. When the

Federal participation in the construction of real property covers only a portion

of a building, title insurance should cover the total cost of the facility to

prevent liens on the unsecured portion from having an adverse impact on the

portion with a Federal interest. If the recipient already owns the land (for

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example, land in the middle of a campus setting on which a building is being

constructed), in lieu of a title insurance policy, the recipient may provide

evidence satisfactory to the OPDIV, such as legal or title opinion, that it has

good and merchantable title free of all mortgages or other foreclosable liens

to all land, rights of way, and easements necessary for the project. In

instances where a recipient is given land by the State, if the State recently

acquired the land in a land swap transaction, the recipient should obtain title

insurance. However, if the State has owned the land for a considerable period

of time, title insurance would not be necessary; a copy of the State

documents giving the land to the recipient would be sufficient. If the recipient

must buy the land on which to build, a legal opinion would not be sufficient;

title insurance must be obtained in order to protect the Federal interest in the

building to be constructed.

• Physical destruction insurance policy that insures the full appraised value of

the facility from risk of partial and total physical destruction. When the

Federal participation in the construction or renovation of real property covers

only a portion of a building, the insurance should cover the total cost of the

facility, because any damage to the building could make the building unusable

and could thus affect the Federal interest. The insurance policy is to be

maintained for the duration of the Federal interest in the property. The cost of

insurance coverage after the period of grant support must be borne by a

source other than the grant that provided the funds for the construction or

renovation. The grant account will not remain active for this purpose.

Governmental recipients may follow their own insurance requirements. Federally

owned property provided to a recipient for use need not be insured by the recipient.

Within 5 days of completion or beneficial occupancy, the recipient must submit, to

the GMO, a written statement signed by the authorized organizational representative

assuring that the recipient has purchased the required insurance policies on the

OPDIV-funded facility and will maintain the insurance coverage at the full appraised

value of the facility throughout the period of Federal interest as specified in the NoA.

The OPDIV may waive one or both of the requirements above if the recipient shows

that it is effectively self-insured against the risks involved. The term “effectively self-

insured” means that the recipient has sufficient funds to pay for any damage to the

facility, including total replacement if necessary, or to satisfy any liens placed against

the facility. If a recipient claims self-insurance, it must provide the OPDIV an

assurance that it has sufficient funds available to replace or repair the facility or to

satisfy all liens. This certification should state the source of the funds, such as the

organization’s endowment or other special funds set aside specifically for this

purpose.

Intellectual Property

It is HHS policy that the results and accomplishments of the activities that it funds

should be made available to the public. PIs/PDs and recipient organizations are

expected to make the results and accomplishments of their activities available to the

research community and to the public at large. If the outcomes of the research result

in inventions, the provisions of the Bayh-Dole Act of 1980, as implemented in 37 CFR

part 401, apply.

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As long as recipients comply with the provisions of the Bayh-Dole Act, as amended

by the Technology Transfer Commercialization Act of 2000 (P.L. 106-404), and 37

CFR part 401, they have the right to retain title to any invention conceived or first

actually reduced to practice using HHS grant funds. The principal objectives of these

laws and the implementing regulation are to promote commercialization of federally

funded inventions, while ensuring that inventions are used in a manner that

promotes free competition and enterprise without unduly encumbering future

research and discovery.

The regulation requires the recipient to develop and commercialize the technology or

use patent and licensing processes to transfer grant-supported technology to

industry for development. Alternatively, unpatented research products or resources

may be made available through licensing to vendors or other investigators. Sharing

of copyrightable outcomes of research may be in the form of journal articles or other

publications.

The importance of each of these outcomes is reflected in the specific policies

pertaining to rights in data, sharing of research data and unique research resources,

and inventions and patents described in this section.

Rights in Data

In general, recipients own the rights in data resulting from a grant-supported project

or program. However, the NoA may indicate alternative rights, e.g., under a

cooperative agreement or based on specific programmatic considerations as stated in

the applicable program announcement or solicitation. Except as otherwise provided

in the NoA, any publications, data,

or other copyrightable works developed under

an HHS grant may be copyrighted without OPDIV prior approval. Rights in data also

extend to students, fellows, or trainees under awards whose primary purpose is

educational, with the authors free to copyright works without OPDIV approval. In all

cases, whether HHS funded all or part of the project or program resulting in the

data, the Federal government must be given a royalty-free, nonexclusive, and

irrevocable license for the Federal government to reproduce, publish, or otherwise

use the material and to authorize others to do so for Federal purposes, e.g., to make

it available in government-sponsored databases for use by other researchers. The

specific scope of OPDIV rights with respect to a particular grant-supported effort will

be addressed in the NoA. Data developed by a subrecipient also are subject to this

policy.

Access to Research Data

HHS handles requests for the release of research data from certain types of

recipients as FOIA requests (see 45 CFR 74.36). The term “research data” is defined

as the recorded factual material commonly accepted in the scientific community as

necessary to validate research findings. It does not include preliminary analyses;

For this purpose, “data” means recorded information, regardless of the form or

media on which it may be recorded, and includes writings, films, sound recordings,

pictorial reproductions, drawings, designs or other graphic representations,

procedural manuals, forms, diagrams, work flow charts, equipment descriptions,

data files, data processing or computer programs (software), statistical records, and

other research data.

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drafts of scientific papers; plans for future research; peer reviews; communications

with colleagues; physical objects (e.g., laboratory samples, audio or video tapes);

trade secrets; commercial information; materials necessary to be held confidential by

a researcher until publications in a peer-reviewed journal; information that is

protected under the law (e.g., intellectual property); personnel or medical files and

similar files, the disclosure of which would constitute an unwarranted invasion of

personal privacy; or information that could be used to identify a particular person in

a research study.

As required by 45 CFR 74.36, recipients that are institutions of higher education,

hospitals, or non-profit organizations must release research data first produced in a

project supported in whole or in part with Federal funds that are cited publicly and

officially by a Federal agency in support of an action that has the force and effect of

law (i.e., regulations and administrative orders). If the data are publicly available,

HHS directs the requester to the public source. Otherwise, the OPDIV FOI

coordinator handles the request, consulting with the affected recipient and the PI.

This requirement also provides for assessment of a reasonable fee to cover grantee

costs and (separately) the HHS costs of responding.

This requirement to release research data does not apply to commercial

organizations or to research data produced by State or local governments. However,

if a State or local governmental recipient contracts with an educational institution,

hospital, or non-profit organization, and the contract results in covered research

data, those data are subject to the disclosure requirement.

Publications

As a means of sharing knowledge, HHS encourages recipients to arrange for

publication of the results and accomplishments of HHS-supported activities. OPDIV

prior approval is not required for publishing the results of an activity under a grant.

Recipients also may assert copyright in scientific and technical articles based on data

produced under the grant and transfer it to the publisher or others where necessary

to effect journal publication or inclusion in proceedings associated with professional

activities. Any such transfer is subject to the royalty-free, non-exclusive and

irrevocable license to the Federal government and any agreement should note

explicitly that the assignment is subject to the government license.

Journal or other copyright practices are acceptable unless the copyright policy

prevents the recipient from making copies for its own use (as provided in 45 CFR

74.36 and 92.34). The recipient should account for royalties and other income

earned from a copyrighted work as specified by the OPDIV (see Part IV and the

NoA).

For each publication that results from HHS grant-supported activities, recipients

must include an acknowledgment of grant support using one of the following

statements:

“This publication was made possible by Grant Number ________ from

_________.”

“The project described was supported by Grant Number ________

from ________.”

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Recipients also must include a disclaimer stating the following:

“Its contents are solely the responsibility of the authors and do not

necessarily represent the official views of the [name of OPDIV, OPDIV

component, or HHS].”

If the recipient plans to issue a press release concerning the outcome of HHS grant-

supported activities, it should notify the OPDIV in advance to allow for coordination.

One copy of each publication resulting from work performed under an HHS grant-

supported project must accompany the annual or final progress report submitted to

the OPDIV.

Patents and Inventions

The Bayh-Dole Act of 1980 (P.L. 96-517; 35 U.S.C. 200–212) and the related EO

12591 (April 10, 1987) provide incentives for the practical application of research or

results of other activities supported through Federal funding agreements. To be able

to retain rights and title to inventions made with Federal funds, so-called “subject”

inventions, the recipient must comply with a series of regulations that ensure the

timely transfer of the technology to the private sector, while protecting limited rights

of the Federal government.

The regulations apply to any subject invention—defined as any invention either

conceived or first actually reduced to practice in the performance of work under the

Federal award—and to all types of recipients of Federal funding. This includes non-

profit entities and small businesses or large businesses receiving funding through

grants, cooperative agreements, or contracts as direct recipients of funds or as

subrecipients or subcontractors under those awards.

HHS recipients may retain intellectual property rights to subject inventions provided

they do the following:

• Report all subject inventions to the OPDIV

• Make efforts to commercialize the subject invention through patent or

licensing

• Formally acknowledge the Federal government’s support in all patents that

arise from the subject invention

• Formally grant the Federal government a limited use license to the subject

invention.

Subawards and contracts under an award also must reflect the objectives of the

Bayh-Dole Act and the Technology Transfer Commercialization Act of 2000 to ensure

that inventions made are used in a manner to promote free competition and

enterprise without unduly encumbering future research and discovery.

Royalties and Licensing Fees from Copyrights, Inventions, and Patents

HHS recipients do not have to report program income resulting from royalties or

licensing fees from sale of copyrighted material unless the NoA provides otherwise.

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The NoA may include additional terms and conditions if commercialization of an

invention is an anticipated outcome of a research project.

Pursuant to the regulations implementing the Bayh-Dole Act (37 CFR 401.14(h)),

HHS requires reporting of income resulting from HHS-funded inventions and patents.

Specifically, as part of the annual invention utilization report, recipients must report

income generated by all subject inventions to which title has been elected, including

inventions that have been patented and those that are licensed but not patented

(see “Invention Reporting” in this section).

Invention Reporting

Exhibit 9 summarizes recipient responsibilities for invention reporting as specified in

37 CFR part 401. Recipients should refer to 37 CFR part 401 (available on the

Interagency Edison site: https://s-edison.info.nih.gov/iEdison/) for a complete

discussion of the regulations.

Exhibit 9. Extramural Invention Reporting Compliance Responsibilities

Action required

When action

must be taken Discussion

37 CFR part

401

reference

Employee Agreement to Disclose All Inventions

The PI/PD (employee) must

sign an agreement to abide by

the terms of the Bayh-Dole Act

and the HHS GPS as they

relate to intellectual property

rights.

At time of employment. Recipients and subrecipients

must have policies in place

regarding ownership of

intellectual property.

401.14(f)(2)

Invention Report and “Disclosure”

The recipient must submit to

the OPDIV a report of any

subject invention. This

includes a written description

(the so-called “invention

disclosure”) of the invention.

Within 2 months of the

inventor’s initial report of the

invention to the recipient.

There is no single format for

disclosing the invention to the

Federal government. The

report must identify inventor(s),

OPDIV grant number, and date

of any public disclosure.

401.14(a)(2)

401.14(c)(1)

Rights to Subrecipient Inventions

Subrecipients retain rights to

any subject inventions they

make.

Within 2 months of the

inventor’s initial report of the

invention to the subrecipient.

(The subrecipient has the

same invention reporting

obligations as the recipient.)

The recipient cannot require

ownership of a subrecipient’s

subject inventions as a term of

the agreement.

401.14(g)(1)

401.14(g)(2)

Election of Title to Invention

The recipient must notify the

OPDIV of its decision to retain

or waive title to invention and

patent rights.

Within 2 years of the initial

reporting of the invention to the

OPDIV.

401.14(b)

401.14(c)(2)

401.14(f)(1)

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Exhibit 9. Extramural Invention Reporting Compliance Responsibilities

Action required

When action

must be taken Discussion

37 CFR part

401

reference

Confirmatory License

For each invention, the

recipient must provide a use

license to the OPDIV for each

invention.

Promptly after election of title

to the invention.

401.14(f)(1)

Patent Application

The recipient must inform the

OPDIV of the filing of any non-

provisional patent application.

The patent application must

include a Federal government

support clause.

Within 1 year after election of

title, unless there is an

extension.

Initial patent application is

defined as a non-provisional

U.S. application. The patent

application number and filing

date must be provided.

401.14(c)(3)

401.2(n)

Assignment of Rights to Third Party

If the recipient is a non-profit

organization, it must seek

OPDIV approval to assign

invention or U.S. patent rights

to any third party, including the

inventor(s).

As needed. Recipients that are for-profit

entities (including small

businesses) do not need to

seek approval.

401.14(k)

Issued Patent

The recipient must notify the

OPDIV that a patent has been

issued.

When the patent is issued. The patent issue date,

number, and evidence of

Federal government support

clause must be provided.

401.5(f)(2)

Extension of Time to Elect Title or File Patent

The recipient may request an

extension of up to 2 years for

election of title, or 1 year for

filing a patent application.

As needed. Request for extension of time

must be made. Such requests

are preapproved.

401.14(c)(4)

Change in Patent Application Status

The recipient must notify the

OPDIV of changes in patent

status.

At least 30 days before any

pending patent office deadline.

This notification allows the

OPDIV to consider continuing

the patent action.

401.14(f)(3)

Invention Utilization Report

The recipient must submit

information about the status of

commercialization of any

invention for which title has

been elected.

Annually. This report gives an indication

of whether the objectives of

the law are being met. Specific

reporting requirements can be

found in i-Edison (https://s-

edison.info.nih.gov/iEdison/).

401.14(h)

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Exhibit 9. Extramural Invention Reporting Compliance Responsibilities

Action required

When action

must be taken Discussion

37 CFR part

401

reference

Annual Invention Statement

The recipient must indicate

any inventions made during

the previous budget period on

all grant awards.

Generally part of the

competing application or non-

competing grant progress

reports.

For PHS OPDIVs, the

information is requested as a

checklist item on the PHS 398

application or through the SF

424 (R&R), as applicable, and

on the non-competing grant

progress report (PHS 2590).

PHS 398 and

PHS 2590;

SF 424

(R&R)

Final Invention Statement and Certification

The recipient must submit to

the GMO a summary of all

inventions made during the

entire term of each grant

award.

Within 90 days after the project

period (competitive segment)

ends.

Required information is

specified on the HHS 568

form. If no inventions occurred

during the project period, a

negative report must be

submitted.

401.14(f)(5)

A recipient’s failure to comply with any of these or other regulations cited in 37 CFR

part 401 may result in the loss of patent rights or an enforcement action.

The Bayh-Dole Act includes provisions for the recipient to assign invention rights to

third parties. Recipients that are non-profit organizations must request OPDIV

approval for the assignment. If the assignment is approved and the rights are

assigned to a third party, invention and patent reporting requirements apply to the

third party. The recipient should review existing agreements with third parties and

revise them, as appropriate, to ensure that they are consistent with the terms and

conditions in the NoA and that the objectives of the Bayh-Dole Act are adequately

represented in the assignment.

Any invention made using funds awarded for educational purposes, e.g., training

grants or certain types of career development awards, is not considered a subject

invention and therefore is not subject to invention reporting requirements (as

provided in 45 CFR part 74 and 37 CFR 401.1(b)). The recipient should seek the

advice of the GMO to verify whether any invention made under a career development

award should be considered a subject invention.

All issues or questions regarding extramural technology transfer policy and reporting

of inventions and their utilization should be referred to the GMO or other designated

individual.

Sharing Research Tools

HHS believes that sharing of data and other research tools produced or developed by

investigators under HHS grants, such as cell lines, certain types of animals (e.g.,

transgenic mice), and computer programs, is essential for expedited translation of

research results into knowledge, products, and procedures to improve human health.

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HHS endorses the sharing of final research data and research tools to serve these

and other important scientific goals and expects and supports the timely release and

sharing of final research data and research tools from HHS-supported studies for use

by other researchers. “Timely release and sharing” is defined as no later than the

acceptance for publication of the main findings from the final data set or after

submission to the OPDIV. Restricting the availability of unique resources can impede

the advancement of further research.

For any subaward, including a consortium agreement, that may result in research

data or tools, the recipient must include a provision requiring third-party data or

research tools to be made available to the recipient and, as appropriate, the OPDIV

upon request, to allow for sharing.

HHS recognizes that data sharing may be complicated or limited, in some cases, by

organizational policies, local IRB rules, and local, State and Federal laws and

regulations, including the Privacy Rule. The rights and privacy of individuals who

participate in HHS-sponsored research must be protected at all times. Thus, data

intended for broader use should be free of identifiers that would permit linkages to

individual research participants and variables that could lead to deductive disclosure

of the identity of individual subjects. Investigators also must exercise great care to

ensure that resources involving human cells or tissues do not identify original donors

or subjects, either directly or through identifiers such as codes linked to the donors

or subjects.

To facilitate the availability of research tools developed with OPDIV funds,

investigators may distribute the materials through their own laboratory or

organization or submit them, if appropriate, to a repository. Investigators are

expected to submit unique biological information, such as DNA sequences or

crystallographic coordinates, to the appropriate data banks so that they can be made

available to the broad scientific community. When distributing unique resources,

investigators are to include pertinent information on the nature, quality, or

characterization of the materials.

In addition to sharing data and research resources with the research community,

upon request of the OPDIV, the recipient also must provide a copy of documents or a

sample of any material developed under an HHS grant award. The recipient may

charge a nominal fee to cover shipping costs for providing this material. Income

earned from these charges must be treated as program income.

Organizations that believe they will be unable to comply with these requirements

should promptly contact the GMO to discuss the circumstances, obtain information

that might enable compliance, and reach an understanding in advance of an award.

Procurement Management

Recipients may acquire a variety of commercially available goods or services in

connection with a grant-supported project or program. States may follow the same

policies and procedures they use for procurements from non-Federal funds. All other

recipients must follow the requirements in 45 CFR 74.40 through 74.48 or 92.36, as

applicable, for the purchase of goods or services through contracts under grants. The

requirements for third-party activities involving transfer of substantive programmatic

work are addressed under “Subawards” in this section.

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A contract under a grant must be a written agreement between the recipient and the

third party. The contract must, as appropriate, state the activities to be performed;

the time schedule; the policies and requirements that apply to the contractor,

including those required by 45 CFR 74.48 or 92.36(i) and other terms and conditions

of the grant (these may be incorporated by reference where feasible); the maximum

amount of money for which the recipient may become liable to the third party under

the agreement; and the cost principles to be used in determining allowable costs in

the case of cost-type contracts. The contract must not affect the recipient’s overall

responsibility for the direction of the project or program and accountability to the

Federal government. Therefore, the agreement must reserve sufficient rights and

control to the recipient to enable it to fulfill its responsibilities.

When a recipient enters into a service-type contract in which the term is not

concurrent with the budget period of the award, the recipient may charge the costs

of the contract to the budget period in which the contract is executed even though

some of the services will be performed in a succeeding period if the following

conditions are met:

• The awarding office has been made aware of this situation either at the time

of application or through post-award notification.

• The project has been recommended for a project period extending beyond the

current year of support.

• The recipient has a legal commitment to continue the contract for its full

term.

However, costs will be allowable only to the extent that they are for services

provided during the period of OPDIV support. To limit liability if continued OPDIV

funding is not forthcoming, it is recommended that recipients insert a clause in such

contracts of $100,000 or less stipulating that payment beyond the end of the current

budget period is contingent on continued Federal funding. The contract provisions

prescribed by 45 CFR 74.48 and 92.36(i)(2) specify termination provisions for

contracts in excess of $100,000.

In general, the rental costs for facilities and equipment applicable to each budget

period should be charged to that period. Recipients are encouraged to consult the

GMO before entering into leases that will result in direct charges to the grant project.

Approval Requirements

The procurement standards in 45 CFR 74.44 and 92.36(g) allow OPDIVs to require

approval of specific procurement transactions under the following circumstances (and

provide a mechanism for governmental recipients to be exempt from this type of

review):

• A recipient’s procurement procedures or operations do not comply with the

procurement standards required by those regulations.

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• The procurement is expected to exceed the “simplified acquisition threshold”

(currently $100,000) (formerly the “small purchase threshold”) established by

the Federal Property and Administrative Services Act, as amended, and is to

be awarded without competition, or only one bid or proposal is received in

response to a solicitation.

• A procurement that will exceed the simplified acquisition threshold specifies a

“brand name” product.

• A proposed award over the simplified acquisition threshold is to be awarded to

other than the apparent low bidder under a sealed-bid procurement.

• A proposed contract modification changes the scope of a contract or increases

the contract amount by more than the amount considered to be a simplified

acquisition.

When OPDIV prior approval is required, the recipient must make available sufficient

information to enable review. This may include, at OPDIV discretion, pre-solicitation

technical specifications or documents, such as requests for proposals or invitations

for bids, or independent cost estimates. Approval may be deferred pending

submission of additional information by the recipient or may be conditioned on the

receipt of additional information. Any resulting OPDIV approval does not constitute a

legal endorsement of the business arrangement by the Federal government nor does

such approval establish the OPDIV as a party to the contract or any of its provisions.

Requirements for Using Small Businesses,

Minority-Owned Firms, and Women-Owned Businesses

Recipients must make positive efforts to use small businesses, minority-owned firms,

and women-owned businesses as sources of goods and services whenever possible.

Recipients are required to take the following steps to implement this policy:

• Place qualified small, minority-owned, and women-owned business

enterprises on solicitation lists

• Ensure that small, minority-owned, and women-owned business enterprises

are solicited whenever they are potential sources

• Consider contracting with consortia of small, minority-owned, or women-

owned business enterprises when an intended contract is too large for any

one such firm to handle on its own or, if economically feasible, divide larger

requirements into smaller transactions for which such organizations might

compete

• Make information on contracting opportunities available and establish delivery

schedules that encourage participation by small, minority-owned, and

women-owned business enterprises

• Use the services and assistance of the SBA and DoC’s Minority Business

Development Agency, as appropriate

• If subcontracts are to be let, require the prime contractor to take the

affirmative steps listed above.

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Subawards

This section includes the requirements for a grant involving subawards, including

consortium agreements in which the recipient collaborates with one or more other

organizations in carrying out the grant-supported activity. Subrecipients should be

selected by the recipient using its established policies. HHS does not require that

subawards comply with the procurement standards and requirements outlined above.

The recipient is accountable to the OPDIV for the performance of the project, the

appropriate expenditure of grant funds by all parties, and all other obligations of the

recipient, as specified in the HHS GPS. In general, the requirements that apply to the

recipient, including the intellectual property and program income requirements of the

award, also apply to subrecipients. The recipient is responsible for including the

applicable requirements of the HHS GPS in its subaward agreements.

The recipient must enter into a formal written agreement with each subrecipient that

addresses the arrangements for meeting the programmatic, administrative, financial,

and reporting requirements of the grant, including those necessary to ensure

compliance with all applicable Federal regulations and policies. At a minimum, the

subaward agreement must include the following:

• Identification of the PI/PD and individuals responsible for the programmatic

activity at the subrecipient organization along with their roles and

responsibilities.

• Procedures for directing and monitoring the programmatic effort.

• Procedures to be followed in providing funding to the subrecipient, including

dollar ceiling, method and schedule of payment, type of supporting

documentation required, and procedures for review and approval of

expenditures of grant funds.

• If different from those of the recipient, a determination of policies to be

followed in such areas as travel reimbursement and salaries and fringe

benefits (the policies of the subrecipient may be used as long as they meet

HHS requirements).

• Incorporation of applicable public policy requirements and provisions

indicating the intent of the subrecipient to comply, including submission of

applicable assurances and certifications.

• For research subawards, inclusion of the following:

h Statement specifying whether the financial conflict of interest

requirements of the collaborating organization or those of the recipient

apply.

h Provision addressing ownership and disposition of data produced under

the agreement.

h Provision making the sharing of data and research tools and the

inventions and patent policy applicable to the subrecipient and its

employees in order to ensure that the rights of the parties to the

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agreement are protected and that the recipient can fulfill its

responsibilities to the OPDIV. This provision must include a requirement to

report inventions to the recipient and specify that the recipient has the

right to request and receive data from the subrecipient on demand.

• Provisions regarding property (other than intellectual property), program

income, publications, reporting, record retention, and audit necessary for the

recipient to fulfill its obligations to the OPDIV.

Changes in Organizational Status

Recipients must give HHS advance notice of the following types of changes in

organizational status:

• Merger—legal action resulting in the unification of two or more legal entities.

When such an action involves the transfer of HHS grants, the procedures for

recognizing a successor-in-interest will apply. When the action does not

involve the transfer of HHS grants, the procedures for recognizing a name

change normally will apply.

• Successor-in-interest—process whereby the rights to and obligations under an

HHS grant are acquired incidental to the transfer of all of the assets of the

recipient or the transfer of that part of the assets involved in the performance

of the grant. A successor-in-interest may result from legislative or other legal

action, such as a merger or other corporate change.

• Name change—action whereby the name of an organization is changed

without otherwise affecting the rights and obligations of that organization as a

recipient.

If the change would be considered a change of grantee organization as described in

“Prior-Approval Requirements—OPDIV Prior Approval,” the recipient must obtain that

approval rather than simply notifying the OPDIV of its intent.

Advance notification is required to ensure that the recipient still is able to meet its

legal and administrative obligations to HHS and payments are not interrupted.

Recipients are encouraged to contact the GMO of the lead OPDIV awarding office to

explain the nature of the change in organizational status and receive guidance on

whether it will be treated as a name change or successor-in-interest. The lead

awarding office ordinarily will be the OPDIV with which the organization has the most

HHS grants. If there is no advance consultation, HHS reserves the right to review the

material provided, seek clarification or additional information, and make an

independent determination.

A recipient’s formal request for a change in organizational status should be

submitted as soon as possible so that HHS can determine whether the organization

will continue to meet the grant program’s eligibility requirements and take the

necessary action to reflect the change in advance of the change in status.

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For a successor-in-interest, a letter signed by the authorized organizational

representative of the current recipient (transferor) and the successor-in-interest

(transferee) must be sent to the lead awarding office, following consultation with the

GMO of that office. The letter must do the following:

• Stipulate that the transfer will be properly effected in accordance with

applicable law.

• Indicate that the transferor relinquishes all rights and interests in all of the

affected grants.

• Request that the HHS awarding office (offices) modify its (their) records to

reflect the transferee as the recipient of record.

