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ARCHIVED - NIH Grants Policy Statement (10/98)

Part II: Terms and Conditions of NIH Grant Awards-Part 7 of 7

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A grantee's failure to comply with the terms and conditions of award, including confirmed instances of scientific misconduct, may cause NIH to take one or more enforcement actions, depending on the severity and duration of the non-compliance. NIH will undertake any such action in accordance with applicable statutes, regulations, and policies, and will generally afford the grantee an opportunity to correct the deficiencies prior to taking enforcement action unless public health or welfare concerns require immediate action. However, even if a grantee is taking corrective action, NIH may, at the same time, take proactive actions to protect the Federal Government's interests, including placing special conditions on awards or precluding the grantee from obtaining future awards for a specified period, or actions designed to prevent future noncompliance, such as closer monitoring. If NIH imposes sanctions on a grantee as a result of misconduct in science or will more closely monitor an award(s) through the use of special conditions (see below), NIH will share this information with other HHS components.

During grant performance, the awarding office may impose special conditions to require correction of identified financial or administrative deficiencies. At the time the special conditions are imposed, the awarding office will notify the grantee of the nature of the conditions; the reason why they are being imposed; the nature of the corrective action needed; the time allowed for completing corrective actions; and the method for requesting reconsideration of the conditions. See 42 CFR 52.9 and 45 CFR 74.14 or 92.12.

The awarding office may also, for reasonable cause, withdraw approval of the PI or other key personnel for a project. The qualifications and competence of the PI and other key personnel were evaluated prior to award, and, if the awarding office has reasonable basis to conclude that the PI or other key personnel are no longer qualified to perform in that capacity, the awarding office may withdraw its approval of those individuals and request that the grantee designate a new PI or other key personnel.

The decision to modify the terms of an award by imposing special conditions, by withdrawing approval of the PI or other key personnel, or otherwise, is discretionary on the part of the IC.

When a grantee has failed to materially comply with the terms and conditions of a grant, NIH 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 92.43.

NIH will generally suspend (rather than immediately terminate) a grant and allow the grantee an opportunity to take appropriate corrective action prior to NIH's making a termination decision. NIH may decide to terminate the grant if the grantee does not take appropriate corrective action during the period of suspension. However, NIH may terminate without first suspending the grant if the deficiency is so serious as to warrant immediate termination or public health or welfare concerns require immediate action. Termination for cause may be appealed under the NIH/HHS grant appeals procedures (see "Administrative Requirements     Grant Appeals Procedures"). NIH may award a replacement grant for a limited period of time (up to 18 months) without competition pending the outcome of an appeal or other action by the grantee.

A grant may also be terminated, partially or totally, by the grantee or by NIH with the consent of the grantee. If the grantee decides to terminate a portion of a grant, NIH 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, NIH will advise the grantee of the possibility of termination of the entire grant and allow the grantee to withdraw its termination request. If the grantee does not withdraw its request for partial termination, NIH may initiate procedures to terminate the entire grant for cause.

See "Allowability of Costs/Activities     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 NIH, terminated by the grantee, or terminated by mutual agreement.

Withholding of support is a decision not to make a noncompeting continuation award within the current competitive segment. Withholding may occur for one or more of the following reasons:

  • A grantee is delinquent in submitting required reports.
  • Adequate Federal funds are not available to support the project.
  • A grantee fails to show satisfactory progress in achieving the objectives of the project.
  • A grantee failed to meet the terms of a previous award.
  • A grantee's management practices fail to provide adequate stewardship of Federal funds.
  • Any reason that would indicate that continued