• State the effective date of the transfer.

• Provide the transferee’s Entity Identification Number and DUNS number.

• Include verification of the transferee’s compliance with applicable

requirements (e.g., research misconduct).

• Include a list of all affected HHS grants (active and pending) with the

following information for each:

h Complete grant number.

h Name of PI/PD.

h Current budget period and project period.

h Total direct costs (as originally recommended) plus applicable indirect

costs for each remaining budget period. If the successor-in-interest will

occur during a budget period rather than on the anniversary date, the

transferor also must provide estimated levels of current-year direct and

indirect costs remaining as of the effective date of the transfer. The

estimate may be reported on the official statement relinquishing interests

and rights in the grant (e.g., PHS 3734 is available at

http://www.hhs.gov/forms/publicuse.html or an equivalent relinquishing

statement) for each affected grant or may be itemized by grant number as

an attachment to the letter.

• Include a complete application face page for each affected grant showing the

transferee as the applicant organization. Each face page must be signed by

both the PI/PD and the authorized organizational representative at the

transferee organization.

• Include a copy of the current negotiated indirect cost rate agreement for the

transferee.

In order to be recognized as the successor-in-interest, the “new” (transferee)

organization must meet each grant program’s eligibility requirements. Upon review

and acceptance of this information, the awarding office will revise the NoA to show

the transferee as the recipient of record.

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For name changes, the recipient’s written notification to the lead awarding office

must include the effective date of the change. Revised face pages are not required

for name changes because name changes are processed with the next award action

(e.g., non-competing continuation award), and the organization will submit a face

page with the information submitted as part of that action.

Federally Sponsored Surveys

Recipients may use HHS grant funds to collect information through surveys or

questionnaires under the following conditions:

• When the collection of information is not a primary objective of the grant but

is incidental to, or is an integral part of, a grant-supported activity.

• When the collection of information is a primary objective of the grant, but

such information is not intended primarily for the use of the Federal

government or a party designated by the Federal government. (Contracts are

used for this purpose unless a grant is specifically required by legislation.)

When information is collected according to either of the two conditions above,

recipients are prohibited from representing to their respondents that the information

is being collected for, or in association with, the Federal government unless OPDIV

approval has been obtained and, when required, OMB report clearance procedures as

contained in OMB regulations implementing the PRA at 5 CFR part 1320, Controlling

Paperwork Burdens on the Public, have been followed. (When OMB approval is

required, the OPDIV, rather than the recipient, is responsible for obtaining the

necessary clearance.)

OMB clearance is required whenever HHS sponsors the use of a reporting form or

plan to collect identical kinds of information or data from 10 or more people.

Information collection is considered to be sponsored by HHS when one or more of

the following circumstances exist:

• The OPDIV authorizes the recipient of a grant to represent to respondents

that the information is being collected for, or in association with, an OPDIV.

• The recipient of a grant uses the report form or plan to collect information

that an OPDIV has requested for the planning, operation, or evaluation of its

program.

• The terms and conditions of a grant award provide for OPDIV approval of the

study design, questionnaire content, or data collection procedure.

• The terms and conditions of a grant award provide for either submission of

the data for individual respondents or the preparation and submission of

special requested tabulations to the OPDIV.

• Any information collection under a cooperative agreement.

HHS and OMB approval may also be required if the use of a report form or plan

presents a relatively high risk of unwarranted invasion of privacy.

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Collection of the following types of information is not subject to the clearance

requirements under OMB regulations at 5 CFR part 1320:

• Health professions data as described in Section 708 of the PHS Act, as

amended

• Tests or examinations given individuals for determining knowledge, abilities,

or aptitudes of the person tested and the collection of information for

identification or classification in connection with such tests

• Information from patients that is to be used exclusively for research on or

direct treatment of a clinical disorder; for the interpretation of biological

analyses of body fluids, tissues, or other specimens; or for identification or

classification of such specimens (see 5 CFR part 1320 for additional

exemptions from clearance requirements).

Monitoring

Recipients are responsible for managing the day-to-day operations of grant-

supported activities using their established controls and policies, as long as they are

consistent with HHS requirements. However, to fulfill their role in regard to the

stewardship of Federal funds, OPDIVs monitor their grants to identify potential

problems and areas where technical assistance might be necessary. This active

monitoring is accomplished through review of reports and correspondence from the

recipient, audit reports, site visits, and other information available to the OPDIV. The

names and telephone numbers of the individuals responsible for monitoring the

programmatic and business management aspects of a project or activity will be

provided to the recipient as part of the NoA.

During post-award administration, the GMO monitors expenditures for conformance

with cost policies. The GMO’s monitoring includes, among other things, responding to

prior-approval requests and reviewing financial reports, audit reports, and other

periodic reports. The GMO also may use audit findings as the basis for final cost

adjustments. The PO’s monitoring includes review of progress reports, prior-approval

requests, and other correspondence (written or telephonic), and site visits.

Monitoring of a project or activity will continue for as long as the OPDIV retains a

financial interest in the project or activity as a result of property accountability,

audit, and other requirements that may continue for a period of time after the grant

is administratively closed out and the OPDIV is no longer providing active grant

support.

Reporting

HHS requires that recipients periodically submit financial and progress reports. Other

required reports may include annual invention utilization reports, research

misconduct reports, property reports, lobbying disclosures (as required by 45 CFR

93.110(c)), audit reports, reports to the appropriate payment points (in accordance

with instructions received from the payment office), and specialized programmatic

reports.

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Unless otherwise indicated in the NoA, the GMO is generally the receipt point for

most required reports, including non-competing continuation applications, annual

and final progress reports, FSRs, final invention statements and certifications,

property reports, and lobbying disclosure statements. Generally, an original and two

copies of progress reports must be submitted. Submission of these reports to

individuals other than the GMO may result in delays in processing of the non-

competing continuation award or the submission being considered delinquent. Also

see Part IV of the HHS GPS.

Recipients are allowed a specified period of time in which to submit required financial

and final progress reports (see 45 CFR 74.51, 74.52, 92.40, and 92.41 and the

discussion in this subsection). Failure to submit complete, accurate, and timely

reports may indicate the need for closer monitoring by HHS or may result in possible

award delays or enforcement actions, including conversion to a reimbursement

payment method or withholding a non-competing continuation award (also see

“Overdue Reports” in this section).

Financial Reporting

Reports of expenditures are required as documentation of the financial status of

grants according to the official accounting records of the recipient. Financial or

expenditure reporting is accomplished using the FSR (SF 269 or SF 269A); the

recipient must use the long form (SF 269) to report program income earned and

used.

The FSR generally is required annually, unless otherwise indicated in the NoA. If an

FSR is required annually and the award is operating under an authorized no-cost

extension, an FSR must be submitted for each 12 months of activity, regardless of

the overall length of the extended budget period. For example, if the budget period

would have ended on July 31, 2006, but is extended to July 31, 2007, the recipient

must submit two FSRs—one for the period August 1, 2005-July 31, 2006 and one for

the period August 1, 2006-July 31, 2007. When required annually, the report must

be submitted for each budget period no later than 90 days after the close of the

budget period or applicable 12-month period.

If FSRs are required more frequently than annually, the NoA will specify both the

frequency and due date. Some OPDIVs provide for electronic submission to the

OPDIV. See Part IV for OPDIV-specific information concerning financial reporting,

including the means of submission.

For some awards, in lieu of the annual FSR, the OPDIV will use the quarterly FCTR,

submitted to PMS to monitor the financial aspects of grants. The GMO may review

the report for patterns of cash expenditures, including accelerated or delayed

drawdowns, and to assess whether performance or financial management problems

exist. For these awards, an FSR generally is required only at the end of a competitive

segment. It must be submitted within 90 days after the end of the competitive

segment and must report on the cumulative support awarded for the entire segment.

An FSR must be submitted at this time whether or not a competing continuation

award is made. If no further award is made, this report will serve as the final FSR.

Before submitting FSRs, recipients must ensure that the information submitted is

accurate, complete, and consistent with the recipient’s accounting system. The

authorized organizational representative’s signature on the FSR certifies that the

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information in the FSR is correct and complete and that all outlays and obligations

are for the purposes set forth in grant documents, and represents a claim to the

Federal government. Filing a false claim may result in the imposition of civil or

criminal penalties (see “Fraud, Waste, and Abuse” in Part I of the HHS GPS).

In some cases, the recipient may have to revise or amend a previously submitted

FSR. When the revision results in a balance due to the OPDIV, the recipient must

submit a revised FSR whenever the overcharge is discovered, no matter how much

time has lapsed since the original due date of the report. Revised expenditure

reports representing additional expenditures by the recipient that were not reported

to the OPDIV within the 90-day time frame may be submitted to the GMO with an

explanation for the revision. The explanation also should indicate why the revision is

necessary and describe what action is being taken by the recipient to preclude

similar situations in the future. This should be done as promptly as possible, but not

later than 1 year from the due date of the original report, i.e., 15 months following

the end of the budget period. If an adjustment is to be made, the awarding office will

advise the recipient of actions it will take to reflect the adjustment. The OPDIV will

not accept any revised report received after that date and will return it to the

recipient.

Progress Reporting

Progress reports generally are required annually as part of the non-competing

continuation award process. However, the OPDIV may require these reports more

frequently. Progress reports must be submitted to, and approved by, the OPDIV to

non-competitively fund each additional budget period within a previously approved

project period (competitive segment). When used in lieu of a non-competing

continuation application, the progress report typically includes an updated budget in

addition to other required information.

The form/format to be used and the information to be included in the progress report

are specified in the NoA or in specific OPDIV guidance, e.g., non-competing

continuation guidance. Some OPDIVs have implemented procedures for the

electronic transmission of progress reports. See Part IV for OPDIV-specific

information on electronic procedures for submitting progress reports.

Progress reports must be submitted directly to the awarding office. Late submission

or receipt of an incomplete grant progress report will result in delaying the issuance

and funding of the non-competing continuation award and may result in a reduced

award amount.

The progress report for the final budget period of a competitive segment for which a

competing continuation application is submitted will be part of that application;

however, if an award is not made or the recipient does not submit an application for

continued support, a final progress report is required.

The OPDIV will specify the requirements for progress reporting under construction

grants or grants supporting both construction activities, including acquisition or

modernization, and nonconstruction activities.

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Other Reporting

Each competing continuation grant application and progress report (when used in

lieu of a non-competing continuation application) must indicate whether or not any

subject inventions were made during the preceding budget period. If inventions were

made, the recipient must indicate whether they have been reported. The recipient

also must submit an annual invention utilization report for all subject inventions to

which title has been elected and inventions that have been licensed but not patented

(research tools). The utilization report provides a way to evaluate the extent of

commercialization of subject inventions, consistent with the objectives of the Bayh-

Dole Act.

Bayh-Dole regulations allow recipients to report inventions electronically (37 CFR

401.16). Electronic reporting is available through an Internet-based system called

Interagency Edison (https://s-edison.info.nih.gov/i-Edison/). Recipients should make

all reasonable efforts to submit invention reports using i-Edison, where possible. The

system supports confidential transmission of required information and provides a

utility for generating reports and reminders of pending reporting deadlines. Further

information about the system, including instructions for creating an account needed

to submit reports electronically, is available on the i-Edison site.

Title to federally owned property remains vested in the Federal government.

Annually, recipients must submit to the OPDIV an inventory listing federally owned

property in the recipient’s custody. Upon completion of the award or when the

property is no longer needed, the recipient must report the property to the awarding

office for further agency utilization. If the OPDIV has no further need for the

property, it must be declared excess and reported to GSA, unless the OPDIV has

statutory authority to dispose of the property by alternative methods (e.g., the

authority provided by the Federal Technology Transfer Act, 15 U.S.C. 3710(I) to

donate research equipment to educational and non-profit organizations in accordance

with EO 12821, “Improving Mathematics and Science Education in Support of the

National Education Goals”). The OPDIV will issue appropriate instructions to the

recipient.

Overdue Reports

Failure to submit required reports within the time allowed may result in suspension

or termination of an active grant, withholding a non-competing continuation award,

or other enforcement actions, including withholding of payments or converting to the

reimbursement method of payment. Continued failure to submit required reports

may result in the imposition of special award provisions or cause other eligible

projects or activities involving that recipient or the individual responsible for the

delinquency to not be funded.

If at any time the recipient provides an acceptable explanation regarding the late

submission of a report, the OPDIV may waive the reporting requirement or set a new

due date. However, once a report becomes overdue, such action will be taken by the

OPDIV only if the reasons for the recipient’s inability to submit the report on time are

legitimately beyond its control or if the purposes for which the report is to be used

can be accomplished through other means. Failure to meet a new date may result in

the OPDIV taking action as described above.

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Submission of a required report does not necessarily fulfill the recipient’s obligation.

Such reports must also meet the content requirements in regulations or other grant

terms. Where reports need to be revised in order to be accepted, the recipient must

provide a revised report by the due date indicated or immediate fund cutoff or other

enforcement actions may be taken with regard to the delinquency.

Record Retention and Access

Recipients generally must retain financial and programmatic records, supporting

documents, statistical records, and all other records that are required by the terms

of a grant, or may reasonably be considered pertinent to a grant, for a period of 3

years from the date the annual FSR is submitted. For awards where the FSR is

submitted at the end of the competitive segment, the 3-year retention period will be

calculated from the date the FSR for the entire competitive segment is submitted.

Those recipients must retain the records pertinent to the entire competitive segment

for 3 years from the date the FSR is submitted. See 45 CFR 74.53 and 92.42 for

exceptions and qualifications to the 3-year retention requirement (e.g., if any

litigation, claim, financial management review, or audit is started before the

expiration of the 3-year period, the records must be retained until all litigation,

claims, or audit findings involving the records have been resolved and final action

taken). Those sections also specify the retention period for other types of grant-

related records, including indirect cost proposals and property records. See 45 CFR

74.48 and 92.36 for record retention and access requirements for contracts under

grants.

Audit Requirements

An audit is a systematic review or appraisal made to determine whether internal

accounting and other control systems provide reasonable assurance of the following:

• Financial operations are properly conducted.

• Financial reports are timely, fair, and accurate.

• The entity has complied with applicable laws, regulations, and terms and

conditions of award.

• Resources are managed and used economically and efficiently.

• Desired results and objectives are being achieved effectively.

Recipients (other than Federal institutions) and subrecipients are subject to the audit

requirements of OMB Circular A-133, as implemented by 45 CFR 74.26 and 92.26, or

the audit requirements stated in 45 CFR 74.26(d) and in the HHS GPS (for types of

organizations to which OMB Circular A-133 does not directly apply). In general, OMB

Circular A-133 requires a State government, local government, or non-profit

organization (including institutions of higher education) that expends $500,000 or

more per year under Federal grants, cooperative agreements, and/or procurement

contracts to have an annual audit by a public accountant or a Federal, State, or local

governmental audit organization. The audit must meet the standards specified in

generally accepted government auditing standards (GAGAS).

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A for-profit organization is required to have a non-Federal audit if, during its fiscal

year, it expended a total of $500,000 or more under one or more HHS awards (as a

direct recipient and/or as a subrecipient). Title 45, part 74.26(d) of the CFR

incorporates the thresholds and deadlines of OMB Circular A-133 but provides for-

profit organizations two options regarding the type of audit that will satisfy the audit

requirements. The recipient either may have (1) a financial-related audit (as defined

in, and in accordance with, the Government Auditing Standards [commonly known as

the “Yellow Book”], (GPO stock 020-000-00-265-4) of all the HHS awards, or (2) an

audit that meets the requirements of OMB Circular A-133. Foreign recipients are

subject to the same audit requirements as for-profit organizations specified in

45 CFR 74.26(d).

When a recipient procures audit services, the procurement must comply with the

procurement standards of 45 CFR part 74 or 92, as applicable, including obtaining

competition and making positive efforts to use small, minority-owned, and women-

owned business enterprises. Recipients should ensure that comprehensive

solicitations made available to interested firms include all audit requirements and

specify the criteria to be used for selection of the firm. Recipients’ written

agreements with auditors must specify the rights and responsibilities of each party.

OMB Circular A-133 explains in detail the scope, frequency, and other aspects of the

audit. Some highlights of this circular are as follows:

• Covered organizations expending $500,000 or more per year in Federal

awards are required to have an audit made in accordance with the circular.

However, if the awards are under one program, the organization can have

either a single organization-wide audit or a program-specific audit of the

single program, subject to the provisions of Section 235 of the circular. OPDIV

research awards may not be considered a single program for this purpose.

Covered organizations expending less than $500,000 in any year are exempt

from these audit requirements in that year but must have their records

available for review by the OPDIV.

• The data collection form and copies of the reporting package must be

submitted to the FAC at the following address:

Federal Audit Clearinghouse

Bureau of the Census

1201 E. 10th Street

Jeffersonville, IN 47132

• The reporting package must contain the following:

h Financial statements and Schedule of Expenditures of Federal Awards

h Independent auditor’s report, including an opinion on the financial

statements and the Schedule of Expenditures of Federal Awards, a report

on compliance and internal control over financial reporting, and a report

on compliance with requirements applicable to each major program and

on internal control over such compliance requirements

h A schedule of findings and questioned costs

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h If applicable, a summary of prior audit findings and a corrective action

plan.

• An audit under OMB Circular A-133 is in lieu of a financial audit of individual

Federal awards. However, Federal agencies may request additional audits

necessary to carry out their responsibilities under Federal laws or regulations.

Any additional audits will build upon work performed by the independent

auditor.

If the schedule of findings and questioned costs discloses an audit finding related to

an HHS award or if the schedule of prior audit findings reports the status of any audit

finding relating to an HHS award, the FAC will provide copies of the audit report to

NEARC, OIG, HHS. NEARC will, in turn, distribute them within HHS for further action,

as necessary.

Recipients must follow a systematic method for ensuring timely and appropriate

resolution of audit findings and recommendations, whether discovered as a result of

a Federal audit or a recipient-initiated audit. Recipients usually are allowed 30 days

from the date of request to respond to the responsible audit resolution official (Action

Official) concerning audit findings. Failure to submit timely responses may result in

cost disallowance or other actions by HHS or the OPDIV. At the completion of the

audit resolution process, the recipient will be notified of the Action Official’s final

decision. The recipient may appeal this decision if the adverse determination is of a

type covered by the OPDIV or HHS grant appeals procedures (see “Grant Appeals

Procedures”). Refunds owed to the Federal government as a result of audit

disallowances must be made in accordance with instructions issued by the Action

Official.

It is imperative that recipients submit required OMB Circular A-133 audits within the

time limits specified in the circular. If recipients are delinquent in complying with the

provisions of the circular, HHS or the OPDIV will impose sanctions that may result in

the loss of Federal funds. No audit costs will be allowed either as indirect costs or

direct costs to Federal awards if the required audits have not been completed or

have not been conducted in accordance with the provisions of OMB Circular A-133.

Enforcement Actions

A recipient’s failure to comply with the terms and conditions of award, including

confirmed instances of research misconduct, may cause an OPDIV to take one or

more enforcement actions, depending on the severity and duration of the non-

compliance. The OPDIV will undertake any such action in accordance with applicable

statutes, regulations, and policies. The OPDIV generally will afford the recipient an

opportunity to correct the deficiencies before taking enforcement action unless public

health or welfare concerns require immediate action. However, even if a recipient is

taking corrective action, the OPDIV may take proactive steps to protect the Federal

government’s interests, including placing special conditions on awards or precluding

the recipient from obtaining future awards for a specified period, or may take action

designed to prevent future non-compliance, such as closer monitoring. If the OPDIV

takes an enforcement action as a result of research misconduct or will more closely

monitor an award through the use of special conditions, the OPDIV will share this

information with other HHS components.

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Modification of the Terms and Conditions of Award

During grant performance, the GMO may include special conditions in the award to

require correction of identified financial or administrative deficiencies. When the

special conditions are imposed, the GMO will notify the recipient of the nature of the

conditions, the reason why they are being imposed, the type of corrective action

needed, the time allowed for completing corrective actions, and the method for

requesting reconsideration of the conditions. (See 45 CFR 74.14 or 92.12.)

The OPDIV also may withdraw approval of the PI/PD or other key personnel if there

is a reasonable basis to conclude that they are no longer qualified or competent to

perform. In that case, the OPDIV may request that the recipient designate a new

PI/PD or other key personnel.

The decision to modify the terms of an award—by imposing special conditions, by

withdrawing approval of the PI/PD or other key personnel, or otherwise—is

discretionary on the part of the OPDIV.

Withholding a Non-Competing Continuation Award

An OPDIV may decide not to make a non-competing continuation award within the

current competitive segment for one or more of the following reasons:

• Adequate Federal funds are not available to support the project.

• A recipient failed to show satisfactory progress in achieving the objectives of

the project.

• A recipient failed to meet the terms and conditions of a previous award.

• For whatever reason, continued funding would not be in the best interests of

the Federal government.

If a non-competing continuation award is denied (withheld) because the recipient

failed to comply with the terms and conditions of a previous award, the recipient

may appeal that determination.

Depending on the nature of the deficiency, an OPDIV also may temporarily withhold

payment or convert the grant from an advance payment method to a reimbursement

method.

Suspension or Termination

If a recipient has failed to materially comply with the terms and conditions of award,

the OPDIV may suspend the grant, pending corrective action, or may terminate the

grant for cause. The regulatory procedures that pertain to suspension and

termination are specified in 45 CFR 74.61 and 74.62 and in 45 CFR 92.43.

The OPDIV generally will suspend (rather than immediately terminate) a grant and

allow the recipient an opportunity to take appropriate corrective action before

making a termination decision. The OPDIV may decide to terminate the grant if the

recipient does not take appropriate corrective action during the period of suspension.

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The OPDIV may terminate—without first suspending—the grant if the deficiency is so

serious as to warrant immediate termination or if public health or welfare concerns

require immediate action. Termination for cause may be appealed under the OPDIV

and HHS grant appeals procedures.

A grant also may be terminated, partially or totally, by the recipient or by the OPDIV

with the consent of the recipient. If the recipient decides to terminate a portion of a

grant, the OPDIV may determine that the remaining portion of the grant will not

accomplish the purposes for which the grant was originally awarded. In any such

case, the recipient will be advised of the possibility of termination of the entire grant

and will be allowed to withdraw its termination request. If the recipient does not

withdraw its request for partial termination, the OPDIV may initiate procedures to

terminate the entire grant for cause.

See “Selected Items of Cost” for the allowability of termination costs. Allowability of

these costs does not vary whether a grant is terminated for cause by the OPDIV,

terminated at the request of the recipient, or terminated by mutual agreement.

Other options available to an OPDIV include suspension or debarment under 45 CFR

part 76. Suspension under 45 CFR part 76 (see Eligibility—Suspension and

Debarment” in Part I) is a distinct action from “suspension” described above in

conjunction with termination.

Closeout

The OPDIV will close out a grant as soon as possible after expiration if the grant will

not be extended or after termination, as provided in 45 CFR 74.71 through 74.73

and in 45 CFR 92.50. Closeout includes ensuring timely submission of all required

reports and adjustments for amounts due the recipient or the OPDIV. Closeout of a

grant does not automatically cancel any requirements for property accountability,

record retention, or financial accountability. Following closeout, the recipient remains

obligated to return funds due as a result of later refunds, corrections, or other

transactions, and the Federal government may recover amounts based on the results

of an audit covering any part of the period of grant support.

Unless the GMO grants an extension, recipients must submit a final FSR, final

progress report, and Final Invention Statement and Certification within 90 days of

the end of grant support. Failure to submit timely and accurate final reports may

affect future funding to the organization or awards with the same PI/PD.

Final Financial Status Report

A final FSR is required for

• any grant that is terminated,

• any grant that is transferred to a new recipient, or

• any award at the end of the project period (or if comprised of multiple

competitive segments, at the end of each competitive segment).

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The final FSR must cover the entire project period (competitive segment) or as much

of the project period (competitive segment) as has been funded before termination

or transfer. Final FSRs must have no unliquidated obligations and must indicate the

exact balance of unobligated funds. Unobligated funds must be returned to the

OPDIV or must be reflected by an appropriate accounting adjustment in accordance

with instructions from the GMO or from the payment office. For those organizations

receiving their funds through PMS, final reports, as specified by PMS, must be

submitted to that office. It is the recipient’s responsibility to reconcile reports

submitted to PMS and to the OPDIV. Reconciliation consists of ensuring that

disbursements equal obligations and drawdowns or making any adjustments as

necessary, e.g., for an overpayment. Withdrawal of the unobligated balance

following expiration or termination of a grant is not considered an adverse action and

is not subject to appeal.

When the submission of a revised final FSR results in additional claims by the

recipient, the OPDIV will consider the approval of such claims subject to the following

minimum criteria:

• The recipient must indicate why the revision is necessary and explain and

implement internal controls that will preclude similar occurrences in the

future.

• The charge must represent otherwise allowable costs under the provisions of

the grant.

• There must be an unobligated balance for the budget period sufficient to

cover the claim.

• The funds must still be available for use.

• The OPDIV must receive the revised FSR within 12 months of its original due

date.

Final Progress Report

A final progress report is required for any grant that is terminated and at the end of

the project period. The final progress report should follow specific OPDIV instructions

and be submitted to the GMO, but minimally will include a summary of progress

toward the achievement of the originally stated aims, a list of significant results

(positive or negative), and a list of publications. If the recipient submits a competing

continuation application, the final progress report requirement will be met by the

information included in that application.

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Final Invention Statement and Certification

For research grants, the recipient must submit a Final Invention Statement and

Certification (HHS 568), whether or not the funded activity results in any subject

inventions. The HHS 568 must list all inventions that were conceived or first actually

reduced to practice during the course of work under the grant, and it must be signed

by the PI/PD and an authorized organizational representative. The completed form to

be submitted to the GMO should cover the period from the original effective date of

support through the date of expiration or termination of the award. If there were no

inventions, the form should indicate “None.” Copies of the HHS 568 are available on

the i-Edison Web site at https://s-edison.info.nih.gov/iEdison/.

Debt Collection

An OPDIV may administratively recover funds paid to a recipient in excess of the

amount to which the recipient is finally determined to be entitled under the terms

and conditions of the award, including misspent funds or unallowable costs incurred.

If the recipient does not pay back the funds in accordance with the demand by the

OPDIV, which specifies the period of time for repayment, the OPDIV may collect the

debt by

• making an administrative offset against payments that would be due under

other grant awards,

• withholding advance payments that would otherwise be due, or

• taking any other action permitted by statute.

Several Federal statutes governing debt collection and the Federal Claims Collection

Standards (31 CFR parts 900-904) require the OPDIV to collect debts due to the

Federal government and, except where prohibited by law, to charge interest on all

delinquent debts owed to the OPDIV by recipients (also see HHS claims collection

regulations at 45 CFR part 30). Debts may result from cost disallowances, recovery

of funds, unobligated balances, or other circumstances.

Unless otherwise specified in law, regulation, or the terms and conditions of the

award, debts are considered delinquent 30 days after notification to the recipient of

the indebtedness. The interest on delinquent debts will be computed from the

original notification date to the recipient of the indebtedness. The interest rate

applied will be the current value of funds rate or the private consumer rate of

interest fixed by Treasury, whichever is higher. A higher rate may be charged if

necessary to protect the interests of the Federal government.

Penalties and administrative collection costs also will be charged in accordance with

the act and the implementing HHS regulations, as follows:

• A penalty charge of 6 percent a year will be assessed on debts that are more

than 90 days overdue. Penalty charges will accrue from the date the debt

became overdue until the indebtedness is paid.

• Delinquent debtors will be assessed charges to cover the Federal

government’s administrative costs of collecting overdue debts. From time to

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time, HHS will publish a notice in the Federal Register setting forth the

amounts to be assessed for administrative collection costs.

If a recipient appeals an adverse monetary determination under 45 CFR part 16 or

specific OPDIV appeal procedures, collection will be suspended pending a final

decision on the appeal. If the determination is sustained (either fully or partially),

interest will be charged beginning with the date of the original notification to the

recipient of the indebtedness.

Appeals

HHS permits recipients to appeal to the DAB certain post-award adverse

administrative decisions made by HHS officials (see 45 CFR part 16). In addition,

some OPDIVs have implemented OPDIV-specific appeal procedures (see Part IV). In

general, a recipient may appeal the following OPDIV actions:

• Termination, in whole or in part, of a grant for failure of the recipient to carry

out its approved project in accordance with the applicable law and the terms

and conditions of award or for failure of the recipient otherwise to comply

with any law, regulation, assurance, term, or condition applicable to the grant

• Determination that an expenditure not allowable under the grant has been

charged to the grant or that the recipient has otherwise failed to discharge its

obligation to account for grant funds

• Denial (withholding) of a non-competing continuation award for failure to

comply with the terms of a previous award

• Determination that a grant is void (i.e., a decision that an award is invalid

because it was not authorized by statute or regulation or because it was

fraudulently obtained).

The formal notification of an adverse determination will contain a statement of the

recipient’s appeal rights. As the first level in appealing an adverse determination, the

recipient must submit a request for review to the HHS or OPDIV official specified in

the notification, detailing the nature of the disagreement with the adverse

determination and providing supporting documents in accordance with the

procedures contained in the notification. A recipient may not submit an appeal

directly to the DAB where OPDIV appeal procedures are in place. In those instances,

the DAB will review only those appeals that have been reviewed and acted on by the

OPDIV.

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In addition to the adverse determinations indicated, the DAB is the single level of

appeal for disputes related to the establishment of indirect cost rates, research

patient care rates, and certain other cost allocations used in determining amounts to

be reimbursed under HHS grants (e.g., cost allocation plans negotiated with State or

local governments and computer, fringe benefit, and other special rates).

HHS encourages its OPDIVs and recipients to try to resolve disputes by using

alternative dispute resolution (ADR) techniques. ADR often is effective in reducing

the cost, delay, and contentiousness involved in appeals and other traditional ways

of handling disputes. ADR techniques include mediation, neutral evaluation, and

other consensual methods. Information about ADR is available from the HHS Dispute

Resolution Specialist at the Departmental Appeals Board, U.S. Department of Health

and Human Services, Washington, DC 20201.

Requirements for Specific Types of Grants

Conference Grants

This section addresses requirements for grants that support domestic and

international conferences, which may be supported by grants or cooperative

agreements. If no specific or alternative requirement for conference grants is stated

below or elsewhere in this HHS GPS, the requirements applicable to all other types of

grants apply. Questions concerning conference grants or the allowability of

conference activity under other types of OPDIV grants should be directed to the

GMO.

Definitions

Definitions of key terms are as follows:

• Scientific meeting (conference)—a gathering, symposium, seminar, workshop,

or any other organized, formal event where people assemble to coordinate,

exchange, and disseminate information or to explore or clarify a defined

subject, problem, or area of knowledge.

• International conference—a meeting so designated by its sponsor or one to

which open invitations are issued on an equal basis to potential participants in

two or more countries other than the United States or Canada. The meeting

may be held in any country, including the United States.

• Domestic conference—a meeting held in the United States or Canada

primarily for U.S. or U.S.-Canadian participation (even if foreign speakers are

invited).

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Representation

Appropriate representation of women, individuals who are members of racial/ethnic

minority groups, people with disabilities, and other individuals who have been

traditionally underrepresented must be included in all aspects of planning,

organization, and implementation of OPDIV-sponsored or -supported meetings.

“Appropriate representation” is based on the availability of individuals from these

groups known to be working in a particular field of endeavor. If appropriate

representation is not apparent, the OPDIV will not make an award until the applicant

has submitted acceptable documentation of its compliance.

Funding

Awards in support of a single conference will be made for a project period

commensurate with the time involved in planning and conducting the conference and

post-conference follow-up, usually 1 year. A conference grant made to a

permanently sponsoring organization for conferences held annually or biennially on a

recurring topic may be awarded for up to a total of 5 years and will be funded

annually, based on the availability of funds. Continued funding beyond the first year

will be contingent on a report of satisfactory progress. A change in conference focus

is considered a change in scope and requires OPDIV prior approval.

Acknowledgment of Support and Disclaimer

Conference grant materials, including promotional materials, the agenda, and any

Internet sites that advertise the conference, must acknowledge that HHS provided

support for the conference, whether in whole or in part. That acknowledgment must

be accompanied by a disclaimer indicating that information provided or views

expressed at the conference, whether orally or in writing, or in any documents

resulting from the conference, do not necessarily reflect the official views of the

OPDIV providing the support or imply endorsement by the Federal government.

Use of the following language fulfills this requirement:

“Funding for this conference was made possible [in part, if applicable] by

[insert grant or cooperative agreement number] from [insert name of

OPDIV]. The views expressed in written conference materials or publications

and by speakers and moderators do not necessarily reflect the official policies

of the Department of Health and Human Services nor does mention of trade

names, commercial practices, or organizations imply endorsement by the U.S.

Government.”

Use of HHS and OPDIV Logos

Generally, the NoA will indicate the conditions for use of the HHS or OPDIV logo in

conference materials. If not specified in the NoA, a recipient must obtain prior

approval to use an HHS or OPDIV logo. Unauthorized use of the HHS or OPDIV name

or logo may result in imposition of civil monetary penalties (as provided in 42 CFR

part 1003).

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Allowable and Unallowable Costs

Grant funds may be awarded to provide general support of domestic or international

conferences held in the United States or Canada. Grant funds may not be used to

provide general support for international conferences held outside the United States

or Canada. Grant funds may be awarded to support only specific aspects of an

international conference held outside the United States or Canada. An example of a

specific aspect would be a selected symposium, panel, or workshop.

This section highlights allowable and unallowable costs under conference grants. No

costs other than those specified in Exhibit 10 as allowable, including any

qualifications on their allowability, are permitted under conference grants. Exhibit 11

addresses areas for which applicants/recipients frequently seek clarification about

allowability.

Exhibit 10. Allowable Costs under Conference Grants

Grant funds

may be used for Under the following circumstances

Conference services Necessary recording of proceedings, simultaneous translation, and

subsequent transcriptions.

Consultant services Consultant fees, including travel and supporting costs (per diem or, where

applicable, subsistence).

Equipment rental Rental of necessary equipment.

Federal employees See “Requirements for Specific Types of Recipients–Grants to Federal

Institutions and Payments to (or on Behalf of) Federal Employees under

Grants.”

Meals When certain meals are an integral and necessary part of a conference (i.e., a

working meal where business is transacted), grant funds may be used for such

meals, as qualified under “Travel” in this exhibit.

Publication costs When grant funds are awarded to pay for either the entire or partial cost of

publication of proceedings or a book or pamphlet, costs of special plates,

charts, diagrams, printing, distribution, mailing, postage, and general handling,

unless otherwise specified in the NoA.

Registration fees Registration fees paid by the recipient to other organizations on behalf of

attendees, provided such fees cover only those allowable costs properly

chargeable to the grant.

Salaries In accordance with the policy of the recipient, all or part of the salaries of

professional personnel, clerical assistants, editorial assistants, and other non-

professional staff in proportion to the time or effort directly related to the

conference.

Speakers’ fees Speakers’ fees for services rendered.

Supplies Purchase of supplies for the conference if the supplies are received and used

during the project period.

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Exhibit 10. Allowable Costs under Conference Grants

Grant funds

may be used for Under the following circumstances

Travel Travel of staff, speakers, participants, and attendees, if identified in the

application and approved at the time of award. Travel expenses for employees

of the recipient are governed by the recipient’s travel policies, consistently

applied regardless of the source of funds. Any U.S. foreign travel restrictions

that are in effect at the time of the award will be followed, such as

¡ limitations or restrictions on countries to which travel will be supported or

budgetary or

¡ other limitations on availability of funds for foreign travel.

Proposed per diem or subsistence allowances must be reasonable and limited

to the days of attendance at the conference plus the actual travel time to reach

the conference location by the most direct route. Local mileage costs only may

be paid for local participants. Where meals and/or lodgings are furnished

without charge or at a nominal cost (e.g., as part of the registration fee), the

proposed per diem or subsistence allowance must take this into consideration.

Transportation costs for attendees and participants at the conference may not

exceed coach class fares. In all cases, U.S. flag carriers will be used where

possible.

Exhibit 11. Selected Unallowable Costs under Conference Grants

Item Description

A&R Not allowable under any circumstances.

Entertainment and

personal expenses

Costs of amusement, diversion, social activities, ceremonials, and related

incidental costs, such as bar charges, tips, personal telephone calls, and

laundry charges of participants or guests, are unallowable. However, meals

may be allowable as provided under “Meals” in Exhibit 10.

Equipment purchase Not allowable under any circumstances.

Honoraria Honoraria or other payments given for the purpose of conferring distinction or

to symbolize respect, esteem, or admiration may not be paid from grant funds.

Indirect costs Not allowable under any circumstances.

Local participants’

expenses

With the exception of local mileage as indicated under “Travel” in Exhibit 10,

grant funds may not be used to pay per diem or expenses for local participants

in the conference.

Membership dues Not allowable under any circumstances.

Research patient care Not allowable under any circumstances.

Intellectual Property: Publications, Copyright, and Public Disclosure

If a recipient publishes material developed in whole or in part with HHS funds, the

material may be distributed free of charge. If the recipient charges for the material,

the sales proceeds are considered program income and must be accounted for as

specified in the NoA and reported on the FSR.

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Unless otherwise provided in the terms and conditions of the award, the recipient is

free to arrange for copyright of any publication resulting from an OPDIV-supported

conference. However, any such copyrighted publication is subject to a nonexclusive,

irrevocable, royalty-free license to the Federal government to reproduce, translate,

publish, and dispose of the material and to authorize others to use the work for

government purposes. Copyright does not extend to any materials prepared by

Federal employees as part of their official duties.

The recipient should notify conference participants that any presentation or

discussion constitutes public disclosure of information. Once information is disclosed

publicly, it may adversely impact the degree to which any intellectual property rights

could be protected.

Reporting and Record Retention

Recipients are responsible for submitting the following reports to the OPDIV upon

completion or termination of a grant in support of a conference.

Progress/Final Report

For single conferences, a final report of the conference must be submitted in

accordance with OPDIV instructions to the awarding office within 90 days after the

end of the project period.

With the approval of the OPDIV, copies of proceedings or publications resulting from

a conference may be substituted for the final report, provided they contain the

information specified for inclusion in the final report.

Financial Status Report

An FSR is required from the recipient within 90 days after the end of the project

period. Records of expenditures and any program income generated must be

maintained in accordance with the provisions of 45 CFR 74.53 or 92.42.

Construction and Modernization of Facilities

This section applies to the following OPDIV grant-supported activities:

• Construction of new facilities, which includes the installation of fixed

equipment, but excludes the cost of land and off-site improvements

• Modernization of existing facilities, which includes alteration, renovation,

remodeling, improvement, expansion, or repair; provision of equipment

necessary to make the building suitable for use by a particular program; and

the modernization, or completion, of shell space. This may be under a grant

for this purpose or as A&R under another type of grant.

To provide support for construction or modernization that is considered “major”, an

OPDIV must have specific statutory authority allowing construction or modernization.

Even if an OPDIV has this authority, a recipient may not incur costs for construction

or modernization unless the OPDIV specifically authorizes such costs.

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In addition, an applicant/recipient may propose to undertake an A&R project under a

non-construction grant. HHS characterizes A&R projects as “minor” or “major,”

depending on the type of activity proposed and the cost of the project and the

threshold set by the HHS GPS or the OPDIV (see “Cost Considerations—Allowable

Costs and Activities,” “Prior-Approval Requirements—OPDIV Prior Approval,” and Part

IV). An OPDIV may support a major A&R project only if it has specific statutory

authority allowing modernization. Generally, an A&R project that is under the OPDIV

threshold is treated as minor A&R; however, depending on the activity proposed, it

may be considered modernization (which cannot be supported unless the OPDIV has

the required statutory authority). The requirements that apply to minor A&R projects

are addressed in “Allowable Costs and Activities.”

Except where indicated, the requirements in this section apply to HHS grant-

supported construction or modernization (hereafter, “construction”) in lieu of the

requirements stated elsewhere in Part II of the HHS GPS for construction or

modernization. Other activities under the award would be subject to those other

policies. However, there may be areas of overlap, e.g., a rebudgeting action that

causes a minor A&R project to become a major A&R project.

Funding

Construction grants usually involve a single award, covering more than 1 year, made

on the basis of an application for the entire construction project. Incremental funding

(budget periods) within a project period normally is not used for construction grants.

Allowable and Unallowable Costs and Activities

Exhibits 12 and 13 indicate types of costs and activities generally allowable and

unallowable under HHS construction grants. The allowability and unallowability of

costs and activities apply to the use of Federal funds and funds expended by the

grantee to satisfy cost sharing or matching requirements (see “Matching or Cost

Sharing”). The lists are not all-inclusive. Program guidelines and other terms and

conditions of the award should be consulted for the specific costs allowable under a

particular program or grant.

Exhibit 12. Allowable Costs and Activities under Construction Grants

Item Description

Acquisition and installation

of fixed equipment

Allowable.

Architectural and

engineering services

Allowable.

Bid advertising Allowable.

Bid guarantees and

performance and payment

bonds

Bid guarantees and performance and payment bonds are allowable as

provided in 45 CFR 74.48 or 92.36(h).

Contingency fund Applicants for construction grants may include a project contingency

amount with the initial cost estimates for construction contracts to

provide for unanticipated charges. This amount will be limited to 5

percent of construction costs before bids are received and must be

reduced to 2 percent after a construction contract has been awarded.

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Exhibit 12. Allowable Costs and Activities under Construction Grants

Item Description

Filing fees for recording the

NFI

Allowable.

Force account If the grantee’s own construction and maintenance staffs are used in

carrying out modernization activities (i.e., force account), the associated

costs are allowable provided the grantee can document that a force

account is less expensive than if the project were competitively bid and

can substantiate all costs with appropriate receipts for the purchase of

materials and certified pay records for the labor involved. This requires

OPDIV prior approval.

Compliance with the

National Historic

Preservation Act

Allowable. May include hiring special consultants to research and

document the historic value of proposed performance sites and costs

associated with preparation and presentation of required materials to

inform the public and others.

Incentive costs for

contractors

Allowable consistent with contract type as specified in the solicitation of

bids or proposals and in the contract. Incentive costs must be

reasonable and appropriately documented, e.g., that conditions to earn

the incentive were met. In addition to an incentive fee provision,

incentive-type contracts may also contain a penalty provision. Other

types of bonus payments are not allowable.

Inspection fees Allowable.

Insurance Costs of title insurance, physical-destruction insurance, and liability

insurance are generally allowable. Physical destruction and liability

insurance are usually treated as F&A costs but may be treated as direct

costs in accordance with the established policy of the recipient,

consistently applied regardless of the source of funds. Title insurance, if

required, may be charged to the grant in proportion to the amount of

OPDIV participation in the property (see “Real Property —Insurance “).

Legal fees Legal fees related to obtaining a legal opinion regarding title to a site are

allowable.

Pre-award costs Costs incurred before award for architect’s fees and consultant’s fees

necessary to the planning and design of the project are allowable if the

project is subsequently approved and funded.

Project management Allowable.

Relocation expenses Allowable.

Sidewalks necessary for use

of facility

Allowable.

Site clearance. Site clearance costs are allowable as long as they are reflected in the

bid.

Site survey and soil

investigation

Allowable.

NEPA analysis Costs associated with evaluation of the environmental effects of

proposed construction activity and producing the Environmental Impact

Statement (EIS) are allowable.

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Exhibit 12. Allowable Costs and Activities under Construction Grants

Item Description

Threat-risk assessment. Costs incurred for a site-specific or project-specific assessment of

security risk by a qualified professional are allowable. The threat-risk

assessment identifies and quantifies potential threats, both internal and

external to the building, its contents, the personnel working in it, and the

general public. The analysis also includes a thorough examination and

evaluation of the physical aspects of the proposed facility, along with

operational issues.

Exhibit 13. Unallowable Costs and Activities under Construction Grants

Bonus payments other than earned incentive payments to contractors under formal incentive

arrangements are unallowable.

Construction of shell space designed for completion at a future date.

Consultant fees not related to actual construction.

Damage judgment suits.

Equipment purchased through a conditional sales contract.

Indirect/F&A costs.

Fund-raising expenses.

Land acquisition.

Legal services not related to site acquisition.

Movable equipment.

Off-site improvements such as parking lots are not allowable.

Prior-Approval Requirements

Recipients must obtain OPDIV prior approval for the following types of recipient-

initiated project or budget changes:

• A revision that would result in a change in scope of the project, including

proposed modifications that would materially alter the costs of the project,

space utilization, or financial layout, resulting in changes in the previously

approved procurement method or contract. Modifications that would

materially alter the costs include significant rebudgeting actions, whether or

not the particular expenditure requires prior approval and increase in the

amount of Federal funds needed to complete the project.

• Any other applicable change as specified in “Prior-Approval Requirements.”

• Change in the use of the facility (see “Use of Facility and Disposition” in this

section).

The request for approval must include sufficient information to allow the OPDIV to

review the circumstances and need for the proposed change. After receipt of OPDIV

prior approval, the recipient may make or authorize the approved modifications of

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the construction contract. Other less substantive modifications to construction

contracts may be made without OPDIV prior approval. However, copies of all change

orders to construction contracts must be retained as grant-related records (see

“Record Retention and Access”).

Procurement Requirements

Construction activity usually is carried out through one or more contracts under the

grant. Therefore, the circumstances of the procurement are critical to the successful

completion of the grant-supported project. All construction work must be procured

by the methods described in 45 CFR 74.40 through 74.48 or in 92.36, as applicable.

Equal Employment Opportunity, Labor Standards,

and Other Contract Requirements

Equal employment opportunity and labor standards requirements for federally

assisted construction and modernization must be specified in the information

provided to potential bidders/offerors on construction contracts under HHS grants

and must be included in the resulting contract documents (see 45 CFR part 74,

Appendix A, and 45 CFR 92.36(i)). The Davis-Bacon Act or the Copeland “Anti-

Kickback” Act apply only if specifically required by the program’s authorizing statute.

The NoA will indicate if they apply.

Equal Employment Opportunity Requirements

Construction contracts (and subcontracts) awarded under HHS grants are subject to

the requirements of EO 11246 (September 24, 1965), as amended, as implemented

in 41 CFR part 60-1 by OFCCP, DoL. The recipient is required to include the “Equal

Opportunity Clause” at 41 CFR 60-1.4(b) in any construction contract under the

grant. The contractor must be directed to include this clause in any applicable

subcontracts.

In addition, recipients and construction contractors under HHS grants are required to

comply with the solicitation and contract requirements for affirmative action specified

in 41 CFR part 60-4 for contracts in specified geographical areas that will exceed

$10,000. These requirements are specified in EO 11246 (“Notice of Requirement for

Affirmative Action to Ensure Equal Employment Opportunity”) and EO 11246

(“Standard Federal Equal Employment Opportunity Construction Contract

Specifications”).

The OFCCP regulations also require that the recipient notify the applicable OFCCP

regional, area, or field office when it expects to award a construction contract that

will exceed $10,000.

Further information about these requirements and the full text of these regulations

are available at http://www.dol.gov/esa/ofcp_org.htm

Labor Standards Requirements

Preservation of Open Competition and Government Neutrality toward Government

Contractors’ Labor Relations on Federal and Federally Funded Construction Projects.

Pursuant to EO 13202, as amended by EO 13208 (April 6, 2001), executive agencies

issuing grants, providing Federal assistance, or entering into cooperative agreements

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for construction projects (including major and minor A&R) must ensure that bid

specifications, project agreements, or other controlling documents for construction

services contracts awarded by recipients of grants, cooperative agreements, or other

financial assistance do not do the following:

• Require or prohibit bidders, offerors, contractors, or subcontractors to enter

into or adhere to agreements with one or more labor organizations, on the

same or other related construction projects. It does not prohibit contractors

or subcontractors from voluntarily entering into such agreements.

• Otherwise discriminate against bidders, offerors, contractors, or

subcontractors for becoming, refusing to become, or remaining signatories, or

otherwise adhering to agreements with one or more labor organizations, on

the same or other related construction projects.

Non-segregated Facilities. Pursuant to 41 CFR 60-1.8, for any contract for

construction services that will exceed $10,000, the grantee must require each

prospective contractor to submit a certification that the contractor

• does not, and will not, maintain any facilities it provides for its employees in a

segregated manner;

• does not or will not permit its employees to perform their services at any

location, under the contractor’s control, where segregated facilities are

maintained; and

• will obtain a similar certification before awarding any covered subcontract.

Contract Work Hours and Safety Standards. Contractors and subcontractors

providing construction services under HHS grants with contracts or subcontracts

exceeding $100,000 are subject to the requirements of the Contract Work Hours and

Safety Standards Act, 40 U.S.C. 3701–3708, concerning the payment of overtime

and the maintenance of healthful and safe working conditions if the statute

authorizing the grant provides wage standards for the project to be funded by the

grant.

Under this act, wages paid any laborer or mechanic employed by the contractor or

subcontractor must be computed on the basis of a standard workweek of 40 hours.

For all work in excess of the standard workweek, mechanics and laborers must be

compensated at a rate not less than one-and-a-half times the basic rate of pay. If

this requirement is violated, the contractor or subcontractor is liable to the employee

for the unpaid wages and may be liable to the Federal government for liquidated

damages. The OPDIV or the recipient may withhold otherwise payable funds to

satisfy any such liability. The statute also specifies penalties for intentional violation

of these requirements.

Further, pursuant to standards issued by the Secretary of Labor, a contractor or

subcontractor under an HHS grant (with contracts or subcontracts exceeding

$100,000) must not require any laborer or mechanic employed in the performance of

the contract to work in surroundings or under working conditions that are unsanitary,

hazardous, or dangerous to an individual’s health or safety. Violation of these

requirements may be cause for debarment from future Federal contracts or financial

assistance.

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Other Requirements

Liquidated Damages. Invitations for bids must stipulate a time for completion of the

project, expressed either in calendar days or as a fixed date, for each prime contract

to be awarded under the project. At the option of the grantee, a liquidated damages

provision may be included in the contract, allowing for assessment of damages when

the contractor has not completed the construction or modernization by the date

specified in the contract. Liquidated damages must be real and justified and must be

approved by the OPDIV before solicitation. Where damages are assessed, any

amounts paid belong to the recipient.

Disposition of Unclaimed Wages. During or after the period of performance of an

HHS-assisted contract for construction services, if it is discovered that an employee

is entitled to wages but cannot be located for the purposes of payment (or for some

reason refuses to accept payment), the grantee may eventually have to repay the

Federal government.

The recipient should notify the GMO that an escrow account has been established in

the affected employee’s name and should maintain the account for 2 years (or longer

if required by State or local law) following the completion of the contract. Upon the

expiration of this period, any amounts still unclaimed will be disbursed by refunding

to the OPDIV either the entire amount, if the construction or modernization project

was

100 percent funded by the OPDIV, or an amount representing the percentage of

OPDIV participation in the project. If the project was funded by more than one HHS

program at differing rates, the refund should be based on an average percentage

calculated by weighting each program’s rate of participation by the dollar amount of

that program’s contribution.

If the contractor has made a reasonable effort to locate the employee by having mail

forwarded and contacting the employee’s union, the recipient need not repeat such

attempts. If there is reason to believe that the contractor’s efforts to locate

employees that are due wages were not thorough, the recipient should attempt to

locate the employees. Doing so will reduce the likelihood of future claims against the

recipient. If any wages held in escrow are paid to an employee or an employee’s

legal representative while the account is maintained, a complete report must be

made to the GMO when the account is closed.

Use of Facility and Disposition

HHS awards for construction or modernization generally require that a facility be

used for the programmatic purpose of the award as long as needed for that purpose

(see the NoA or Part IV). During that time, the recipient must use the facility for the

originally authorized purpose unless it obtains prior approval from the OPDIV to use

the facility for an alternate purpose. If, during the required usage period, the facility

is no longer used for the original intended purpose, the OPDIV may, for recipients

covered by 45 CFR part 74, provide prior approval for alternate use as specified in 45

CFR 74.32; direct the recipient to sell the property or allow it to retain title and

recover the OPDIV share; or direct that title be transferred to a third party named by

the OPDIV (see “Property Management—Real Property”).

The usage obligation may also be transferred to facilities of substantially comparable

or greater monetary value or utility to carry out the original purpose for which the

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grant was awarded. In this event, the remaining usage obligation must be released

from the original facility constructed with grant funds and transferred to the new

facility. The recipient remains subject to all other requirements imposed by the NoA

or successor document (if the change occurs following the period of grant support).

The OPDIV will monitor compliance with these requirements through periodic facility

use certifications or reports, site visits, and other appropriate means for the

duration of the required usage period. After the required usage period, the

organization has no further accountability to the OPDIV concerning the use of the

property or any sales proceeds.

If, during the required usage period, the facility is no longer used for the original

intended purpose and the OPDIV did not provide prior approval for an alternate use,

the recipient must comply with disposition requirements. The OPDIV may recover its

share of the construction or modernization costs. For disposition of property acquired

on an amortized acquisition basis, the formulas in 45 CFR 74.32 and 92.31 do not

apply in determining the Federal share. In cases of amortized acquisition, the Federal

share will be determined by multiplying the amount of mortgage principal already

repaid at the time of disposition by the average Federal participation (taken from the

FSR) plus the increase in value over the purchase price multiplied by the average

Federal participation plus the Federal participation in the down payment. The

computation of the Federal share of real property acquired with long-term debt

financing must be computed for each year of grant support in which Federal funds

are used to meet all or a portion of the down payment, principal on the mortgage, or

both.

Traineeship, Fellowship, and Similar Awards Made

to Organizations on Behalf of Individuals

Applicants/recipients should consult the funding opportunity announcement and any

program guidance or guidelines for application instructions; eligibility requirements,

including citizenship and sponsorship requirements; and other program-specific

requirements related to required forms, allowable costs, and reporting requirements.

Detailed requirements for the Kirschstein-National Research Service Awards program

are found at http://grants1.nih.gov/training/extramural.htm. Some of the

administrative requirements that pertain to fellowships under that program are

described below. See Part IV for other programs.

Initiation of Support

The OPDIV will notify the individual of the intention to make an award and confirm

the plans for the start of fellowship support. The fellowship award notice allows the

individual to begin the fellowship immediately on or after the issue date, but permits

up to 6 months for the individual to make final arrangements, such as the

completion of degree requirements, final coordination with the sponsor, and, if

necessary, a move to the sponsoring institution. The fellow must start the period of

training under the award by the latest activation date as shown on the award notice,

i.e., 6 months from the award issue date. The activation period may be extended in

unusual circumstances. Written requests for extensions should be submitted by the

fellow and must be countersigned by the sponsor and the authorized organizational

representative.

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An activation notice must be submitted to the awarding office as of the day the

fellow begins training. A payback agreement may also be required to be completed

and submitted (see Part IV or the program guidelines). A stipend may not be paid

until the forms are submitted and the fellow begins training. If necessary for payroll

purposes, the activation notice and payback agreement may be submitted up to 30

days before the start date. However, any change in the planned activation start date

must be reported immediately to the sponsoring institution’s business office and to

the OPDIV. If an award is conditioned upon completion of degree requirements, the

fellow must submit, with the activation notice, proof of completion by the degree-

granting institution.

Fellowship support generally is approved for consecutive years of training. The initial

award usually is for 12 months. Subsequent periods of approved fellowship training

are consecutive with the first year of support and are usually in 12-month

increments (budget periods). Awards for less than 12 months will be prorated

accordingly. If a fellow decides not to activate the award, or to terminate early, he or

she should notify the recipient organization’s business office, the sponsor, and the

OPDIV immediately, in writing. The OPDIV will make any necessary adjustments in

the stipend and other costs, including the institutional allowance.

Payment

Payment is as follows:

• Domestic organizations. Non-Federal sponsoring organizations receive an

award for the stipend, institutional allowance, and tuition and fees (when

applicable). The organization directly pays the fellow and disburses all other

awarded costs.

• Federal laboratories. Fellows training at Federal laboratories are paid stipends

directly by the OPDIV. Reimbursement to the fellow for appropriate

expenditures from the institutional allowance also is paid by the OPDIV.

• Foreign organizations. Fellows training at foreign sites receive stipends

directly from the OPDIV. However, the institutional allowance is awarded to

and disbursed by the sponsoring organization.

Allowable Costs

Exhibit 14 lists and describes allowable costs of fellowships.

Exhibit 14. Allowable Costs of Fellowships

Item Description

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Exhibit 14. Allowable Costs of Fellowships

Item Description

Stipend A stipend is provided as a subsistence allowance for fellows to help defray living

expenses during the training experience. It is not provided as a condition of

employment with either the Federal government or the sponsoring organization.

Stipends must be paid in accordance with stipend levels established by the OPDIV,

which are based on a 12-month full-time training appointment. In the event of early

termination, the stipend will be prorated according to the amount of time spent in

training, and the OPDIV will issue a revised NoA. No departure from the standard

stipend provided by the OPDIV under the fellowship may be negotiated by the

sponsoring institution with the fellow.

Stipend levels are updated nearly every year. When increases are approved, they are

published and posted on the OPDIV Web site. The awarding office will adjust

fellowship awards on their anniversary dates to include the currently applicable stipend

amount.

Institutional

allowance

An institutional allowance is generally provided to help support the costs of training.

The specific levels of allowance for support, including those for individuals training at

Federal laboratories, for-profit organizations, or foreign organizations, are published by

the OPDIV and posted on its Web site. Costs for tuition and fees, where appropriate,

will be awarded independent of the institutional allowance.

The institutional allowance is a fixed amount. Expenditures under institutional

allowances are not subject to OPDIV prior-approval requirements, and the institution is

not required to account for these expenditures on an actual cost basis. Except for

fellows at Federal training sites, consistent with OPDIV policy governing the type of

expenditures appropriate for the institutional allowance, the sponsoring organization

authorizes the expenditure of the institutional allowance on behalf of the fellow

according to the organization’s policy. The organization is entitled to expend up to the

full institutional allowance upon official activation of the award. However, if an individual

fellow is not in a training status for more than 6 months of the award year, only one-half

of that year’s institutional allowance may be charged to the grant. The NoA will be

revised and the balance must be refunded to the OPDIV.

The type of sponsoring institution dictates what costs may be charged to this category

and how the funds are to be administered.

Non-Federal

public and

private non-

profit

organizations

(domestic and

foreign)

The allowance is intended to defray expenses for the individual fellow such as supplies,

equipment, travel to meetings, and health insurance and to otherwise offset, insofar as

possible, appropriate administrative costs of training. Funds are paid directly to and

administered by the sponsoring organization.

Federal

laboratories

The allowance is intended to cover the costs of meeting travel, health insurance, and

books. Funds are administered by the OPDIV.

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Exhibit 14. Allowable Costs of Fellowships

Item Description

For-profit

institutions

The allowance is intended to cover the costs of meeting travel, health insurance, and

books. Funds are paid directly to the sponsoring organization for disbursement to the

fellow.

The following are guidelines for the use of the institutional allowance:

¡ Travel. Payment for travel to meetings is appropriate when it is necessary for the

individual’s training and when the costs are incurred within the period of grant-

supported training. For fellows at Federal laboratories, reimbursement of travel costs

must be in accordance with current Federal travel regulations. Funds may not be

expended to cover the costs of travel between the fellow’s place of residence and

the domestic training organization, except that the sponsoring organization may

authorize the cost of a one-way travel allowance in an individual case of extreme

hardship.

¡ Extraordinary costs. Additional funds may be requested by the organization when

the training of a fellow involves extraordinary costs for travel to field sites remote

from the sponsoring organization or accommodations for fellows who are disabled,

as defined by the Americans with Disabilities Act. The funds requested for

extraordinary costs must be reasonable in relationship to the total dollars awarded

under a fellowship and must be directly related to the approved training activity.

Such additional funds will be provided only in exceptional circumstances that are

fully justified and explained by the organization.

¡ Health insurance. A fellow’s health insurance is an allowable cost only if applied

consistently to all people in a similar training status regardless of the source of

support. Family health insurance is an allowable cost for fellows who have families

and are eligible for family health insurance coverage at the sponsoring organization.

Self-only health insurance is an allowable cost for fellows without families. Health

insurance can include coverage for costs such as vision and/or dental care if

consistent with organizational policy.

Tuition and

fees

Costs associated with tuition and fees are allowable only if they are required for

specific courses in support of the training. The recipient should consult the OPDIV

guidelines or Part IV for specific guidance on the reimbursement of tuition and fees.

Travel to

foreign

training sites

For fellows at foreign training sites, in addition to the institutional allowance, awards

may include a single economy or coach round-trip travel fare. No allowance is provided

for dependents. U.S. flag air carriers must be used to the maximum extent possible

when commercial air transportation is the means of travel between the United States

and a foreign country or between foreign countries. This requirement will not be

influenced by factors of cost, convenience, or personal travel preference.

Employee

benefits

Since fellowships are not provided as a condition of employment with either the Federal

government or the sponsoring organization, recipients may not seek funds, or charge

fellowship awards, for costs that normally would be associated with employee benefits

(for example, FICA, workers compensation, and unemployment insurance).

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Supplementation of Stipends, Compensation, and Other Income

Stipend Supplementation

Fellows receive stipends to defray living expenses. Stipends may be supplemented

by an organization from non-Federal funds provided this supplementation does not

require any additional obligation from the fellow. An organization can determine the

amount of stipend supplementation, if any, it will provide according to its own

formally established policies governing stipend support. These policies must be

consistently applied to all individuals in a similar status regardless of the source of

funds. Federal funds may not be used for stipend supplementation unless specifically

authorized under the terms of the program from which funds are derived. Under no

circumstances may OPDIV funds be used for supplementation. An individual may use

Federal educational loan funds or VA benefits when permitted by those programs as

described in this section.

Compensation

Fellows may seek part-time employment incidental to their training program to offset

further their expenses. Funds characterized as compensation may be paid to fellows

only when there is an employer-employee relationship, the payments are for services

rendered, and the situation otherwise meets the conditions for compensation of

students as detailed in “Selected Items of Cost.” In addition, compensation must be

in accordance with organizational policies applied consistently to both federally and

non-federally supported activities and must be supported by acceptable accounting

records that reflect the employer-employee relationship agreement. Under these

conditions, the funds provided as compensation (salary, fringe benefits, and/or

tuition remission) for services rendered, such as teaching or laboratory assistance,

are not considered stipend supplementation; they are allowable charges to Federal

grants, including HHS grants. However, the OPDIV expects that compensation from

HHS grants will be for limited part-time employment apart from the normal training

activities. Compensation may not be paid from a grant that supports the same

activity that is part of the fellow’s planned training experience as approved in the

fellowship application. Under no circumstances may the conditions of stipend

supplementation or the services provided for compensation interfere with, detract

from, or prolong the fellow’s approved training program. Fellowship sponsors must

approve all instances of employment on HHS grants to verify that the circumstances

will not detract from or prolong the approved training program.

Concurrent Benefits

A fellowship under the Kirschstein-National Research Service Awards may not be

held concurrently with another federally sponsored fellowship or similar Federal

award that provides a stipend or otherwise duplicates provisions of the fellowship

award.

Educational Loans or GI Bill

An individual may accept concurrent educational remuneration from the VA (GI Bill)

and Federal educational loan funds. Such funds are not considered supplementation

or compensation.

Taxability of Stipends

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Section 117 of the Internal Revenue Code applies to the tax treatment of

scholarships and fellowships. Degree candidates may exclude from gross income (for

tax purposes) any amount used for course tuition and related expenses such as fees,

books, supplies, and equipment required for courses of instruction at a qualified

educational organization. Non-degree candidates are required to report as gross

income any monies paid on their behalf for stipends or any course tuition and fees

required for attendance. The taxability of stipends in no way alters the relationship

between fellows and sponsoring organizations. Stipends are not considered salaries.

In addition, recipients of fellowships are not considered to be in an employee-

employer relationship with the OPDIV or the sponsoring organization solely as a

result of the fellowship award. The interpretation and implementation of the tax laws

are the domain of the IRS and the courts. HHS takes no position on what the status

may be for a particular taxpayer, and it does not have the authority to dispense tax

advice. Individuals should consult their local IRS office about the applicability of the

law to their situation and for information on their tax obligations.

Form 1099

Although stipends are not considered salaries, this income is still subject to Federal

and, sometimes, State income tax. Such income may be reported by the sponsoring

organization on IRS Form 1099, Statement of Miscellaneous Income. Normally, the

business office of the sponsoring organization will be responsible for annually

preparing and issuing IRS Form 1099 for fellows paid through the organization

(fellows at domestic non-Federal organizations). Sponsoring organizations are not

required to issue a Form 1099, but it is a useful form of documentation of income

received and a reminder to the fellow that some tax liability may exist. Fellows are

reminded that, even if the sponsoring organization does not issue a Form 1099, they

still are required to report stipends as income. The OPDIV will issue a Form 1099 for

each fellow training at a Federal or foreign laboratory and receiving a stipend check

from the U.S. Treasury.

Reporting Requirements

The submission of the forms described in this section is critical to establishing and

paying stipends and other costs and determining payback service, if applicable. All of

these forms generally are available in PDF-fillable and RTF formats at the OPDIV Web

site or http://grants.nih.gov/grants/forms.htm. The awarding office may provide

copies of applicable forms with—or reference the Web site in—the NoA.

Activation Notice

Immediately upon the initiation of training, the individual must complete and sign a

fellowship activation notice (e.g., PHS 416-5), obtain the signature of the authorized

organizational representative, and forward the notice along with a payback

agreement (where required) to the awarding office. For fellows paid directly by the

OPDIV, the activation notice is required at the start of each award year. The form

should not be submitted before the fellow actually begins training. Stipend checks

are issued when both the activation notice and the payback agreement (where

required) are received by the awarding office. For fellows whose stipend is paid

through the organization, the activation notice is required for the initial year only.

The activation notice may be submitted up to 30 days before the individual begins

training if necessary for payroll purposes. However, the organization must not

release any funds until the individual has started training. Furthermore, if the

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individual does not begin training on the day indicated, the organization must notify

the awarding office immediately. Competing continuation awards must be activated

on the day following the end of the last budget period of the previous award.

Payback Agreement

A payback agreement (e.g., PHS 6031), where required, must be signed by each

person who is to receive a fellowship. Recipients should consult the OPDIV program

guidelines or Part IV for guidance regarding the submission of a payback agreement.

Termination Notice

The termination notice (e.g., PHS 416-7) (along with the activation notice and the

award notice) is the basis for validating the total period of fellowship support and

establishing the amount of payback obligation, if any. A reminder of this reporting

requirement may be sent to the fellow by the awarding office before the scheduled

termination date. For early terminations, the completed form will be required

immediately upon receipt of notification from the fellow or an authorized

organizational representative. The lack of timely and accurate information on this

form could adversely affect the payback process.

Progress Reports

Progress reports must be submitted for non-competing continuation support.

Progress report forms and instructions generally are available from the OPDIV Web

site or at http://grants.nih.gov/grants/forms.htm. Report form pages are available in

PDF-fillable and RTF formats. Inadequate or incomplete progress reports may be

returned to the fellow for revision and may result in a delay of continued support. A

final progress report is required as part of the termination notice.

Financial Status Report

An annual or final FSR is not required on fellowship awards.

Changes in the Project/Activity

Fellowship awards are made for training at a specific organization under the guidance

of a particular sponsor. OPDIV approval is required for a transfer of the award to

another organization, a change in sponsor, or a project/activity change. As part of

the approval process, if a fellow sponsored by a domestic non-Federal organization

requests a transfer to another domestic non-Federal organization before the end of

the current award year, the initial organization may be requested to continue to pay

the stipend until the end of the current year. Disposition of the institutional

allowance is negotiable between the two sponsoring organizations. No activation

notice is required from the new sponsoring organization.

Transfers involving Federal or foreign sponsoring organizations require unique

administrative procedures and approvals. Because each transfer varies depending on

individual circumstances, the sponsoring organization should contact the awarding

office for specific guidance.

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Any proposed change in the individual’s specified area of training must be reviewed

and approved in writing by the OPDIV to ensure that the training continues to fall

within the area of the original reviewed application. When the sponsor is going to be

absent for more than 3 months, an interim sponsor must be named by the

organization and approved in writing by the OPDIV.

Consecutive Support

If a fellow switches from one grant mechanism to another (e.g., from an institutional

research training grant to a fellowship or from one OPDIV or OPDIV component to

another), the requirement for payback service incurred is deferred until the total

period of support is completed. All fellowship applications are reviewed to determine

if previous fellowship support has been provided.

Termination

An OPDIV may terminate a fellowship before its normal expiration date if it

determines that the recipient has materially failed to comply with the terms and

conditions of the award or to carry out the purpose for which it was made. If an

award is terminated for cause, the OPDIV will notify the fellow in writing of the

determination, the reasons for the determination, the effective date, and the right to

appeal the decision.

The OPDIV also may terminate an award at the request of the sponsoring

organization or the recipient. The awarding office must be notified immediately if a

sponsoring organization wants to terminate an individual fellow or the fellow decides

to terminate training before the scheduled expiration date. If a fellowship is

terminated early, the stipend must be prorated according to the amount of time

spent in training, and the award notice will be revised. The balance of any

institutional allowance (at least one-half) must be refunded if the training has been

for 6 months or less.

Except as otherwise provided in the conditions of the award, when a publication or

similar copyrightable material is developed from work supported by HHS, the author

is free to arrange for copyright without approval of the OPDIV. Such copyrighted

materials are subject to a royalty-free, nonexclusive, and irrevocable license to the

Federal government to reproduce them, translate them, publish them, and use and

dispose of them, and to authorize others to do so for Federal government purposes.

Inventions and Patents

Fellowships funded primarily for educational purposes are not subject to invention

reporting requirements nor does the OPDIV have any rights to inventions under

those awards (as specified in 37 CFR 401.1(b)). Kirschstein-National Research

Service Award fellows training at HHS represent an exception to this policy. Those

fellows are subject to the provisions of EO 10096 and the OPDIV determines the

disposition of rights to any invention conceived or actually reduced to practice during

the period of the fellowship.

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Disposition of Professional Fees

Fees resulting from clinical practice, professional consultation, or other comparable

activities performed pursuant to the purpose of the award must be assigned to the

sponsoring organization for disposition in accordance with established organizational

policy. The term “professional fees” does not apply to honoraria, fees for scholarly

writing, delivery of occasional outside lectures, or service in an advisory capacity to

public or private non-profit organizations, which, if permitted by organizational

policy, may be retained by the fellow.

Requirements for Specific Types of Recipients

Grants to Foreign Organizations, International Organizations,

and Domestic Grants with Foreign Components

and Subawards to Foreign Organizations

Most of the policies contained in this HHS GPS apply to grants made to foreign

organizations and international organizations (hereafter “foreign grants”), including

the requirements of 45 CFR part 74 or 45 CFR part 92, as applicable to the type of

foreign organization, and the cost principles incorporated by reference in those

regulations. If an applicant/recipient would be unable to comply with these

requirements, the authorized organizational representative should contact the GMO.

Specific exceptions and modifications of the HHS GPS requirements for foreign

grants, and highlights of other policies, are set forth in this section. This section also

includes policies that apply to domestic grants with a foreign component.

Public Policy Requirements

All public policy requirements included in “Public Policy Requirements” in Part I apply

to foreign grants, with the following exceptions:

• Civil rights. None of the civil rights requirements specified in “Public Policy

Requirements” apply to foreign grants.

• Debarment and suspension. Applicants and recipients that are foreign

governments or governmental entities, public international organizations, or

foreign-government-owned or -controlled (in whole or in part) entities are not

subject to the debarment or suspension certification requirement or to

debarment or suspension under 45 CFR part 76. All other foreign

organizations and international organizations are subject to these

requirements.

• Drug-free workplace. Foreign applicants and recipients may be exempted

from the drug-free workplace requirements of 45 CFR part 83 based on a

documented finding by the OPDIV that application of those requirements is

inconsistent with U.S. international obligations or the laws and regulations of

a foreign government.

• Environmental requirements. Receipt of a grant does not make a foreign

applicant/recipient subject to environmental requirements that would not

otherwise apply to it.

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Funding and Payment

The application budget, requests for funds, and financial reports must be stated in

U.S. dollars using the currency rate in effect at the time of submission. Once an

award is made, the OPDIV may adjust for currency exchange fluctuations as part of

the non-competing continuation award process. This may result in an upward or

downward adjustment from the total approved budget for that budget period based

on the net change from the prior year’s award.

Awards to foreign organizations and international organizations generally are paid by

the OPDIV’s servicing finance office rather than through PMS unless the recipient is

serviced by a U.S. owned- or -based bank. All payments will be in U.S. dollars at the

rate of exchange current at the time of payment. Foreign recipients are strongly

encouraged to use U.S. banks to ensure that payments arrive on time.

Payments are made by U.S. Treasury check. If paid by the OPDIV, grants normally

will be paid on a predetermined quarterly advance basis, usually in four equal

installments, unless the total amount of the award is $25,000 or less. If the amount

advanced to an organization based on the predetermined quarterly advance is

insufficient to meet the grant’s cash requirements, the recipient must make a written

request to the GMO for any additional funds needed. If payments are made by PMS,

they are made on the same basis as for domestic grants (see “HHS Grants Process—

Payment”).

Allowable Costs

The costs that are generally allowable under grants to domestic organizations also

are allowable under foreign grants, with the following exceptions:

• A&R. Major A&R costs are unallowable under foreign grants and domestic

grants with foreign components. Minor A&R costs are allowable (see “Cost

Considerations—Allowable Costs and Activities” and “Prior-Approval

Requirements”).

• Audit costs. Costs of financial-related audits are allowable (see “Audit” in this

section).

• Customs and import duties. These costs, which include consular fees, customs

surtax, value-added taxes, and other related charges, are unallowable under

foreign grants and domestic grants with foreign components.

• Indirect costs. With the exception of the American University of Beirut, which

is not considered a foreign organization, and the World Health Organization,

indirect costs will not be reimbursed.

• Research patient care costs. Research patient care costs are allowable only in

exceptional circumstances as determined by the OPDIV.

Prior-Approval Requirements

Foreign grants generally are included in expanded authorities.

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A change in the performance site within a foreign country or performance in a

country other than that specified in the approved application requires OPDIV prior

approval. The transfer of work by a domestic recipient to a foreign component also

requires OPDIV prior approval.

A change of grantee organization that involves the transfer of a grant to or between

foreign organizations or international organizations requires OPDIV approval and,

where applicable, the associated National Advisory Council or Board. OPDIV approval

also is required for the transfer of a grant from a foreign organization to a domestic

organization.

Audit

Foreign recipients are subject to the same audit requirements as for-profit

organizations (specified in 45 CFR 74.26(d)).

Subawards

Subawards to foreign entities that are considered financial assistance arrangements

(rather than acquisition of goods or services) require special oversight by recipients.

The recipient must do the following:

• Ensure that appropriate OPDIV approval is obtained for a foreign subaward;

i.e., that the OPDIV approves of the intent to subaward (subgrant) as defined

in 45 CFR 74.2 and 45 CFR 92.3 (see “Prior Approval Requirements—OPDIV

Prior Approval”). The recipient does not have to obtain GMO approval of the

selected subrecipient or the agreement between the recipient and

subrecipient.

• Determine whether the subaward recipient is subject to OMB Circular A-133

audit requirements (generally the case only if the subaward recipient has

direct awards from HHS because HHS has adopted A-133 as the standard

audit requirement for foreign recipients).

• Determine appropriate means of oversight, including review of reports, or on-

site reviews, or alternatives to an A-133 audit if one will not be available

during the period of the subaward, as part of seeking OPDIV approval, and

indicate how it will monitor foreign subawards.

• Provide adequate evidence during its own A-133 audit and in reports to the

OPDIV that it is meeting its subrecipient monitoring responsibilities.

Grants to Federal Institutions and Allowable Costs and

Payments to (or on Behalf of) Federal Employees under Grants

Most of the policies contained in this HHS GPS apply to grants made to Federal

institutions. If an applicant/recipient would be unable to comply with these

requirements, the authorized Federal official should contact the GMO. Specific

exceptions and modifications of the HHS GPS requirements for Federal recipients,

and highlights of other policies, are set forth in this section.

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Eligibility

Federal institutions are eligible to receive certain types of grants from PHS OPDIVs.

This includes, but is not necessarily limited to, grants for research, training, and

demonstration projects. Federal institutions must meet the eligibility requirements of

the grant program from which support is sought. However, in no case may an

awarding office issue a grant award to any component of its own OPDIV.

Although the performance site may be at a level lower than the agency or

department, when an award is made to an eligible Federal institution, the Federal

agency or department will be the designated recipient and must assume

responsibility for the project. Federal institutions must also ensure that their own

authorizing legislation will allow them to receive a PHS grant and be able to comply

with the award terms and conditions.

A document certifying both the assumption of responsibility and authority to receive

a grant must be submitted at the time of each new and competing continuation

application. The certification must be signed by the head of the responsible Federal

department or independent agency or a designee who reports directly to the

department or agency head. (In the case of the Department of Defense, the

Departments of the Army, Navy, and Air Force are considered the Federal

department and their Secretaries as the responsible Department head.)

The certification requirement does not apply to VA hospitals, Bureau of Prisons

(Department of Justice) hospitals, IHS hospitals, or other PHS OPDIVs applying for

grants. Generally an award to a PHS OPDIV other than to an IHS hospital will be

considered only if a project cannot be supported within the mission of the applicant

OPDIV or organizational segment, the activity cannot be performed elsewhere, its

non-pursuit would have an adverse or potentially important impact on the OPDIV

mission, and a grant is determined to be the appropriate means of carrying out the

activity.

Payment

Grants to DoD normally will be paid by U.S. Treasury check after submission of the

appropriate interagency form. Payments to all other Federal departments and

agencies generally will be accomplished by transfers of funds between

appropriations.

Allowable Costs under Grants to Federal Institutions

Allowable costs under grants to Federal institutions will be determined by the

established policies of the institution, consistently applied to both its own activities

and to grant-supported activities, and by the requirements shown in Exhibit 15. In

the absence of a governing organizational policy, the cost principles for State, local,

and Indian tribal governments (OMB Circular A-87) will apply.

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Exhibit 15. Allowable Costs under Grants to Federal Institutions

These costs are

allowable

only as specified If

Indirect costs Indirect costs will not be provided to Federal institutions.

Institutional allowances

under fellowships

Institutional allowances may be requested by Federal institutions sponsoring

a predoctoral or postdoctoral fellow.

Federal (U.S.

Government) employees

No salary or fringe benefit payments may be made from HHS grant funds to

support career, career-conditional, or other Federal employees (civilian or

uniformed services) with permanent appointments provided for under existing

position ceilings of a Federal institution receiving a grant. While the level of

effort required for the project must be allowed by the recipient as part of the

individuals’ official duties, salary costs associated with an individual

participating in an official capacity as a Federal employee under a grant to

that Federal institution are not allowable costs under an HHS grant. See

“Payments to (or on behalf of) Federal Employees under Grants” for the

conditions under which salary and fringe benefits may be paid for Federal

employees working on a grant-supported project when the recipient is a non-

Federal organization or a Federal institution other than the one that employs

the individual.

Project-related travel costs of such employees are allowable as long as they

consistent with the FTR. See Exhibit 16 in this section.

Payments to temporary

employees

Payments to individuals specifically hired to assist in the performance of the

grant are allowable.

Equipment Accountability

HHS will consider all nonexpendable personal property acquired under a grant

awarded to a Federal institution as federally owned, subject to 45 CFR 92.32. Upon

completion of the award, or when the property is no longer needed, the recipient

must request disposition instructions from the OPDIV.

Procurement Requirements

Procurement under grants to Federal institutions is governed by the FAR and the

recipient agency’s FAR supplement.

Intellectual Property

Inventions resulting from grants supporting the activities of Federal employees under

grants to Federal institutions must be reported simultaneously to the OPDIV and to

the employing agency under the terms of EO 10096, as amended, and are subject to

the licensing requirements of 37 CFR part 401. (See https://s-

edison.info.nih.gov/iEdison/ for reporting requirements.) In cases where the VA is

involved with the invention but is not the recipient, and the recipient chooses not to

elect title or pursue practical application of an invention, the recipient must note VA’s

involvement on its notice to the OPDIV and provide a courtesy copy of the OPDIV

notification to the appropriate VA office. The OPDIV will notify the recipient and the

VA whether the OPDIV has an interest in taking title and/or continuing the pursuit of

practical application of the invention.

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Reporting Requirements

Federal institutions must submit annual FSRs and progress reports.

Allowable Costs and Payments to (or on Behalf of)

Federal Employees under Grants

Exhibit 16 lists and describes allowable costs and payments to Federal employees

under grants.

Exhibit 16. Allowable Costs and Payments to (or on Behalf of)

Federal Employees under Grants

Item Description

General Only four types of costs—consultant fees, outpatient or subject costs, salary or fringe

benefits (when the employee is not an employee of a recipient Federal institution or is a

part-time VA employee as described in this exhibit), and travel costs—can be charged to

OPDIV grants on behalf of Federal employees, whether by a recipient or subrecipient, and

under the conditions specified only. Applicants/recipients should advise any Federal

employees with whom these types of arrangements may be made to consult with their

employing agency concerning their ability to meet the required conditions.

The applicant/recipient must submit, as part of the grant application or subsequent

request, any letters or documentation specified below, and that documentation must be

deemed acceptable by the GMO before the Federal employee may be involved in a

project.

These limitations do not apply to individuals that are classified as special government

employees because of service on advisory groups or as a result of a formal consulting

arrangement with a Federal agency. (See the HHS Standards of Conduct at 45 CFR part

73, Subpart J for additional guidance.)

Consultant

fees

These costs are allowable only for medical personnel of the Uniformed Services of the

United States (excluding PHS Commissioned Officers) and when all of the following

conditions are present:

¡ The employees are providing the kind and extent of medical services approved in the

grant award.

¡ Adequate numbers of qualified civilian personnel are not available to provide these

services, and eligible Federal medical personnel are hired only in addition to those

qualified civilian medical personnel, if any, who are available.

The applicant/recipient organization provides prior written authorization from the proposed

consultant’s commanding officer that he or she is authorized to work on the grant-

supported activity during non-duty hours or while on authorized leave, and can be paid for

his or her efforts.

Outpatient

or subject

costs

These costs are allowable when the employee is an outpatient or subject under study in

connection with grant-supported activities.

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Exhibit 16. Allowable Costs and Payments to (or on Behalf of)

Federal Employees under Grants

Item Description

Salary or

fringe

benefits

Salary payments may be made from OPDIV grant funds to career, career-conditional, or

other Federal employees (civilian or uniformed services) with permanent appointments

provided under existing position ceilings of a Federal institution only if prior approval is

obtained from an authorized official of the employee’s agency and the employee is one of

the following:

¡ A PHS Commissioned Officer or a civil service employee carrying out duties for which

specific statutory authorization exists permitting direct Federal assistance in lieu of cash

under the grant, or where the government is reimbursed for services rendered subject

to restrictions applicable to such personnel, including the applicable Federal standards

of conduct (for HHS, 45 CFR part 73).

¡ A PHS Commissioned Officer on LWOP if the

 recipient has obtained written prior approval from the OPDIV;

 total amount of salary paid from OPDIV grant funds is proportional to the time

devoted to the project and does not exceed the total annual amount of pay and

allowances the individual would have received if not in LWOP status; and

 parties concerned have made a prior determination that there is no possibility of dual

compensation and there is no actual or apparent conflict of interest or other violation

of the applicable standards of conduct.

¡ A civil service employee participating in a grant to a non-Federal organization and all of

the following conditions are met:

 The individual is participating as part of an approved IPA assignment in a role other

than as PI/PD. IPA assignments generally do not exceed 2 years and may not

exceed 4 years of continuous duration (5 U.S.C. 3372). Based on this statutory time

restriction, the involvement of the civil service employee should be limited in scope.

Therefore, the proposed PI/PD for an HHS grant may not be participating through an

IPA. On a case-by-case basis, the OPDIV may determine that certain other key

personnel on the project are sufficiently critical to its long-term success that

participation through an IPA is not appropriate.

 Before making any payment from HHS grant funds to such an employee, the

recipient must certify that the employee is on an IPA assignment and must provide

adequate documentation, as determined by OPDIV, of the IPA assignment and

information about its nature and duration.

 The level of effort required for the project must be allowed by the employing agency

as part of the individual’s official duties. Salary payments from OPDIV grant funds

must be proportional to the time an individual devotes to the grant-supported project.

The total salary support may not exceed the normal level of compensation from

Federal salary if the individual were not participating in the grant.

 The parties concerned have made a prior determination that there is no possibility of

dual compensation and there is no actual or apparent conflict of interest or other

violation of the applicable standards of conduct.

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Exhibit 16. Allowable Costs and Payments to (or on Behalf of)

Federal Employees under Grants

Item Description

Salaries

under

research

grants to

VANPCs

In accordance with the established policies and salary structure of the VANPC, if the PI is

a part-time VA employee, grant funds may be used to pay the differential between the

individual’s VA part-time salary and the salary level for a full-time VANPC commitment in

proportion to the level of effort devoted to the project. Therefore, if the PI has a part-time

appointment with the VANPC, an appropriate portion of the individual’s salary that would

otherwise be supported by the non-profit VANPC may be charged to the grant. An HHS

grant may not be the source of funding for an increase in an investigator’s salary

regardless of the type of entity with which the investigator holds an appointment (e.g.,

university, VA, or VANPC).

Travel

costs

These costs are allowable if the employee is

¡ performing allowable reimbursable services as specified under “Salary or Fringe

Benefits” above, or

¡ attending an OPDIV grant-supported conference

 during non-duty hours,

 while in a preexisting LWOP status or one that continues beyond the conference, or

 while on detail to a State or local government, educational institution, or other non-

profit organization.

Such payments must be made in accordance with established organizational policy,

consistently applied regardless of the source of funds, and the parties concerned must

take reasonable steps to ensure that there is no actual or apparent conflict of interest.

Grants to For-Profit Organizations

General

For-profit organizations generally are subject to the same requirements specified in

the HHS GPS for non-profit organizations, including those relating to personal

property title and management. However, some of the terms and conditions for

grants to for-profit (commercial) organizations vary from the standard terms and

conditions included in the HHS GPS. In addition, the terms and conditions of the

SBIR and STTR programs vary from those otherwise applicable to for-profit

organizations. This section addresses separately the policies applicable to for-profit

organizations generally and those that apply to SBIR and STTR awards specifically. It

also highlights several policies that apply equally to for-profit and non-profit

recipients. If an exception is not stated below or in the NoA, the public policy

requirements cited in the “Public Policy Requirements” section of this HHS GPS,

including the requirements for the protection of human subjects and animal welfare,

apply.

Allowable Costs and Payment of Fee

No cost principles are specifically applicable to grants to for-profit organizations.

Therefore, the cost principles for commercial organizations set forth in the FAR

(48 CFR Subpart 31.2) generally are used to determine allowable costs under HHS

grants to for-profit organizations. As provided in those costs principles, allowable

travel costs may not exceed those established by the FTR (available at

http://www.gsa.gov). In addition, as provided in 45 CFR 74.27(a), HHS does not

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allow for-profit organizations to be reimbursed for IR&D (self-sponsored) costs. The

cost principles in 45 CFR part 74, Appendix E, are used to determine allowable costs

under HHS grants to proprietary hospitals.

Except for grants awarded under the SBIR/STTR programs, no profit or fee will be

provided to a for-profit organization, whether as a recipient or subrecipient. A profit

or fee under a grant is not a cost, but is an amount in excess of actual allowable

direct and indirect costs. In accordance with normal commercial practice, a profit/fee

may be paid to a contractor under an HHS grant providing routine goods or services

to the recipient.

Intellectual Property

Intellectual property requirements set forth in 37 CFR part 401 apply to for-profit

organizations, whether small businesses or large businesses. However, invention

reporting requirements for for-profit organizations differ somewhat from those for

non-profit organizations. When the recipient is a for-profit organization, assignment

of invention rights to a third party does not require OPDIV approval. To the extent

authorized by 35 U.S.C. 205 (the Patent Act, as amended), the Federal government

will not make public any information disclosing a Federal government-supported

invention.

Audit

The requirements for non-Federal audits of for-profit organizations are specified in

45 CFR 74.26(d). A for-profit organization is required to have a non-Federal audit if,

during its fiscal year, it expended a total of $500,000 or more under one or more

HHS awards (as a direct recipient and/or as a subrecipient). Title 45, part 74.26(d),

of the CFR incorporates the thresholds and deadlines of OMB Circular A-133 but

provides for-profit organizations two options regarding the type of audit that will

satisfy the audit requirements:

• A financial-related audit, as defined in, and in accordance with,

the Government Auditing Standards, of all its HHS awards. The

standards, commonly known as the “Yellow Book” (GPO stock

020-000-00-265-4), are available at

http://www.gao.gov/govaud/ybk01.htm. The Government

Auditing Standards audits must be completed and submitted

within 30 days after receipt of the auditor’s report or 9 months

after the end of the audit period (i.e., the end of the

organization’s fiscal year), whichever is earlier.

• An audit that meets the requirements of OMB Circular A-133. OMB Circular A-

133 is available at

http://www.whitehouse.gov/omb/circulars/a133/a133.html.

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Within 30 days after receipt of the auditor’s report(s), or 9 months after the end of

the audit period, i.e., the end of the organization’s fiscal year, whichever is earlier,

the audit must be submitted to the following office:

National External Audit Review Center

HHS Office of Audit Services

323 West 8th Street

Lucas Place

Room 514

Kansas City, MO 64105.

For-profit organizations expending less than $500,000 a year are not required to

have an annual audit for that year but must make their grant-related records

available to the OPDIV or other designated officials for review or audit.

Small Business Innovation Research

and Small Business Technology Transfer Programs

Certain OPDIVs are required by statute to reserve a portion of its annual extramural

budget for projects under the SBIR and STTR programs. These programs primarily

are intended to encourage private-sector commercialization of technology and to

increase small business participation in federally funded R&D.

Both the SBIR and STTR programs consist of the following three phases; however,

individual projects may not be eligible for all three phases:

• Phase I. The objective of this phase is to establish the technical merit and

feasibility of proposed research or R&D efforts and to determine the quality of

performance of the applicant (small business concern or SBC) before

providing further Federal support in Phase II.

• Phase II. The objective of this phase is to continue the research or R&D

efforts initiated in Phase I. Funding will be based on the results of Phase I and

the scientific and technical merit and commercial potential of the Phase II

application. Only Phase I recipients are eligible to receive Phase II funding.

Unless submitted as a Fast-Track application (see below), Phase II

applications may be submitted only after the Phase I award is made. OPDIVs

expect non Fast-Track Phase II applications to be submitted within the first

six receipt dates following expiration of the Phase I budget period, i.e.,

normally 2 years beyond the expiration date of the Phase I award.

• Phase III. The objective of this phase, where appropriate, is for the SBC to

pursue, with non-Federal funds, the commercialization of the results of the

research or R&D funded in Phases I and II.

There are two major differences between the SBIR and STTR programs:

• The STTR program requires that the SBC formally partner with a single, non-

profit research institution in the collaborative conduct of a project that has

potential for commercialization. To be eligible for an STTR award, at least

40 percent of the research must be performed by the SBC and at least 30

percent of the research must be performed by a domestic non-profit research

institution through a formal, cooperative arrangement. Such organizations

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include universities, non-profit hospitals, and other non-profit research

organizations as well as Federally Funded Research and Development

Centers. (The same requirement applies to Phase I and to Phase II.) STTR

grants are awarded to the SBC, which will receive all of the funding for the

project and disperse the appropriate funding to the research institution. The

SBIR program does not have this requirement; therefore, the SBC may

conduct the entire SBIR project without outside collaboration.

• The SBIR program requires that the primary employment of the PI (greater

than 50 percent of the individual’s time) be with the SBC at the time of award

and during the conduct of the project. The STTR program does not have this

requirement, i.e., the PI may have his or her primary employment with an

organization other than the SBC, including the collaborating research

institution. However, there must be an official relationship between the PI and

the SBC. As an eligibility criterion, the PI also is required to devote at least 10

percent of his or her time to the STTR project.

The Fast-Track application process expedites award decisions and funding of SBIR

and STTR Phase II applications for scientifically meritorious projects that have a high

potential for commercialization. The Fast-Track process allows Phase I and Phase II

grant applications to be submitted and reviewed together. Typically, Fast-Track

applications will receive a single rating. An OPDIV determines whether to allow SBCs

to use the Fast-Track review option. Therefore, before submitting applications for

Fast-Track review, applicants are strongly encouraged to consult with OPDIV

program staff. SBIR/STTR Phase I and Phase II applications submitted concurrently

without prior consultation with the OPDIV may be redirected for review under the

OPDIV’s normal review procedures. For additional information on the submission of

Fast-Track applications, see the OPDIV’s SBIR/STTR program solicitations.

Qualification as a Small Business Concern

Each organization receiving a grant under the SBIR/STTR programs must qualify as a

U.S.-owned SBC—an entity that, at the time of the Phase I and Phase II awards,

meets all of the following criteria:

• The entity is organized for profit and has a place of business located in the

United States, operates primarily within the United States, or makes a

significant contribution to the U.S. economy through payment of taxes or use

of American products, materials, or labor.

• It is in the legal form of an individual proprietorship, partnership, limited

liability company, corporation, joint venture, association, trust, or

cooperative. If the entity is a joint venture, there can be no more than 49

percent participation by foreign business entities.

• As provided by the express terms of 13 CFR 121.702(a), it is at least 51

percent owned and controlled by one or more individuals who are citizens of,

or permanent resident aliens in, the United States. In the case of a joint

venture, each party to the venture must be 51 percent owned and controlled

by one or more individuals who are citizens of, or permanent resident aliens

in, the United States. Under these regulations, corporations or artificial

entities cannot quality as individuals who are U.S. citizens. Further, indirect

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ownership of the entity by a U.S. citizen does not satisfy the requirements of

13 CFR 121.702(a).

h Example 1. An entity applying for an SBIR/STTR grant is 100 percent

owned by Company A. Company A is 100 percent owned by U.S. citizens.

The entity is not eligible for support under the SBIR/STTR program

because it is not 51 percent directly owned and controlled by citizens of,

or permanent resident aliens in, the United States.

h Example 2. An entity applying for an SBIR/STTR grant is 51 percent

owned by U.S. citizens of and permanent resident aliens in the United

States and 49 percent owned by a corporation. The entity is eligible for

support under the SBIR/STTR program, assuming it meets the other

eligibility criteria (e.g., size), because 51 percent of the ownership rests

directly with U.S. citizens and permanent resident aliens of the United

States.

• The entity, including its affiliates, cannot have more than 500 employees. In

accordance with 13 CFR 121.103, affiliation exists when, either directly or

indirectly, (1) one concern controls or has the power to control the other, or

(2) a third party or parties controls or has the power to control both. One of

the circumstances that would lead to a finding that an organization is

controlling or has the power to control another organization involves sharing

common office space, employees, and/or other facilities (e.g., laboratory

space). The research and analytical work performed by the recipient under an

SBIR/STTR award is to be conducted in research space occupied by, available

to, and under the control of, the recipient. However, when required by the

project activity, access to special facilities or equipment in another

organization is permitted, as in cases where the SBIR recipient has entered

into a consortium arrangement with another organization for a specific,

limited portion of the research project. See 13 CFR 121.3-2(a) and 13 CFR

121.3-2(t) for additional information concerning this criterion.

All appropriate factors will be considered in determining whether an entity qualifies

for an SBIR/STTR award, including common ownership, common management, and

contractual relationships.

Place of Performance

For both Phase I and Phase II SBIR/STTR awards, the research or R&D project

activity must be performed in its entirety in the United States. (The United States is

defined as the 50 States, the territories and possessions of the United States, the

Commonwealth of Puerto Rico, the Federated States of Micronesia, the Republic of

Palau, the Republic of the Marshall Islands, and the District of Columbia.)

In those rare instances where the study design requires use of a foreign site (e.g., to

conduct testing of specific patient populations), the investigator must thoroughly

justify in the application the need for use of a foreign site. Similarly, in those rare

instances where it may be necessary to purchase materials from other countries,

investigators must thoroughly justify the request. The OPDIV will consider these

instances on a case-by-case basis, and they should be discussed with cognizant

OPDIV staff before submitting an application. Whether the request is approved or

disapproved, it will be explicitly addressed in the NoA if an award is made. Whenever

II-124

possible, work outside the United States, which is necessary to the completion of the

project, should be supported by funding other than SBIR/STTR grants.

Minimum Level of Effort

Generally, under SBIR Phase I awards, a minimum of two-thirds or 67 percent of the

research or analytical effort must be carried out by the SBC. In addition, payments,

in the aggregate, to consultants, consortium participants and contractors for portions

of the scientific/technical effort generally may not exceed 33 percent of the total

requested amount.

Generally, under SBIR Phase II awards, a minimum of one-half or 50 percent of the

research or analytical effort must be carried out by the SBC. In addition, payments,

in the aggregate, to consultants, consortium participants, and contractors for

portions of the scientific/technical effort generally may not exceed 50 percent of the

total requested amount.

For STTR awards (both Phase I and Phase II), at least 40 percent of the work is to be

performed by the SBC and at least 30 percent of the work is to be performed by the

single, non-profit research institution. The basis for determining the percentage of

work to be performed by each of the cooperating parties is the total of direct and

F&A costs attributable to each party, unless otherwise described and justified in the

“Contractual Arrangements” portion of the “Research Plan” section of the grant

application.

Public Policy Requirements

The requirements concerning disclosure of financial conflicts of interest (see “Public

Policy Requirements—Other Research-Related Requirements—Financial Conflict of

Interest”) do not apply to applications or awards under Phase I of the SBIR/STTR

programs.

Allowable Costs and Fee

Profit or Fee. A reasonable profit or fee may be paid to an SBC receiving an award

under Phase I or Phase II of the SBIR and STTR programs. The profit or fee is not

considered a “cost” for purposes of determining allowable use, program income

accountability, or audit thresholds. The profit or fee may be used by the SBC for any

purpose, including additional effort under the SBIR/STTR award. It is intended to

provide a reasonable profit consistent with normal profit margins for for-profit

organizations for R&D work. Fee amounts may not exceed 8 percent of total costs

(direct plus indirect) exclusive of fee, unless there is compelling justification and the

request is approved by the OPDIV. Regardless, total costs and fee must be

accommodated within the statutory limitations on the size of awards under the

SBIR/STTR programs (see Part IV for allowable fee percentage). The profit or fee

should be drawn from PMS in increments proportional to the drawdown of funds for

direct and indirect costs. The profit or fee applies solely to the SBC receiving the

SBIR/STTR award and not to any other participant; however, in accordance with

normal commercial practice, the SBC may pay a profit or fee to a contractor

providing routine goods or services to the SBC under the grant.

For multi-year awards, i.e., those where the approved project period will exceed 1

year, the overall fee negotiated will be divided into the number of years in the

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project period and the resulting amount added to each budget period as a “fixed

fee.” The fee paid is not subject to the cost principle tests of allowability and it will

not be adjusted downward based on actual allowable costs incurred. However, in the

event of a termination or the withholding a non-competing continuation award for

failure to make satisfactory progress, non-compliance with the terms and conditions

of a previous award or absence of an appropriation, the recipient is not entitled to

any fee amount in excess of the negotiated percentage applied to the period for

which grant support has been provided.

Indirect Costs.

• Phase I. If the applicant SBC has a currently effective indirect cost rate with a

Federal agency, that rate should be used when calculating proposed indirect

costs for an application. (However, the rate must be adjusted for IR&D

expenses, which are not allowable under HHS awards.) If the applicant SBC

does not have a currently effective negotiated indirect cost rate with a Federal

agency, the applicant should propose estimated indirect costs at a rate not to

exceed 40 percent of the total direct costs. However, SBCs are reminded that

only actual indirect costs are to be charged to projects. (If awarded at a rate

of 40 percent or less, the rate used to charge actual indirect costs to projects

cannot exceed the awarded rate unless the SBC negotiates an indirect cost

rate with a Federal agency.) OPDIVs will not negotiate indirect cost rates for

Phase I awards.

• Phase II. If the applicant SBC has a currently effective negotiated indirect

cost rate with a Federal agency, that rate should be used when calculating

proposed indirect costs for an application. (However, the rate must be

adjusted for IR&D expenses, which are not allowable under HHS awards.) If

the applicant SBC does not have a currently effective negotiated indirect cost

rate with a Federal agency, the applicant should propose an estimated

indirect cost rate in the application. If the requested indirect cost rate is 25

percent of total direct costs or less, no further justification is required at the

time of award, and indirect costs will be awarded at the requested rate.

However, SBCs are reminded that only actual indirect costs may be charged

to projects. If awarded at a rate of 25 percent or less of total direct costs, the

rate used to charge actual indirect costs to projects cannot exceed the

awarded rate unless the SBC negotiates an indirect cost rate with DFAS.

DFAS—the office authorized to negotiate indirect cost rates with SBCs

receiving HHS SBIR/STTR awards—will negotiate indirect cost rates for SBCs

receiving Phase II awards that requested a rate greater than 25 percent of

total direct costs.

Upon request, the applicant SBC should provide DFAS with an indirect cost

proposal and supporting financial data for its most recently completed fiscal

year. If financial data are not available for the most recently completed fiscal

year, the applicant should submit a proposal showing estimated rates with

supporting documentation. Further information about DFAS is available at its

Web site or by telephone (see Part III of the HHS GPS).

Market Research

HHS will not support market research, including studies of the literature that lead to

a new or expanded statement of work, under the grant. For purposes of the

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II-127

SBIR/STTR programs, “market research” is the systematic gathering, editing,

recording, computing, and analyzing of data about problems relating to the sale and

distribution of the subject of the proposed research. It includes various types of

research, such as the size of potential markets and potential sales volume, the

identification of consumers most apt to purchase the products, and the advertising

media most likely to stimulate their purchases. However, “market research” does not

include activities under a research plan or protocol that include a survey of the public

as part of the objectives of the project to determine the impact of the subject of the

research on the behavior of individuals.

Intellectual Property

Rights to data, including software developed under the terms of any funding

agreement resulting from an HHS award, must remain with the recipient except that

any such copyrighted material is subject to a royalty-free, nonexclusive and

irrevocable license to the Federal government to reproduce, publish, or otherwise

use the material, and to authorize others to do so for Federal purposes. In addition,

under the SBIR/STTR programs, in contrast to awards to for-profit organizations

under other support mechanisms, such data must not be released outside the

Federal government without the recipient’s permission for a period of 4 years from

completion of the project under which the data were generated.

The STTR program requires that the small business recipient and the single, non-

profit research institution execute an agreement allocating between the parties

intellectual property rights and rights, if any, to carry out follow-on research,

development, or commercialization of the subject research. (A model agreement,

“Allocation of Rights in Intellectual Property and Rights to Carry Out Follow-On

Research, Development, or Commercialization,” is available at the NIH Web site at

http://grants.nih.gov/grants/funding/sbir.htm.) By signing the face page of the grant

application, the SBC’s AOO certifies that the agreement with the research institution

will be effective at the time the grant award is made. A copy of the agreement must

be furnished upon request to the awarding office.

SBIR/STTR recipients are covered by 37 CFR part 401 with respect to inventions and

patents.

Data Sharing. Applicants for SBIR Phase II funding of $500,000 or more of direct

costs in any single year must comply with the HHS policy on data sharing consistent

with the Small Business Act. If the final data would not be amenable to sharing, e.g.,

proprietary data, the SBC should explain that in the application. In addition, as

indicated under “Intellectual Property” in this subsection, whether or not the award

meets the threshold for data sharing, the OPDIV will not release data outside the

Federal government without the recipient’s permission for a period of 4 years from

completion of the project under which the data were generated. The entire policy

may be found at http://grants.nih.gov/grants/policy/data_sharing/index.htm

Part III: Points of Contact

Exhibit 17 lists pertinent offices and officials, along with their addresses and

telephone numbers.

Exhibit 17. Points of Contact

Office or Official Address and telephone numbers

Office of the Inspector General (OIG)

http://www.oig.hhs.gov

Department of Health and Human Services

OIG Hotline

Attn: HOTLINE

330 Independence Avenue, SW

Washington, DC 20201

800-HHS-TIPS (1-800-447-8477)

e-mail: [email protected]

For questions concerning A-133 audit requirements:

National External Audit Resources

Office of Audit Services

323 West 8th Street

Lucas Place, Room 514

Kansas City, MO 64105

800-374-6714 (voice)

816-374-6727 (fax)

http://harvester.census.gov/sac

Office for Human Research Protections

(OHRP)

http://www.hhs.gov/ohrp

The Tower Building

1101 Wootton Parkway, Suite 200

Rockville, MD 20852

866-447-4777 (toll free)

240-453-6900 (local)

e-mail:

[email protected]s.gov

Office of Laboratory Animal Welfare

(OLAW)

http://grants.nih.gov/grants/olaw/olaw.htm

6705 Rockledge Drive

Rockledge I, Suite 360, MSC-7982

Bethesda, MD 20892-7982

301-496-7163

e-mail:

[email protected] (for general questions, copies of

documents, or compliance issues)

[email protected] (for questions or information

about assurances)

Office of Research Integrity (ORI)

http://ori.dhhs.gov

The Tower Building

1101 Wootton Parkway, Suite 750

Rockville, MD 20852

240-453-8200

e-mail: [email protected]

III-1

Exhibit 17. Points of Contact

Office or Official Address and telephone numbers

Departmental Appeals Board (DAB)

http://www.hhs.gov/dab/

Department of Health and Human Services

Departmental Appeals Board, MS 6132

Alternative Dispute Resolution and Civil Remedies

Divisions

330 Independence Avenue, SW

Room G-644

Washington, DC 20201

Note: DAB does not receive courier deliveries at this

address.

202-565-0200 (Chair and Appellate and ADR Divisions)

202-565-9462 (Civil Remedies Division)

e-mail: [email protected]

Office for Civil Rights (OCR)

http://www.hhs.gov/ocr

Office of Program Operations

200 Independence Avenue, SW

Room 509 F

Washington, DC 20201

800-368-1019

e-mail:

[email protected]

Program Support Center

Financial Management Service

Division of Payment Management (DPM)

http://www.dpm.psc.gov

http://www.dpm.psc.gov/Contact.aspx

(Find Account Representative

P.O. Box 6021

Rockville, MD 20852

301-443-9193

301-443-3586 (fax)

e-mail: [email protected]

Division of Cost Allocation (DCA)

http://rates.psc.gov/

Mid-Atlantic Field Office

(Services Alabama, Delaware, District of

Columbia, Florida, Georgia, Kentucky,

Maryland, Mississippi, North Carolina,

Pennsylvania, South Carolina, Tennessee,

Virginia and West Virginia)

330 Independence Avenue, SW

Cohen Building, Room 10-67

Washington, DC 20201

202-401-2808

Northeastern Field Office

(Services Connecticut, Maine,

Massachusetts, New Hampshire, New

Jersey, New York, Rhode Island, Vermont,

Puerto Rico, the Virgin Islands, Canada

and Europe)

26 Federal Plaza

Room 41-122

New York, NY 10278

212-264-2069

Central States Field Office

(Services Arkansas, Illinois, Indiana, Iowa,

Kansas, Louisiana, Michigan, Minnesota,

Missouri, Nebraska, New Mexico, Ohio,

Oklahoma, Texas and Wisconsin)

1301 Young Street

Room 702

Dallas, TX 75202

214-767-3261

Western Field Office

(Services Alaska, Arizona, California,

Colorado, Hawaii, Idaho, Montana,

Nevada, North Dakota, Oregon, South

Dakota, Utah, Washington, Wyoming,

Australia, and Asia)

50 United Nations Plaza

Room 347

San Francisco, CA 94102

415-437-7820

III-2

III-3

Exhibit 17. Points of Contact

Office or Official Address and telephone numbers

Office of Acquisition Management and

Policy (OAMP)

Division of Financial Advisory Services

(DFAS)

http://oamp.od.nih.gov/dfas/dfas.asp

6100 Executive Boulevard, Room 6B05

MSC-7540

Bethesda, MD 20892-7540

301-496-4401

301-402-0177

Appendix A: Abbreviations

Following are abbreviations of terms used throughout this document. They are

included in a single location as an aid to the reader.

A&R alteration and renovation

ACH Automated Clearinghouse

AHRQ Agency for Healthcare Research and Quality

CDC Centers for Disease Control and Prevention

CFR Code of Federal Regulations

CoC certificate of confidentiality

DAB Departmental Appeals Board

DCA Division of Cost Allocation, HHS

DEA Drug Enforcement Administration

DFAS Division of Financial Advisory Services, NIH

DoC Department of Commerce

DoD Department of Defense

DoL Department of Labor

DPM Division of Payment Management, HHS

EIN Entity Identification Number

EO Executive Order

F&A facilities and administrative (costs)

FAC Federal Audit Clearinghouse

FAR Federal Acquisition Regulation

FCTR Federal Cash Transactions Report (SF 272)

FDA Food and Drug Administration

FEMA Federal Emergency Management Agency

FOIA Freedom of Information Act

FSR Financial Status Report (SF 269 or 269A)

FTR Federal Travel Regulation

FWA Federal-Wide Assurance

GMO Grants Management Officer

GMS Grants Management Specialist

GPO Government Printing Office

GSA General Services Administration

HHS Department of Health and Human Services

HRSA Health Resources and Services Administration

IACUC Institutional Animal Care and Use Committee

IDE investigational device exception

IHS Indian Health Service

IND Investigational new drug

A-1

IPA Intergovernmental Personnel Act

IR&D independent research and development

IRB Institutional Review Board

IRS Internal Revenue Service

LOI Letter of intent

LWOP leave without pay

NEARC National External Audit Review Center, OIG

NEPA National Environmental Policy Act

NFI Notice of Federal Interest

NIH National Institutes of Health

NoA Notice of Award (Notice of Grant Award)

OCR Office for Civil Rights, HHS

OFCCP Office of Federal Contract Compliance Programs, DoL

OG Office of Grants

OHRP Office for Human Research Protections

OIG Office of the Inspector General

OLAW Office of Laboratory Animal Welfare, NIH

OMB Office of Management and Budget

ONR Office of Naval Research

OPDIV Operating Division

OPHS Office of Public Health and Science

ORI Office of Research Integrity

PA program announcement

PD Program Director/Project Director

PHS Public Health Service

PI Principal Investigator

P.L. Public Law

PMS Payment Management System

PO Project Officer/Program Official

PRA Paperwork Reduction Act

RA Review Administrator

R&D research and development

RFA Request For Applications

SAMHSA Substance Abuse and Mental Health Services Administration

SBA Small Business Administration

SBC small business concern

SBIR Small Business Innovation Research Program

SF Standard Form

SPOC State Single Point of Contact

STTR Small Business Technology Transfer Program

U.S.C. United States Code

A-2

A-3

USDA United States Department of Agriculture

VA Department of Veterans Affairs

VANPC VA-Affiliated Non-Profit Research Corporation

Appendix B: Glossary

This glossary defines terms commonly used in the HHS GPS. These definitions are

included for purposes of clarity in this document and are not intended to replace

controlling definitions found in applicable statutes and regulations. The policy

associated with these definitions is found in Part II of the HHS GPS, unless otherwise

indicated.

accrual basis An accounting method in which revenues and expenses are identified with

specific periods of time, such as a month or year, and are recorded when they

are earned or incurred without regard to the date of receipt or payment of cash;

distinguished from cash basis.

acquisition cost The net invoice price of property or supplies, including the cost of modifications,

attachments, accessories, or auxiliary apparatus necessary to make the

property usable for the purpose for which it was acquired. Other charges, such

as the cost of installation, transportation, taxes, duty, and protective in-transit

insurance, are included or excluded from the unit acquisition cost in

accordance with the recipient’s regular accounting practices. The term does not

include costs for rental of property or alteration and rental of real property.

administrative

requirements

The general practices that are common to the administration of grants, such as

financial accountability, reporting, equipment management, and retention of

records.

advance payment A payment made to a recipient upon its request either before cash

disbursements are made by the recipient or through the use of predetermined

payment schedules. Most HHS advance payments are made by the Payment

Management System (PMS), the HHS centralized grant payment system.

allocable cost A cost that is allocable to a particular cost objective (i.e., a specific function,

grant project, service, department, or other activity) in accordance with the

relative benefits received. A cost is allocable to a Federal award where it is

treated consistently with other costs incurred for the same purpose in like

circumstances and (1) is incurred specifically for the award, (2) benefits both

the award and other work and can be distributed in reasonable proportion to

the benefits received, or (3) is necessary for the overall operation of the

organization.

allowable cost A cost incurred by a recipient that is

(1) reasonable for the performance of the award;

(2) allocable;

(3) in conformance with any limitations or exclusions set forth in the Federal

cost principles applicable to the organization incurring the cost or in the NoA as

to the type or amount of cost;

(4) consistent with regulations, policies, and procedures of the recipient that are

applied uniformly to both federally supported and other activities of the

organization;

(5) accorded consistent treatment as a direct or indirect cost;

(6) determined in accordance with generally accepted accounting principles;

and

(7) not included as a cost in any other federally supported award (unless

specifically authorized by statute).

B-1

alteration and

renovation

Work that changes the interior arrangements or other physical characteristics of

an existing facility or installed equipment so that it can be used more effectively

for its currently designated purpose or adapted to an alternative use to meet a

programmatic requirement. Alteration and renovation may include work referred

to as improvements, conversion, rehabilitation, remodeling, or modernization,

but is distinguished from construction and large-scale permanent

improvements.

alternative dispute

resolution

A process in which mediation or other techniques are used to avoid or resolve

disputes. Alternative dispute resolution is intended to reduce cost, delay, and

contentiousness in the resolution process as well as to prevent disputes from

escalating to levels requiring more formal or judicial resolution.

applicable credit Those receipts that offset or reduce direct or indirect costs. Typical examples of

such transactions include purchase discounts, rebates, or allowances;

recoveries or indemnities on losses; insurance refunds; and adjustments of

overpayments or erroneous charges.

application A request for financial support of a project, program, or activity submitted on

specified forms and in accordance with OPDIV instructions. (See “Types of

Applications and Letters of Intent” in Part I for an explanation of the types of

applications.)

approved budget The financial expenditure plan for a grant-supported project, program, or

activity, including revisions approved by the OPDIV and permissible revisions

made by the recipient. The approved budget consists of Federal (grant) funds

and, if required by the terms and conditions of the award, non-Federal

participation in the form of matching or cost sharing. Expenditures under an

approved budget that consists of both Federal and non-Federal shares are

deemed to be borne by the recipient in the same proportion as the percentage

of Federal/non-Federal participation in the overall budget.

assurance A written statement by an applicant, normally included with the application,

indicating that it will abide by a particular requirement if a grant is awarded.

(See Part I.)

audit resolution The process of resolving audit findings, including those related to management

and systems deficiencies and monetary findings (i.e., questioned costs).

award The document that provides OPDIV funds to a recipient to carry out an

approved program or project (based on an approved application or progress

report). The term, when used as a noun, is sometimes used interchangeably

with “grant.”

awarding office The OPDIV organizational component responsible for the business

management and non-programmatic aspects of the award and administration

of grants. When referring to the focal point for recipient-initiated prior approval

requests or actions by an awarding office that may require changes in the

terms and conditions of award, reference will be to the GMO.

budget periods The intervals of time (usually 12 months each) into which a project period is

divided for budgetary and funding purposes. Funding of individual budget

periods sometimes is referred to as “incremental funding.”

carryover Unobligated Federal funds remaining at the end of any budget period that may

be carried forward to another budget period to cover allowable costs of that

budget period (whether as an offset or additional authorization). Obligated but

unliquidated funds are not considered carryover.

B-2

cash basis An accounting method in which revenue and expenses are recorded on the

books of account when received and paid, respectively, without regard to the

period in which they are earned or incurred; distinguished from accrual basis.

cash contribution The recipient’s cash outlay, including the outlay of money contributed to the

recipient by third parties.

change of grantee A process in which the legal and administrative responsibility for a grant-

supported project, program, or activity is transferred from one legal entity to

another before the end of the project period. This action also may be termed

“transfer of a grant.”

clinical trial A biomedical or behavioral research study of human subjects that is designed

to answer specific questions about biomedical or behavioral interventions

(drugs, treatments, devices, or new ways of using known drugs, treatments, or

devices). Clinical trials are used to determine whether new biomedical or

behavioral interventions are safe, efficacious, and effective. Clinical trials of an

experimental drug, treatment, device, or intervention may proceed through four

phases:

Phase I—testing in a small group of people (e.g., 20 to 80) to determine

efficacy and evaluate safety (e.g., determine a safe dosage range and identify

side effects).

Phase II—study in a larger group of people (several hundred) to determine

efficacy and further evaluate safety.

Phase III—study to (1) determine efficacy in large groups of people (from

several hundred to several thousand) by comparing the intervention to other

standard or experimental interventions, (2) monitor adverse effects, and (3)

collect information to allow safe use.

Phase IV—studies done after the intervention has been marketed. These

studies are designed to monitor the effectiveness of the approved intervention

in the general population and to collect information about any adverse effects

associated with widespread use.

closeout The process by which an OPDIV determines whether all applicable

administrative actions and all work required under the award have been

completed by the recipient and the awarding office.

cognizant agency The Federal agency that, on behalf of all Federal agencies, is responsible for

reviewing, negotiating, and approving cost allocation plans, indirect cost rate

and similar rates; monitoring non-Federal audit reports; conducting Federal

audits as necessary; and resolving cross-cutting audit findings. The cognizant

agency under applicable cost principles and under OMB Circular A-133 may be

different for a given recipient.

competition A process in which applications undergo an objective review; the applications

are evaluated against established review criteria and scored and rated

accordingly.

competitive

segment

The initial project period recommended for support (up to 5 years) or each

extension of a project period resulting from a competing continuation award.

completion date The date on which all work under an award is completed or the date in the NoA

(as amended) on which Federal sponsorship ends (i.e., the end of a project

period).

B-3

consortium

agreement

A formal agreement whereby a project is carried out by a recipient and one or

more other organizations that are separate legal entities. Under the agreement,

the recipient must perform a substantive role in the conduct of the planned

project or program activity and not merely serve as a conduit of funds to

another party or parties. Consortium agreements are considered subawards for

purposes of this policy statement.

contract under a

grant

A written agreement between a recipient and a third party to acquire

commercial goods or services.

construction A project to support the initial building or major A&R (i.e., large-scale

modernization or permanent improvement) of a facility.

consultant An individual who provides professional advice or services for a fee, but

normally not as an employee of the engaging party. The term “consultant” also

includes a firm that provides paid professional advice or services.

cooperative

agreement

A financial assistance support mechanism used when there will be substantial

Federal programmatic involvement. Substantial involvement means that OPDIV

program staff will collaborate or participate in project or program activities as

specified in the NoA.

Code) to the authors of “original works of authorship,” including literary,

dramatic, musical, artistic, and certain other intellectual works, including

computer programs. This protection is available to both published and

unpublished works.

cost analysis The breakdown and verification of cost data proposed in an application budget,

including evaluating specific elements of costs and examining them to

determine the necessity, reasonableness, and allocability of the costs and their

allowability pursuant to the applicable Federal cost principles and other

governing requirements.

cost sharing See “matching or cost sharing.”

Departmental

Appeals Board

The administrative board responsible for resolving certain disputes arising

under HHS assistance programs. The DAB provides an impartial adjudicatory

hearing process for appealing certain final written decisions by GMOs. The

DAB’s jurisdiction is specified in 45 CFR part 16, “Procedures for HHS Grant

Appeals Board.”

direct assistance A financial assistance support mechanism, which must be specifically

authorized by statute, whereby goods or services are provided to recipients in

lieu of cash. Direct assistance generally involves the assignment of Federal

personnel or the provision of equipment or supplies such as vaccines. This type

of financial assistance also is described as “non-monetary assistance.”

direct costs Costs that can be identified specifically with a particular sponsored project, an

instructional activity, or any other institutional activity, or that can be directly

assigned to such activities relatively easily with a high degree of accuracy.

domestic

organization

A public (including a State or other governmental agency) or private non-profit

or for-profit organization that is located in the United States or its territories, is

subject to U.S. laws, and assumes legal and financial accountability for funds

awarded and for the performance of the grant-supported activities.

B-4

Entity Identification

Number

A three-part coding scheme of 12 characters used in PMS to identify

organizations and individuals. The first character identifies the recipient as an

organization or an individual. The next 9 characters are the Internal Revenue

Service tax number identification (TIN) for organizations or the social security

number (SSN) for individuals. The last 2 characters are a suffix to provide

distinction between organizational entities that are assigned a single EIN and

those that have more than one EIN. The entities could be subsidiaries,

divisions, branches, subdivisions, or other organizational groupings of a major

organizational entity.

equipment An article of tangible nonexpendable personal property that has a useful life of

more than 1 year and an acquisition cost of $5,000 or more per unit or the

capitalization threshold established by the recipient, whichever is less.

excess property The property under the control of any OPDIV that, as determined by the head

of the OPDIV or designee, is no longer required for its needs or the discharge

of its responsibilities.

exempt property Tangible personal property acquired, in whole or part, with Federal funds,

where the OPDIV has statutory authority to vest title in the recipient without

further obligation to the Federal government.

expanded

authorities

Operating authorities provided to recipients that waive the requirement for

OPDIV prior approval for specified actions.

expenditure report For non-construction grants, generally the FSR; and for construction grants, the

Outlay Report and Request for Reimbursement for Construction Programs.

expiration date The date signifying the end of the current budget period, as indicated in the

NoA, after which the recipient does not have authority to obligate grant funds.

facilities and

administrative costs

See “indirect costs.”

Federal cash

transactions report

A standard form, PMS 272, used to obtain disbursement information and to

monitor cash advanced to recipients.

Federal funds

authorized

The total amount of Federal funds obligated by the OPDIV for use by the

recipient. This amount may include any authorized carryover of unobligated

funds from one of the two preceding budget periods.

Federal institution A Cabinet-level department or independent agency of the executive branch of

the Federal government or any component organization of such a department

or agency.

Federal share The amount, generally expressed as a percentage of total project costs, of

financial, property, and other direct assistance provided by the OPDIV, as

specified in the NoA.

federally recognized

Indian tribal

government

The governing body of an Indian tribe, band, nation, or other organized group

or community, including any Native village as defined in Section 3 of the Alaska

Native Claims Settlement Act of 1971 (43 U.S.C. 1601 et seq.), that is certified

by the Secretary of the Interior as eligible for the special programs and services

provided through the Bureau of Indian Affairs and the Indian Health Service.

fee An amount, in addition to actual, allowable costs, paid to an organization

providing goods or services consistent with normal commercial practice. This

payment also is referred to as “profit.”

financial assistance Transfer of money, property in lieu of money, or other direct assistance to an

eligible recipient to support or stimulate a public purpose authorized by statute.

B-5

Financial Status

Report

A standard Federal form, SF 269 (long form) or SF 269A (short form), that

shows the status of funds in non-construction programs and is used to monitor

the financial progress of awards. The forms require information on total outlays

(Federal and recipient shares) and unobligated balances of Federal funds. The

long form is used for grants that involve program income.

flow-down or

flow-through

provisions

The rules governing whether, and how, grant terms apply to subawards or

contracts under grants.

foreign

component

The performance of any significant element or segment of a project outside of

the United States, either by the recipient or by a researcher or other individual

employed by a foreign organization, whether or not grant funds are expended.

foreign

organization

An organization located in a country other than the United States and its

territories that is subject to the laws of that country, regardless of the citizenship

of the proposed PI/PD.

for-profit

organization

An organization, institution, corporation, or other legal entity that is organized or

operated for the profit or financial benefit of its shareholders or other owners.

Such organizations also are referred to as “commercial organizations.”

full-time

appointment

The number of days per week and/or months per year representing full-time

effort at the applicant/recipient organization, as specified in organizational

policy. The organization’s policy must be applied consistently, regardless of the

source of support.

funding opportunity

announcement

An OPDIV’s formally issued announcement of the availability of Federal funding

through one of its financial assistance programs. The announcement invites

applications and provides such information as eligibility and evaluation criteria,

funding preferences/priorities, how to obtain application kits, and the

submission deadline (see Part I).

grant A financial assistance support mechanism providing money, property or other

direct assistance in lieu of money, or both, to an eligible entity to carry out an

approved project or activity in support of a public purpose and not the direct

benefit of the government. A grant is used whenever the OPDIV anticipates no

substantial programmatic involvement with the recipient during performance of

the financially assisted activities.

grant-supported

project or activity

Those activities specified or described in an application or in a subsequent

submission that are approved by an OPDIV for funding, regardless of whether

Federal funding constitutes all or only a portion of the financial support

necessary to carry them out.

high risk The term used to describe a recipient who is at risk of financial failure or failure

to perform based on a history of poor performance or poor business practices,

financial instability, or inadequate management systems.

human subject A living individual about whom an investigator obtains data through intervention

or interaction with the individual or obtains identifiable private information.

Regulations governing the use of human subjects extend to use of human

organs, tissues, and body fluids from identifiable individuals as human subjects

and to graphic, written, or recorded information derived from such individuals.

indirect costs Costs that are incurred by a recipient for common or joint objectives and cannot

be identified specifically with a particular project or program. These costs also

are known as “facilities and administrative costs.”

B-6

institutional review

board

An administrative body whose purpose is to protect the rights and welfare of

human subjects recruited to participate in research activities conducted under

the auspices of the organization with which it is affiliated. The IRB has the

authority to approve, require modifications in, or disapprove all research

activities that fall within its jurisdiction.

intangible property This term means property that ordinarily does not have physical existence. It

includes, but is not limited to, copyrights for which assignments of rights are

acquired under awards; patents and other intellectual property for which

ownership is acquired under awards; loans, notes, and other debt instruments

(even if considered tangible for other purposes); lease agreements; and stock

and other instruments of property ownership. The term excludes copyrights,

patents, and other intellectual property that are generated or developed, rather

than acquired, under awards.

international

organization

An organization that identifies itself as international or intergovernmental and

has membership from, and represents the interests of, more than one country,

without regard to whether the headquarters of the organization and location of

the activity are inside or outside of the United States.

invention Any discovery that is or may be patentable or otherwise protectable. The term

“subject invention” means any invention of an awardee conceived or first

actually reduced to practice in the performance of work under a funding

agreement, i.e., contract, grant, or cooperative agreement.

key personnel The PI/PD and other individuals who contribute to the programmatic

development or execution of a project or program in a substantive, measurable

way, whether or not they receive salaries or compensation under the grant.

local government A county, municipality, city, town, township, local public authority (including any

public and Indian housing agency), school district, special district, intra-State

district, council of governments (whether or not incorporated under State law),

any other regional or interstate government entity (such as regional planning

agencies), or any agency or instrumentality of a local government. The term

does not include institutions of higher education and hospitals.

matching or cost

sharing

The value of third-party in-kind contributions and the portion of the costs of a

federally assisted project or program not borne by the Federal government.

Costs used to satisfy matching or cost-sharing requirements are subject to the

same policies governing allowability as other costs under the approved budget.

misconduct in

science

See “research misconduct.”

monitoring A process in which a grant’s programmatic performance and business

management performance are assessed by reviewing information gathered

from various required reports, audits, site visits, and other sources.

non-competing

extension

A limited period of time beyond the end of the project period, authorized by an

OPDIV or a recipient under an expanded authority, needed to complete project

activities.

non-Federal share The portion of allowable project costs not borne by the Federal government.

objective review An advisory review of discretionary grant applications conducted by unbiased

reviewers with expertise in the programmatic area for which applications are

submitted.

obligations The amounts of orders placed, contracts and subawards, goods and services

received, and similar transactions by a recipient during a budget period that will

require payment during the same or a future budget period.

B-7

outlays or

expenditures

The charges made to the federally sponsored project or program. They may be

reported on a cash or accrual basis.

patent A property right awarded by the Federal government whereby the government

grants the right to exclude others from making, using, or selling the invention

for a period of years.

peer review A form of objective review, generally required by statute, in which the

assessment of scientific or technical merit of applications is carried out by

individuals with knowledge and expertise equivalent (peer) to that of the

individuals whose applications for support they are reviewing.

pre-award costs Costs incurred prior to the beginning date of the project period, in anticipation

of an award and at the applicant’s own risk, for otherwise allowable costs.

prior approval Written consent or issuance of an award by the OPDIV GMO in response to a

written request from the recipient to incur a specific direct cost or take other

action that requires such approval (as specified in Part II of the HHS GPS). If

the costs or other actions are specifically identified in an application, approval

of the application, and issuance of an award based thereon, constitutes such

authorization. Prior approval for components of indirect costs must be obtained

from the cognizant agency or as specified in the applicable cost principles.

profit See “fee.”

program income Gross income earned by a recipient that is directly generated by the grant-

supported project, program, or activity or earned as a result of the award.

progress report Periodic, usually annual, reports submitted by the recipient and used by the

OPDIV to assess progress and, except for the final progress report, to

determine whether to provide funding for the budget period subsequent to that

covered by the report.

project or program

costs

The total allowable costs incurred by a recipient (and the value of in-kind

contributions made by third parties) in accomplishing the objectives of the

award during the project period.

project period The total time for which support of a project has been programmatically

approved. The total project period comprises the initial competitive segment,

any subsequent competitive segments resulting from a competing continuation

award, and any non-competing extensions.

real property Land, including land improvements, structures, and appurtenances, but not

movable machinery and equipment.

reasonable cost A cost whose nature or amount does not exceed that which would be incurred

by a prudent person under the circumstances prevailing when the decision was

made to incur the cost.

recipient The organization or individual that receives a grant or cooperative agreement

award from an OPDIV and is responsible and accountable for the use of the

funds provided and for the performance of the grant-supported project or

activity. The recipient is the entire legal entity even if a particular component is

designated in the NoA. The term includes “grantee.”

reimbursement A payment made to a recipient upon its request after it makes cash

disbursements. Most reimbursement payments are processed through the

Payment Management System (PMS), the Department’s centralized grants

payment system.

B-8

research A systematic, intensive study intended to increase knowledge or understanding

of the subject studied, a systematic study specifically directed toward applying

new knowledge to meet a recognized need, or a systematic application of

knowledge to the production of useful materials, devices, and systems or

methods, including design, development, and improvement of prototypes and

new processes to meet specific requirements. Also termed “research and

development.”

research

misconduct

Fabrication, falsification, or plagiarism in proposing, performing, or reviewing

research, or in reporting research results. Fabrication is making up data or

results and recording or reporting them. Falsification is manipulating research

materials, equipment, or processes, or changing or omitting data or results

such that research is not accurately represented in the research record.

Plagiarism is the appropriation of another person’s ideas, processes, results, or

words without giving appropriate credit. The term does not include honest error

or differences of opinion.

research patient

care

Routine and ancillary services provided by hospitals to patients participating in

research programs. The costs of these services are normally assigned to

individual research projects through the development and application of

research patient care rates or amounts (collectively referred to as “rates”).

significant

rebudgeting

A threshold that is reached when expenditures in a single direct cost budget

category deviate (increase or decrease) from the approved budget amount for

that budget category for that budget period by a specified amount, usually more

than 25 percent of the total costs awarded. Significant rebudgeting is one

indicator of change in scope.

small business

concern

A business that is independently owned and operated and not dominant in its

field of operation; has its principal place of business in the United States and is

organized for profit; is at least 51 percent owned or, in the case of a publicly

owned business, at least 51 percent of its voting stock is owned by U.S.

citizens or lawfully admitted permanent resident aliens; has, including its

affiliates, not more than 500 employees; and meets other regulatory

requirements established by the SBA at 13 CFR 121.

State government The government of any State of the United States, the District of Columbia, the

Commonwealth of Puerto Rico, any U.S. territory or possession, or any agency

or instrumentality of a State exclusive of local governments. State institutions of

higher education and State hospitals are not considered State governments for

purposes of the HHS general administrative requirements for grants and the

HHS GPS.

stipend A payment made to an individual under a fellowship or training grant in

accordance with established levels to provide for the individual’s living

expenses during the period of training. A stipend is not considered

compensation for the services expected of an employee.

subaward Financial assistance in the form of money or property in lieu of money provided

under an award by a recipient to an eligible subrecipient (or by an eligible

subrecipient to a lower-tier subrecipient). The term includes financial assistance

when provided by any legal agreement, even if the agreement is called a

contract, but does not include either procurement of goods or services or, for

purposes of this policy statement, any form of assistance other than grants and

cooperative agreements. The term includes consortium agreements.

subrecipient An entity that receives a subaward from a recipient or another subrecipient

under an award of financial assistance and is accountable to the recipient or

other subrecipient for the use of the Federal funds provided by the subaward.

B-9

substantive

programmatic work

The primary project activities for which grant support is provided.

supplies Personal property other than equipment, intangible property, and debt

instruments. The category of “supplies” includes items that could be considered

equipment, but do not meet the threshold definition.

suspension Temporary withdrawal of a recipient’s authority to obligate grant funds, pending

either corrective action by the recipient, as specified by the OPDIV, or a

decision by the OPDIV to terminate the award. This meaning of the term

“suspension” differs from that used in conjunction with the debarment and

suspension process.

tangible property Equipment, supplies, and any other property other than that defined as

intangible property. It also does not include copyrights, patents, and other

intellectual property that is generated or developed (rather than acquired) under

an award.

termination Permanent withdrawal by the OPDIV of a recipient’s authority to obligate

previously awarded grant funds before that authority would otherwise expire,

including the voluntary relinquishment of that authority by the recipient.

terms and

conditions of award

All legal requirements imposed on a grant by the OPDIV, whether based on

statute, regulation, policy, or other document referenced in the NoA, or

specified by the NoA itself. In addition to general terms and conditions, the NoA

may include other conditions that are considered necessary to attain the

award’s objectives, facilitate post-award administration, conserve grant funds,

or otherwise protect the Federal government’s interests.

third-party in-kind

contributions

The value of non-cash contributions directly benefiting a grant-supported

project or program that is provided by non-Federal third parties to the recipient,

the subrecipient, or a cost-type contractor under the grant or subgrant without

charge. In-kind contributions may be in the form of real property, equipment,

supplies and other expendable property, and goods and services directly

benefiting and specifically identifiable to the project or program.

total project or

program costs

The total allowable costs (both direct and indirect) incurred by the recipient to

carry out a grant-supported project or activity. Total project or program costs

include costs charged to the award and costs borne by the recipient to satisfy a

matching or cost-sharing requirement.

unallowable cost A cost specified by law or regulation, Federal cost principles, or term and

condition of award that may not be reimbursed under a grant or cooperative

agreement

unliquidated

obligations

The amount of obligations incurred by the recipient that has not been paid (for

financial reports prepared on a cash basis) or the amount of obligations

incurred by the recipient for which an outlay has not been recorded (for reports

prepared on an accrual basis).

unobligated balance The portion of the funds authorized by the Federal agency that has not been

obligated by the recipient.

vertebrate animal Any live animal having a backbone or spinal column used or intended for use in

research, research training, experimentation, biological testing, or related

purposes.

withholding of

payment

An action taken by an OPDIV, after appropriate administrative procedures have

been followed, that restricts a recipient’s ability to access its grant funds until

the recipient takes corrective action required by the OPDIV.

B-10

B-11

withholding of

support

A decision by an OPDIV not to make a non-competing continuation award

within a previously approved project period.

woman-owned

business

A business that is, at least, 51 percent owned, controlled, and operated by a

woman or women.

Index

Page references containing an n refer to footnotes.

Pages references preceded by B refer to definitions

Abbreviations list ..................................................................................................................................... A-1

Abortion funding restriction............................................................................................................II-6, II-22

Accelerated expenditures...............................................................................................................II-45, II-62

Accessibility standards, facilities ............................................................................................................II-21

Acknowledgment

of Federal funding........................................................................................................................II-3, II-24

of Federal support......................................................................................................................II-32, II-73

Activation Notice, fellowship ...................................................................................................II-110, II-114

Administration for Children and Families..................................................................................................I-1

Administration on Aging............................................................................................................................I-1

Administrative requirements..............................................................................................................I-4, II-1

definition………………………………………………………………………………………............B-1

fellowships………………………………………………………………………………………….II-109

Advances of grant funds, interest earned on............................................................................................II-64

Advertising, costs....................................................................................................................................II-31

Advisory Council on Historic Preservation..............................................................................................I-21

Affiliated organization services, cost considerations ..............................................................................II-25

Age Discrimination Act of 1975 .......................................................................................................II-3, II-8

Agency for Healthcare Research and Quality ................................................................................I-1, II-13n

Alcoholic beverages, costs ......................................................................................................................II-31

Allocability test, allowability of costs and ..............................................................................................II-26

allocable cost, definition………………………………………………………………………………B-1

Allowability of costs ..................................................................................................II-26, II-30 et seq., B-1

financial system and………………………………………………………………………………….II-48

matching or cost sharing…………………………………………………………………………......II-47

Also see Cost considerations; specific types of grants, recipients

Alteration and renovation (A&R). Also see Construction grants

allowability.........................................................................................................................................II-31

definition...............................................................................................................................................B-2

major A&R ...................................................................................II-31, II-33, II-102, II-103, II-118, B-4

minor A&R..................................................................................................................II-31,II-103, II-118

prior-approval requirements ...............................................................................................................II-50

public policy requirements .........................................................................................................II-4, II-21

Animal welfare............................................................................................................. I-33, II-3, II-12, II-61

Animals, costs .........................................................................................................................................II-32

Appeals procedures

adverse determinations and.................................................................................................................II-97

alternative dispute resolution..............................................................................................................II-98

Departmental Appeals Board............................................................................................ II-97, III-2, B-4

Applicable credits....................................................................................................................................II-30

Application

budget………………………………………………………………………………………………....I-22

definition...............................................................................................................................................B-2

false, fictitious, or fraudulent information in.........................................................................................I-8

C-1

types of applications.................................................................................................................I-15 et seq.

Application process

application forms.................................................................................................................................I-17

application receipt points and deadlines..............................................................................................I-26

application submission.........................................................................................................................I-26

eligibility..............................................................................................................................................I-11

Grants.gov............................................................................................................................................I-26

Also see specific types of grants, recipients

Application review process

disposition of applications...................................................................................................................I-31

objective review................................................................................................................I-30 et seq., B-7

review criteria......................................................................................................................................I-30

review responsibilities ...........................................................................................................................I-6

peer review ..................................................................................................................................I-30, B-8

use of application information.............................................................................................................I-28

Approved budget, definition......................................................................................................................B-2

Architectural Barriers Act ...............................................................................................................II-4, II-21

Assistant Secretary for Planning and Evaluation .......................................................................................I-1

Assurances

animals...........................................................................................................................I-33, II-12, II-13

civil rights ..........................................................................................................................................I-32

definition.............................................................................................................................................B-2

general...............................................................................................................................I-12, I-18, I-19

human subjects....................................................................................................... I-33, II-9, II-10, II-11

subrecipients .....................................................................................................................................II-81

Audiovisual activities, allowability.........................................................................................................II-32

Audit costs...............................................................................................................................................II-32

Audit requirements..................................................................................................................................II-90

for-profit organizations...........................................................................................................II-90, II-124

foreign organizations, international organizations, and domestic grants with

foreign components.....................................................................................................II-90, II-117

recipients, domestic, non-profit..........................................................................................................II-90

subawards (including consortium agreements)...................................................................................II-82

Authorized organizational representative (AOR) role and responsibilities................................................I-6

Award, definition.......................................................................................................................................B-2

Award instruments, types of......................................................................................................................... ii

Awarding office, definition.......................................................................................................................B-2

Bad debts, costs.......................................................................................................................................II-32

Bayh-Dole Act of 1980 ......................................................................................................II-71, II-74 et seq.

Also see Inventions and patents

Bid and proposal costs.............................................................................................................................II-32

Bonding, costs .........................................................................................................................................II-32

Bonus payments ......................................................................................................................................II-41

Books and journals, costs........................................................................................................................II-32

Budget

changes in ...............................................................................................................................II-50, II-105

approved budget, definition..................................................................................................................B-2

NoA and...............................................................................................................................................I-36

significant rebudgeting .....................................................................................................II-55, II-57, B-9

C-2

Budget periods

about ................................................................................................................................I-15, I-35, I-36

definition...............................................................................................................................................B-2

Also see Funding

Building acquisition

costs………………………………………………………………………………………………….II-36

prior-approval requirements…………………………………………………………………………II-51

Business management review……………………………………………………………………............I-32

Career awards

eligibility..............................................................................................................................................I-12

facilities and administrative costs and .................................................................................................I-24

prior-approval requirements for retention of funds ............................................................................II-52

Carryover of unobligated balances

definition………………………………………………………………………………………………B-2

expanded authority and………………………………………………………………………………II-60

prior-approval of……………………………………………………………………………………..II-52

requests for…………………………………………………………………………………………...II-58

Cash requests................................................................................................................................... I-37, I-38

CASHLINE/ACH.....................................................................................................................................I-38

Catalog of Federal Domestic Assistance....................................................................................................I-9

Centers for Disease Control and Prevention...................................................I-2, I-3, II-6, II-9, II-13n, II-16

Centers for Medicare and Medicaid Services.............................................................................................I-2

Central Contractor Registration................................................................................................................I-26

Certificates of confidentiality..........................................................................................................II-3, II-19

Change of grantee organization

definition………………………………………………………………………………………………B-3

prior-approval for………………………………………………………………………II-51, II-53 et seq.

foreign or international organizations and…………………………………………………………...I-119

relinquishing statement.................................................................................II-53, II-54, II-55, II-83, II-84

Changes in project and budget

See Prior approval; Expanded authorities

Child-care costs.......................................................................................................................................II-32

Children

human subjects treatment……………………………………………………………………...II-10, II-12

inclusion as subjects in clinical research .............................................................................................I-19

Pro-Children Act....................................................................................................................….II-5, II-23

toys and nursery items, costs ..............................................................................................................II-43

Citizenship requirements..........................................................................................................................I-12

Civil False Claims Act ...............................................................................................................................I-8

Civil rights

foreign organizations and…………………………………………………………………………..II-117

Office for……………………………………………………………………………………………..III-2

pre-award requirements…………………………………………………………………………….....I-32

Civil Rights Act of 1964 ...........................................................................................................……II-3, II-8

Also see Limited English Proficiency

Clean Air and Clean Water Act...............................................................................................................II-21

C-3

Clinical research

drugs used in, costs.............................................................................................................................II-34

inclusion of children as subjects in......................................................................................................I-19

inclusion of women and minorities as subjects in ...............................................................................I-19

investigational new drug applications and..........................................................................................II-19

recombinant DNA and human gene transfer ......................................................................................II-16

transplantation of human fetal tissue..................................................................................................II-18

Cloning. See Human embryonic stem cell research and cloning

Closeout

about…………………………………………………………………………………………………II-94

definition………………………………………………………………………………………………B-3

reporting requirements…………...……………………………………………………...…....II-94 et seq.

Cognizant agency ..................................................................................................................B-3, II-40, II-50

Communications, costs............................................................................................................................II-33

Compensation

consultants..........................................................................................................................................II-33

Federal employees.......................................................................................................II-35, II-123 et seq.

fringe benefits and..............................................................................................................................II-35

general .....................................................................................................................................II-40 et seq.

fellows ..............................................................................................................................................II-113

sabbatical leave and............................................................................................................................II-40

students.....................................................................................................................................II-35, II-42

Also see Salaries and wages

Competing continuation application

additional funding and.........................................................................................................................II-56

description.............................................................................................................................................I-16

pre-award costs and.........................................................................................................II-38, II-51, II-60

reporting in relation to................................................................................................................I-88, II-95

Competitive segment, definition ...............................................................................................................B-3

Concurrent benefits ...............................................................................................................................II-113

Conference grants

about ...................................................................................................................................................II-98

acknowledgment of support and disclaimer .......................................................................................II-99

allowable costs...................................................................................................II-35, II-37, II-100 et seq.

funding................................................................................................................................................II-99

intellectual property, use of ...................................................................................................II-101 et seq.

representation requirements................................................................................................................II-99

unallowable costs.................................................................................................I-23, II-31, II-35, II-101

use of logos.........................................................................................................................................II-99

Confidentiality

certificates of ..............................................................................................................................II-3, II-19

of patient/client records ..............................................................................................................II-4, II-22

of subjects’ identity.....................................................................................................................II-5, II-12

Conflict of interest,

consultant payments and......................................................................................................................II-33

financial............................................................................................................................II-4, II-14 et seq.

financial and SBIR/STTR Phase I.....................................................................................................II-130

financial and subawards.......................................................................................................................II-82

payments to or on behalf of Federal employees....................................................................II-123, II-124

Conformance test, allowability of costs and............................................................................................II-27

Consistency test, allowability of costs and..............................................................................................II-27

C-4

Consortium agreement

allowability of.....................................................................................................................................II-42

applicability of HHS GPS to....................................................................................................................iii

definition...............................................................................................................................................B-4

recipient responsibilities for...............................................................I-14, II-14, II-15, II-78, II-81 et seq.

SBIR/STTR and................................................................................................................................II-129

Also see Subawards; Subrecipients

Construction. Also see Construction grants

allowability of costs............................................................................................................................II-33

definition...............................................................................................................................................B-4

Construction grants

about ..............................................................................................................................................II-102

allowable costs and activities.......................................................................................II-34, II-103 et seq.

equal employment opportunity, labor standards, and other requirements.............................II-106 et seq.

funding..............................................................................................................................................II-103

prior-approval requirements ...............................................................................II-52, II-53, II-55, II-105

procurement requirements for services under...................................................................................II-106

public policy requirements .................................................................I-20, I-21 et seq., II-3 et seq., II-21

reporting under............................................................................................................................II-88, B-5

unallowable costs and activities...............................................................................................I-23, II-105

use and disposition of facility.................................................................................................II-69, II-109

Consultant, definition................................................................................................................................B-4

Consultant services, costs..................................................................................................II-33–II-34, II-100

Consumer/provider boards, costs of participation...................................................................................II-34

Contingency funds, costs.............................................................................................................II-34, II-104

Contract under a grant

costs ................................................................................................................................................II-42

definition...............................................................................................................................................B-4

flowdown of requirements.............................................................................................. iii, II-2, II-3, B-6

prior-approval requirements ................................................................................II-59, II-60, II-79 et seq.

requirements for written agreement....................................................................................................II-79

Contract Work Hours and Safety Standards Act...................................................................................II-107

Controlled substances......................................................................................................................II-4, II-20

Cooperative agreement

definition.......................................................................................................................................... ii, B-4

usage .................................................................................................................................................... iii

definition...............................................................................................................................................B-4

conference grants and.......................................................................................................................II-101

fellowships..........................................................................................................................................II-74

publications.........................................................................................................................................II-73

data, rights in ................................................................................................................

......................II-72

royalties and licensing fees/program income from........................................................II-62 et seq., II-74

SBIR/STTR grants and.....................................................................................................................II-131

Cost analysis.....................................................................................................................................I-33, B-4

Cost considerations

accelerated expenditures...........................................................................................................II-45, II-62

affiliated organization services...........................................................................................................II-46

allocation of costs...............................................................................................................................II-45

allowability of costs..................................................................................................................II-26, II-30

applicable credits................................................................................................................................II-30

C-5

cost overruns.......................................................................................................................................II-45

cost principles.....................................................................................................................................II-25

cost transfers.............................................................................................................................II-44, II-62

delayed expenditures ................................................................................................................II-45, II-62

direct costs..........................................................................................................................................II-27

indirect costs, reimbursement of..............................................................................................II-27 et seq.

selected items of cost (Exhibit)................................................................................................II-30 et seq.

Also see specific types of grants, recipients

Cost principles for

educational institutions (OMB Circular A-21)..................................II-25, II-28, II-29, II-35, II-41, II-42

for-profit organizations (48 CFR subpart 31.2).................................................................................II-125

hospitals (45 CFR part 74, Appendix E).................................................................................II-25, II-125

non-profit institutions (OMB Circular A-122)..........................................II-25, II-25n; II-32, II-34, II-40

State, local, and Indian tribal governments

(OMB Circular A-87).................................................I-24, II-25, II-25n, II-27, II-27n, II-34, II-121

Cost sharing. See Matching or cost sharing

Cost transfers.................................................................................................................................II-44, II-62

Criminal False Claims Act .........................................................................................................................I-8

Customs and import duties, costs............................................................................................................II-34

Data. See Copyright; Research data and results

Deadlines. See Application process

Debarment.............................................................................................................................I-13 et seq., II-94

drug-free workplace and.......................................................................................................................II-22

foreign organizations..........................................................................................................................II-117

labor standards and.............................................................................................................................II-108

research misconduct and.......................................................................................................................II-14

Also see Suspension and debarment

Debt

bad debts, costs...................................................................................................................................II-32

delinquency on Federal debt................................................................................................................I-14

collection as enforcement action.........................................................................................................II-96

instruments..........................................................................................................................................II-68

Degree requirements..............................................................................................................................II-110

Delayed expenditures ....................................................................................................................II-45, II-62

Depreciation or use allowances...............................................................................................................II-34

land or building acquisition and..........................................................................................................II-36

rental or lease of facilities or equipment and.......................................................................................II-39

valuation of donated supplies, equipment, space, or land....................................................................II-48

Direct costs, definition ....................................................................................................................II-27, B-4

Discretionary grants contrasted with mandatory grants .............................................................................I-3

Domestic conference, definition..............................................................................................................II-98

Domestic organization

civil rights assurance and.....................................................................................................................I-32

definition...............................................................................................................................................B-4

payment for fellows at ......................................................................................................................II-110

prior-approval requirements for foreign component added to grant.......................................II-51, II-119

Donor costs..............................................................................................................................................II-34

Drug-free workplace........................................................................................................................II-4, II-22

foreign organizations and..................................................................................................................II-118

C-6

Drugs

costs.....................................................................................................................................................II-34

investigational new drug applications.................................................................................................II-19

controlled substances and Drug Enforcement Administration............................................................II-20

Dues or membership fees

conference grants and........................................................................................................................II-101

costs of.................................................................................................................................................II-34

DUNS number ...............................................................................................................................I-26, II-83

Education Amendments of 1972, Title IX.........................................................................................II-4, II-8

Educational institutions, cost principles for ............................................................................................II-25

Educational loans or GI bill...................................................................................................................II-113

Eligibility

citizenship and......................................................................................................................................I-11

general.......................................................................................................................................I-11 et seq.

grants to Federal institutions.............................................................................................................II-120

matching or cost sharing and...............................................................................................................I-24

non-profit organizations........................................................................................................................I-11

SBIR and STTR....................................................................................................................II-127, II-128

voluntary exclusion from.....................................................................................................................I-13

Enforcement actions

about ...................................................................................................................................................II-92

debt collection.....................................................................................................................................II-96

modification of award terms...............................................................................................................II-92

suspension or termination...................................................................................................................II-93

withholding a non-competing continuation award .............................................................................II-93

Entertainment costs .................................................................................................................................II-34

Entity Identification Number (EIN) ................................................................................................II-83, B-5

Environmental impact

construction grants and.............................................................................................................I-19 et seq.

costs related to ........................................................................................................................II-37, II-105

Equal employment opportunity requirements, construction grants.......................................................II-106

Equipment. Also see Alteration and renovation; Property; Supplies

accountability....................................................................................................................................II-121

change of grantee and..............................................................................................................II-54 et seq.

costs.........................................................................................II-35, II-100, II-101, II-102, II-103, II-105

definition...............................................................................................................................................B-5

insurance on........................................................................................................................................II-36

management system for...........................................................................................................II-66 et seq.

prior-approval for purchase of........................................................................................II-51, II-56, II-60

rental, costs of...........................................................................................................................II-39, II-79

sale of property acquired and proceeds from sale.................................................II-63, II-64, II-67, II-69

tax on purchase of, allowability..........................................................................................................II-42

trailers and modular units ...................................................................................................................II-43

valuation of donated ................................................................................................................II-47 et seq.

Executive Order 12372.............................................................................................................................I-27

Exempt property..............................................................................................................................II-66, B-5

C-7

Expanded authorities

about ...................................................................................................................................................II-59

carryover of unobligated balances......................................................................................................II-60

cost-related prior approvals ................................................................................................................II-60

definition...............................................................................................................................................B-5

extension of final budget period of project period..............................................................................II-60

foreign organizations and .................................................................................................................II-119

pre-award costs...................................................................................................................................II-60

transfer of performance to third party.................................................................................................II-60

Expenditures

accelerated and delayed............................................................................................................II-45, II-62

financial management requirements and .................................................................................II-61 et seq.

outlays or, definition.............................................................................................................................B-8

reports of......................................................................................................................II-86 et seq., II-102

Schedule of Expenditures of Federal Awards.....................................................................................II-91

Extensions

additional OPDIV funding and.................................................................................................II-51, II-56

final budget period without additional OPDIV funding .................................................II-51, II-57, II-60

Facilities acquisition, alteration and renovation, and construction. See Alteration and renovation; Building

acquisition; Construction; Construction grants

Facilities and administrative costs. See Indirect costs

Federal employees

copyright and...................................................................................................................................II-101

inventions and...................................................................................................................................II-122

payments to/on behalf of .................................................................................II-35, II-121, II-122 et seq.

Federal institution, grants to

allowable costs...................................................................................................................................II-121

definition................................................................................................................................................B-5

eligibility and certification.................................................................................................................II-120

equipment accountability...................................................................................................................II-121

inventions...........................................................................................................................................II-122

payment..............................................................................................................................................II-120

procurement requirements..................................................................................................................II-122

reporting requirements.......................................................................................................................II-122

Fee (or profit)...................................................................................................I-36, II-30, II-125, II-130, B-5

Fellowships (Ruth L. Kirschstein National Research Service Awards)

Activation Notice..............................................................................................................................II-114

allowable costs.......................................................................................................................II-111 et seq.

award notice......................................................................................................................................II-110

changes in project/activity................................................................................................................II-115

compensation....................................................................................................................................II-113

concurrent benefits............................................................................................................................II-113

consecutive support ..........................................................................................................................II-116

copyright of material.........................................................................................................................II-116

degree requirements..........................................................................................................................II-110

disposition of professional fees ........................................................................................................II-117

educational loans or GI bill...............................................................................................................II-113

eligibility..............................................................................................................................................I-12

employee benefits.............................................................................................................................II-112

C-8

Federal laboratories, individuals training at .....................................................................................II-110

financial reporting.............................................................................................................................II-115

Form 1099.........................................................................................................................................II-114

indirect costs........................................................................................................................................I-23

initiation of support...........................................................................................................................II-110

institutional allowance.............................................................II-110, II-111 et seq.II-115, II-116, II-121

inventions and patents.......................................................................................................................II-116

Payback Agreement..............................................................................................................II-110, II-115

payment ............................................................................................................................................II-110

period of support...............................................................................................................................II-110

professional fees ...............................................................................................................................II-117

progress reports.................................................................................................................................II-115

reporting requirements......................................................................................................................II-114

stipend supplementation ...................................................................................................................II-112

stipends, taxability of........................................................................................................................II-113

Termination Notice...........................................................................................................................II-115

termination of award.........................................................................................................................II-116

transfers ............................................................................................................................................II-115

travel to foreign training sites...........................................................................................................II-112

tuition and fees...................................................................................................................................II-112

Final Invention Statement and Certification............................................................................................II-96

Financial conflict of interest

general.......................................................................................................................II-4, II-7, II-14 et seq.

SBIR/STTR and.................................................................................................................................II-130

subawards and......................................................................................................................................II-82

Financial management system......................................................................................................II-61 et seq.

Financial reporting

Financial Status Report..........................................................................................II-86 et seq., II-94, B-6

conference grants..............................................................................................................................II-102

fellowships........................................................................................................................................II-115

foreign organizations ........................................................................................................................II-118

Fines and penalties ..................................................................................................................................II-35

Flood Disaster Protection Act of 1973, flood insurance and...........................................................II-4, II-21

Food and Drug Administration........................................................................... I-2, I-3, II-13n, II-18 et seq.

For-profit organization, grants to

about.................................................................................................................................................II-124

allowable costs..................................................................................................................................II-125

audit ..............................................................................................................................................II-125

definition...............................................................................................................................................B-6

intellectual property..........................................................................................................................II-125

profit or fee under.............................................................................................................................II-125

Also see SBIR and STTR programs

Foreign component....................................................................................................................................B-6

Foreign countries, activities in.............................................................................................II-3, II-24, II-101

Foreign organization..................................................................................................................................B-6

Also see Grants to foreign organizations, international organizations, and domestic grants with foreign

components

Freedom of Information Act (FOIA)........................................................................................................I-29

Fringe benefits, costs.........................................................................................................II-35, II-49, II-123

Full-time appointment...............................................................................................................................B-6

C-9

Funding

acknowledgment of Federal funding/support ...................................................................II-3, II-24, II-99

availability of information about .........................................................................................................I-10

budget period and project period..............................................................................................I-35 et seq.

fellowships........................................................................................................................................II-110

conference grants................................................................................................................................II-99

construction grants............................................................................................................................II-103

grants to foreign organizations, international organizations, and domestic grants with

foreign components...............................................................................................................II-118

needing for additional...............................................................................................................II-51, II-56

NoA and...............................................................................................................................................I-34

prior-approval requirements .............................................................................................................II-105

Funding opportunity announcement

about..............................................................................................................................................I-10, B-6

EO 12372..............................................................................................................................................I-27

matching or cost sharing

review criteria.......................................................................................................................................I-31

Fundraising costs.....................................................................................................................................II-35

GI Bill. See Educational loans or GI bill

Grant

definition...............................................................................................................................................B-6

usage....................................................................................................................................................... iii

Grant appeals procedures. See Appeals procedures

Grant-supported project or activity ...........................................................................................................B-6

Grantee. See Recipient

Grants.gov

Grants.gov FIND............................................................................................................................I-9, I-10

Grants.gov APPLY......................................................................................................................I-17, I-26

Grants Management Officer (GMO) role and responsibilities....................................................................I-5

Grants Management Specialist (GMS) role and responsibilities................................................................I-5

Grants to foreign institutions, international organizations, and domestic grants with foreign components

about ..............................................................................................................................................II-117

allowable costs..................................................................................................................................II-118

audit ..............................................................................................................................................II-119

eligibility...........................................................................................................................................II-120

indirect costs........................................................................................................................................I-24

funding..............................................................................................................................................II-118

payment ............................................................................................................................................II-118

prior-approval requirements .............................................................................................................II-119

public policy and requirements.........................................................................................................II-117

subawards .........................................................................................................................................II-119

Handicapped individuals

facility accessibility standards............................................................................................................II-21

Rehabilitation Act of 1973....................................................................................................................II-8

Hatch Act...........................................................................................................................................II-4, II-8

Hazardous waste disposal, costs..............................................................................................................II-35

C-10

Health and Human Services, Department of (HHS)

points of contact....................................................................................................................... III-1 et seq.

roles and responsibilities........................................................................................................................I-6

Health and safety standards and regulations............................................................................................II-23

Health insurance for fellows..................................................................................................................II-112

Also see Institutional allowance for fellowships

Health Insurance Portability and Accountability Act (HIPAA)......................................................II-4, II-22

Health Resources and Services Administration..............................................................................I-2, II-13n

Historic properties and archeological sites

allowable costs.........................................................................................................................II-34, II-104

protection of.......................................................................................................................I-21 et seq., II-4

Honoraria.....................................................................................................................................II-35, II-101

Hospitals

allowable costs.................................................................................................................II-36, II-37, II-40

cost principles..........................................................................................................................II-25, II-125

Also see Research patient care costs

Human embryonic stem cell research and cloning..........................................................................II-4, II-16

Human fetal tissue

research on...................................................................................................................................II-6, II-17

transplantation of.................................................................................................................................II-18

Human gene transfer research .........................................................................................................II-5, II-16

Human Research Protections, Office for...............................................................I-6, I-33, II-9 et seq., III-1

Human subjects

definition...............................................................................................................................................B-6

grants to for-profit organizations and ...............................................................................................II-125

protection of.......................................................................................................................II-5, II-9 et seq.

Incentive payments, costs..............................................................................................................II-35, II-41

Inclusiveness in research design, requirements for ..................................................................................I-19

Indemnification of third parties.....................................................................................................II-35, II-51

Independent research and development costs......................................................II-36, II-125, II-130, II-131

Indian Health Service.............................................................................................................. I-2, I-3, II-120

Indian tribal governments

administrative requirements for..............................................................................................................I-4

allowable costs and...........................................................................................................I-24, II-37, II-40

cost principles for................................................................................................................................II-35

Executive order 12372 and...................................................................................................................I-27

federally recognized, definition.............................................................................................................B-5

interest accountability..........................................................................................................................II-64

Indirect costs

about..................................................................................................................I-23, I-24, I-36, I-37, II-27

definition...............................................................................................................................................B-6

conference grants.....................................................................................................................I-23, II-101

construction grants...............................................................................................................................I-23

Federal institutions...................................................................................................................I-23, II-121

foreign and international organizations ...................................................................................I-24, II-119

fellowships...........................................................................................................................................I-23

prior approval .....................................................................................................................................II-50

reimbursement .........................................................................................................................II-27 et seq.

SBIR and STTR programs.....................................................................................................II-130 et seq.

C-11

training awards.....................................................................................................................................I-24

Information availability

access to research data....................................................................................... II-72 et seq., II-77 et seq.

Freedom of Information Act................................................................................................................I-28

Privacy Act and....................................................................................................................................I-30

Information sources, general......................................................................................................................I-9

Initiation of support, fellowships...........................................................................................................II-110

In-kind contributions. See Third-party in-kind contributions

Institutional allowance, fellowships...........................................................................................II-111 et seq.

Institutional Animal Care and Use Committee (IACUC) ............................................. I-19, I-33, II-3, II-12

Institutional Review Board (IRB)

financial conflict of interest and.........................................................................................................II-15

human subjects protection and ...........................................................................................................II-11

just-in-time procedures and.................................................................................................................I-33

Insurance

construction grants............................................................................................................................II-104

costs ................................................................................................................................................II-36

flood insurance............................................................................................................................II-4, II-21

health insurance................................................................................................................................II-112

real property........................................................................................................................................II-70

Intangible property....................................................................................................................................B-7

Intellectual property

conference grants..............................................................................................................................II-101

fellowships........................................................................................................................................II-116

for-profit organizations.....................................................................................................................II-125

Federal institutions............................................................................................................................II-122

general .....................................................................................................................................II-71 et seq.

SBIR and STTR programs................................................................................................................II-131

subawards and.....................................................................................................................................II-82

Also see Intangible property

Interest

costs ................................................................................................................................................II-36

earned on advances of grant funds......................................................................................................II-64

International conference, definition.........................................................................................................II-98

International organization..........................................................................................................................B-7

Also see Grants to foreign organizations, international organizations, and domestic grants with foreign

components

Inventions and patents. Also see Bayh-Dole Act of 1980

costs ................................................................................................................................................II-36

invention reporting compliance responsibilities (exhibit) .......................................................II-75 et seq.

fellowships........................................................................................................................................II-116

Final Invention Statement and Certification...................................................................II-53, II-77, II-96

royalties and licensing fees from........................................................................................................II-74

Investigational new drug (INDs) applications/investigational device exceptions (IDEs).....II-5, II-18, II-19

Just-in-time procedures, in pre-award process ........................................................................I-19, I-32, I-33

C-12

Key personnel

definition................................................................................................................................................B-7

prior approval...........................................................................................................II-7, II-14, II-51, II-56

Labor standards, construction grants.....................................................................................................II-107

Laboratory Animal Welfare, Office of (OLAW) ................................................................ II-12, II-13, III-1

Land acquisition, costs ................................................................................................................II-36, II-105

Leave costs ....................................................................................................................................II-36, II-40

Legal services, costs................................................................................................................................II-36

Letters of intent ........................................................................................................................................I-16

Library services, costs.............................................................................................................................II-36

Licensing

costs ................................................................................................................................................II-36

fees from copyrights, inventions, and patents.....................................................................................II-74

Limited English proficiency, nondiscrimination.............................................................................II-5, II-24

Liquidated damages provisions, construction grants.............................................................................II-108

Lobbying

appropriated funds and ........................................................................................................................I-15

certification..........................................................................................................................................I-15

costs ................................................................................................................................................II-36

disclosure statement............................................................................................................................II-86

Management systems and procedures

assessment in pre-award process .........................................................................................................I-32

financial management system..................................................................................................II-61 et seq.

procurement system.................................................................................................................II-78 et seq.

property management system .................................................................................................II-65 et seq.

Matching or cost sharing

about.................................................................................................................................I-24 et seq., II-47

definition...............................................................................................................................................B-7

program income and .................................................................................................................II-49, II-63

valuation of contributions........................................................................................................II-47 et seq.

Meals, costs .................................................................................................................................II-37, II-100

Membership fees. See Dues or membership fees

Minorities

conferences and representation in.......................................................................................................II-99

contracting with minority-owned firms for goods and services .........................................................II-80

inclusion as subjects in clinical research .............................................................................................I-19

Modernization ...................................................................................................................I-33, II-102 et seq.

Also see Construction

Monitoring........................................................................................................................................II-85, B-7

Moving, costs. See Recruitment costs; Relocation costs; Transportation of property

Multiple Project Assurances (MPAs)..................................................................................................II-110n

C-13

National Environmental Policy Act (NEPA)..............................................................I-20, II-5, II-37, II-105

National External Audit Review Center..................................................................................................II-91

National Historic Preservation Act..................................................................I-21 et seq., II-4, II-32, II-104

National Institutes of Health...................................................................................... ii, I-2, I-3, II-6n, II-13n

National Register of Historic Places...............................................................................................I-21, II-31

New application........................................................................................................................................I-15

NIH Guidelines for Research Involving Recombinant

DNA Molecules............................................................................................................II-5, II-9, II-16

Non-competing continuation

application..........................................................................................................................I-16, I-36, II-88

award.........................................................................................I-36, II-38, II-86, II-88, II-89, II-93, II-97

Also see Withholding of support

Non-Competing Grant Progress Report (PHS 2590)

See Non-competing continuation application; Progress report

Non-profit institutions, cost principles for ..............................................................................................II-25

Nonexempt property, administrative requirements .......................................................................II-66, II-67

Non-segregated facilities requirement, construction grants ..................................................................II-107

Notice of Award (NoA)

about ......................................................................................................................................I-34 et seq.

acceptance............................................................................................................................................I-35

budget and funding..............................................................................................................................I-36

budget period and project period..............................................................................................I-35 et seq.

fellowship .........................................................................................................................................II-110

terms and conditions...........................................................................................................I-34, I-35, I-37

Notice of Federal Interest............................................................................................................II-70, II-104

Nursery items, costs ................................................................................................................................II-43

Objective review..........................................................................................................I-30 et seq., II-54, B-7

Office of the Inspector General...............................................................................................I-7, II-92, III-1

Office of Management and Budget (OMB) Circulars

A-21...................................................................................................II-25, II-28, II-29, II-35, II-41, II-42

A-87........................................................................................................................I-24, II-25, II-27, II-34

A-102......................................................................................................................................................I-4

A-110......................................................................................................................................................I-4

A-122.....................................................................................................................II-25, II-32, II-34, II-40

A-133.....................................................................II-32, II-90 et seq., II-119, II-120, II-125 et seq., III-1

Office of Public Health and Science ....................................................................................I-3, II-6n, II-13n

Order of precedence ..................................................................................................................................II-1

Overtime. See Salaries and wages

Paperwork Reduction Act......................................................................................................I-8, II-84 et seq.

Patents. See Inventions and patents

Patient records, confidentiality of....................................................................................................II-4, II-22

PATRIOT Act....................................................................................................................................II-6, II-9

Payback Agreement, fellowships...........................................................................................................II-115

C-14

Payment

about ......................................................................................................................................I-37 et seq.

cash requests........................................................................................................................................I-38

CASHLINE/ACH................................................................................................................................I-38

Federal institutions............................................................................................................................II-121

fellowships........................................................................................................................................II-110

foreign institutions............................................................................................................................II-118

interest earned on advances of grant funds.........................................................................................II-64

reimbursement .................................................................................................................... I-37, I-38, B-8

SMARTLINK II/ACH.........................................................................................................................I-38

Payroll distribution.......................................................................................................................II-40 et seq.

Peer review. See Objective review

Pension plan costs ...................................................................................................................................II-37

PHS Policy on Humane Care and Use of Laboratory Animals ...........................................I-33, II-12, II-31

Physical destruction insurance, real property..............................................................................II-70, II-104

Pre-applications........................................................................................................................................I-16

Pre-award activities

cost analysis.................................................................................................................................I-33, B-4

just-in-time procedures............................................................................................................... I-19, I-33

management systems assessment.........................................................................................................I-33

Pre-award costs.....................................................................................................................II-38, II-104, B-7

prior approval and......................................................................................................................II-51, II-60

Preservation of Open Competition and Government Neutrality toward Government Contractors’ Labor

Relations on Federal and Federally Funded Construction Projects (EO 13202).......................II-107

Principal Investigator (PI)/Program or Project Director

change in status and prior approval ....................................................................................................II-56

roles and responsibilities........................................................................................................................I-6

Principles for Determining Costs Applicable to Research and Development under Grants and Contracts

with Hospitals..............................................................................................................................II-25

Prior-approval requirements

about .....................................................................................................................................II-49 et seq.

additional funding...............................................................................................................................II-56

alteration and renovation ....................................................................................................................II-31

application approval and...........................................................................................................II-30, II-49

capital expenditures ............................................................................................................................II-60

carryover of unobligated balances......................................................................................................II-52

change in grantee organizational status ....................................................................................II-53–II-55

change in scope...................................................................................................................................II-55

change of grantee organization................................................................................................II-53 et seq.

changes in status of PI/PD and key personnel....................................................................................II-56

conference grants and .........................................................................................................................II-99

construction grants.....................................................................................................II-105 et seq., II-108

definition...............................................................................................................................................B-8

expanded authorities........................................................................................................II-59 et seq., B-5

extension of project period ....................................................................................................

...II-57, II-60

foreign grants and.............................................................................................................................II-119

OPDIV prior approval, summary of actions requiring (exhibit)..............................................II-50 et seq.

pre-award costs.........................................................................................................................II-51, II-60

prior approval, definition ..............................................................................................II-50, II-58

requests for .........................................................................................................................................II-58

research patient care .................................................................................................................II-39, II-51

C-15

significant rebudgeting .............................................................................................................II-55, II-57

transfer of substantive programmatic work ........................................................................................II-57

Also see Cost considerations

Privacy Act...............................................................................................................................................I-30

Pro-Children Act .............................................................................................................................II-5, II-23

Procurement requirements

construction grants............................................................................................................................II-106

for grants to Federal institutions.......................................................................................................II-122

system standards.................................................................................................................................II-78

Professional fees, disposition of fellowships

........................................................................ II-117

Profit. See Fee

Program Director. See Principal Investigator/Program or Project Director

Program Fraud and Civil Remedies Act.....................................................................................................I-8

Program income

accountability and use of.........................................................................................................II-62 et seq.

definition...............................................................................................................................................B-8

grants to for-profit organizations........................................................................................................II-64

reporting..............................................................................................................................................II-64

Project Officer/Program Official (PO) role and responsibilities................................................................I-5

Progress reports

conference grants..............................................................................................................................II-102

definition...............................................................................................................................................B-8

Federal institutions............................................................................................................................II-122

fellowships........................................................................................................................................II-115

final progress report............................................................................................................................II-95

requirements ....................................................................................................................I-36, II-86, II-88

Project Director. See Principal Investigator/Program or Project Director

Project period ...............................................................................................................I-15, I-35 et seq., B-8

extensions of..............................................................................................................................II-57, II-60

conference grants.................................................................................................................................II-99

construction grants.............................................................................................................................II-103

Property management requirements.............................................................................................II-65 et seq.

Public disclosure

conference materials.........................................................................................................................II-102

environmental impact .........................................................................................................................I-20

intellectual property..........................................................................................................................II-101

Public Health Security and Bioterrorism Preparedness and Response Act.......................................II-5, II-9

Public policy requirements

about .........................................................................................................................................I-18, II-2

determining applicability/inclusion (exhibit).............................................................................II-3 et seq.

grants to for-profit organizations......................................................................................................II-125

grants to foreign organizations, international organizations, and domestic grants with foreign

components...........................................................................................................................II-117

in pre-award process.................................................................................................................I-18 et seq.

SBIR and STTR programs................................................................................................................II-130

Public relations costs...............................................................................................................................II-38

Publication

about ................................................................................................................................................II-73

conference grants........................................................................................................II-99, II-101, II-102

costs ....................................................................................................................................II-38, II-100

fellowships........................................................................................................................................II-116

C-16

Real estate appraisals...............................................................................................................................II-69

Real property

acquisition, use, and management of.......................................................................................II-68 et seq.

definition...............................................................................................................................................B-8

insurance requirements.......................................................................................................................II-70

notice of Federal interest in ...............................................................................................................II-70

disposition...........................................................................................................................................II-69

Reasonableness test, allowability of costs and........................................................................................II-26

Recipient. Also see Grantee

definition...............................................................................................................................................B-9

staff responsibilities....................................................................................................................I-6 et seq.

usage....................................................................................................................................................... iii

Recombinant DNA..................................................................................................................II-5, II-9, II-16

Record retention and access ....................................................................................................................II-89

conference grants...............................................................................................................................II-102

construction grants.............................................................................................................................II-106

Recruitment costs ....................................................................................................................................II-38

Registration fees (conferences/symposiums/seminars)...............................................................II-38, II-100

Rehabilitation Act of 1973 ................................................................................................................II-5, II-8

Reimbursement

of indirect costs. See Indirect costs

method of payment....................................................................................................................... I-37, I-38

Also see Enforcement actions

third-party.............................................................................................................................................I-26

Relinquishing statement. See Change of grantee

Relocation assistance. See Uniform Relocation Assistance and Real Property Acquisition Policies Act

Relocation costs.......................................................................................................................................II-39

Rental or lease of facilities and equipment

costs...............................................................................................................................II-39, II-79, II-100

matching or cost sharing contribution......................................................................................II-47 et seq.

Reporting requirements

about.........................................................................................................................................II-86 et seq.

audit..................................................................................................................II-90 et seq., II-119, II-125

closeout and final reports....................................................................................................................II-94

conference grants..............................................................................................................................II-102

inventions(and exhibit)..................................................................................................II-75 et seq., II-96

fellowships........................................................................................................................................II-114

financial (expenditure) reports..................................................................................................II-86, II-94

Federal institutions............................................................................................................................II-122

lobbying disclosure.............................................................................................................................II-86

overdue reports ...................................................................................................................................II-89

program income........................................................................................................................II-64, II-74

progress reports.........................................................................................................................II-88, II-95

Public Health System............................................................................................................................I-27

research misconduct............................................................................................................................II-13

Research data and results

access to..............................................................................................................................................II-72

sharing ................................................................................................................................................II-77

subawards and.....................................................................................................................................II-78

C-17

Research design requirements, inclusiveness in.......................................................................................I-19

Research Integrity, Office of............................................................................................... II-13, II-14, III-1

Research misconduct...............................................................................................................II-5, II-13, B-9

Research patient care

allowability of costs.................................................................................................... II-39, II-1-1, II-119

definition...............................................................................................................................................B-9

prior approval and...........................................................................................................II-51, II-56, II-60

rate.........................................................................................................................................................I-25

Research tools, sharing of........................................................................................................................II-77

Reserve funds ..........................................................................................................................................II-39

Resource Conservation and Recovery Act......................................................................................II-6, II-24

Responsibility of Applicants for Promoting Objectivity in Research for which

PHS Funding is Sought (42 CFR part 50, Subpart F)..........................................................II-4, II-14

Review Administrator ................................................................................................................................I-6

Revised (amended) application ................................................................................................................I-16

Revocable license agreement ..................................................................................................................II-68

Royalties and licensing fees from copyrights, inventions, and patents...................................................II-74

Sabbatical leave, costs.............................................................................................................................II-40

Safe Drinking Water Act.................................................................................................................II-6, II-21

Safety. See Health and safety standards and regulations.........................................................................II-23

Salaries and wages

students, compensation of...................................................................................................................II-42

costs .....................................................................................................................................II-40 et seq.

dual appointment payments................................................................................................................II-41

disposition of unclaimed wages, construction grants .......................................................................II-108

payroll distribution systems................................................................................................................II-40

Sale

equipment and supplies.............................................................................................................II-64, II-67

real property........................................................................................................................................II-69

Schedule of Expenditures of Federal Awards .........................................................................................II-91

Scientific meetings. See Conference grants

Scope, change in and prior approval of

............................................. I-16, II-51, II-52, II-54, II-55 et seq., II-57, II-60, II-99, II-105, II-119

Seat belt use.....................................................................................................................................II-6, II-24

Service charges, costs..............................................................................................................................II-42

Severance pay, costs................................................................................................................................II-42

Significant rebudgeting .........................................................................................................II-55, II-57, B-9

Single Project Assurances (SPAs).............................................................................................................59n

Small Business Innovation Research and Technology Transfer Programs (SBIR and STTR)

about ..............................................................................................................................................II-126

data sharing requirements.................................................................................................................II-132

differences between SBIR and STTR...............................................................................................II-127

Fast-track application process...........................................................................................................II-127

indirect costs.....................................................................................................................................II-130

intellectual property..........................................................................................................................II-131

market research.................................................................................................................................II-131

minimum level of effort....................................................................................................................II-129

place of performance ........................................................................................................................II-129

profit or fee.......................................................................................................................................II-130

C-18

public policy requirements ...............................................................................................................II-130

small business concern, definition and qualification.........................................................................II-128

SMARTLINK II/ACH .............................................................................................................................I-38

Smoke-free environment

Pro-Children Act and..................................................................................................................II-6, II-23

workplace....................................................................................................................................II-6, II-23

Standards of conduct .................................................................................................................................II-7

Standards of Privacy of Individuals Identifiable Health Information (HIPAA) (Privacy Rule) .....II-4, II-22

State, local, and Indian tribal governments

cost principles.....................................................................................................................................II-25

payroll distribution..............................................................................................................................II-40

pension plan, costs..............................................................................................................................II-37

State government, definition.................................................................................................................B-9

Uniform Administrative Requirements for Grants and Cooperative

Agreements................................................................................................................................I-4

Statement of Miscellaneous Income (IRS Form 1099).........................................................................II-114

Sterile needle/syringe distribution restriction..................................................................................II-6, II-22

Stipends

costs ........................................................................................................................................II-42, II-111

definition...............................................................................................................................................B-9

training allowance and prior approval................................................................................................II-52

supplementation................................................................................................................................II-113

taxability...........................................................................................................................................II-114

Students, compensation of...........................................................................................................II-42, II-113

Subawards (including consortium agreements)

about .....................................................................................................................................II-81 et seq.

approval authorities ............................................................................................................................II-59

audit ................................................................................................................................................II-90

cost principles.....................................................................................................................................II-25

costs ................................................................................................................................................II-42

definitions.....................................................................................................................................B-4, B-9

financial conflict of interest................................................................................................................II-15

flowdown of requirements.............................................................................................. iii, II-2, II-3, B-6

foreign ..............................................................................................................................................II-119

intellectual property..................................................................................................................II-64, II-74

public policy requirements ...............................................................................................................II-117

personal property ................................................................................................................................II-65

subrecipient.........................................................................................................................................B-10

terms and conditions........................................................................................................I-15, II-63, II-64

transfer of performance to third party by..................................................................................II-55, II-60

written agreement ...............................................................................................................................II-81

Subject costs................................................................................................................................II-44, II-123

Also see Research patient care costs

Submission of applications

application forms.................................................................................................................................I-17

confidentiality of information..............................................................................................................I-28

Grants.gov APPLY..............................................................................................................................I-26

receipt points and deadlines......................................................................................................I-26 et seq.

Substance Abuse and Mental Health Services Administration ..................................................................I-3

Supplemental application..........................................................................................................................I-16

C-19

Supplies. Also see Equipment

costs.........................................................................................................................................II-42, II-100

definition.............................................................................................................................................B-10

sale of..................................................................................................................................................II-67

valuation of donated............................................................................................................................II-47

Surveys.....................................................................................................................................................II-84

Suspension (post-award). Also see Debarment and suspension

costs ................................................................................................................................................II-43

definition.............................................................................................................................................B-10

enforcement actions............................................................................................................................II-93

Taxability of stipends............................................................................................................................II-113

Technology transfer policy. See Bayh-Dole Act of 1980; Inventions and patents

Termination

costs ................................................................................................................................................II-43

definition.............................................................................................................................................B-10

enforcement actions............................................................................................................................II-93

Termination Notice, fellowships ...........................................................................................................II-115

Terms and conditions of award. Also see Cost considerations; Notice of Award; Payment; Pre-award

activities; Public policy requirements

definition.............................................................................................................................................B-10

modification of award terms, enforcement actions.............................................................................II-92

overview ...........................................................................................................................................i, I-37

prior-approval requirements for deviation from.........................................................................II-1, II-51

Third-party in-kind contributions...............................................................................I-25, II-47 et seq., B-10

Third-party reimbursement……………………………………………………………………………....I-26

Title insurance.............................................................................................................................II-70, II-104

Total project or program costs.................................................................................................................B-10

Trailers and modular units, costs.............................................................................................................II-43

Training allowances prior-approval requirements for transfer of amounts

.....................................II-43

Transfer of funds between construction and nonconstruction work, prior-approval requirements.........II-52

Transfers, fellowships ...........................................................................................................................II-115

Transplantation of human fetal tissue, research on .......................................................................II-6, II-18

Transportation of property, costs.............................................................................................................II-43

Travel

costs ................................................................................................................................................II-43

to foreign training sites.......................................................................................................................II-44

institutional allowance for ................................................................................................................II-112

Tuition and fees

under fellowships...............................................................................................................................II-112

remission..............................................................................................................................................II-42

Uniform Relocation Assistance and Real Property Acquisition

Policies Act...................................................................................................................................I-22

Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct

Terrorism Act (USA PATRIOT Act) ............................................................................................II-9

Unobligated balances. See Carryover of unobligated balances

U.S. air flag carriers ........................................................................................................................II-6, II-44

C-20

C-21

Use allowances....................................................................................................................II-34, II-39, II-48

Vertebrate animals. See Animal welfare

Wetlands protection..........................................................................................................................I-22, II-5

Withholding of payment......................................................................................................II-89, II-96, B-10

Withholding of support

definition.............................................................................................................................................B-11

enforcement actions............................................................................................................................II-93

Women

contracting with women’s business enterprises for goods and services.............................................II-80

inclusion as subjects in clinical research................................................................................I-19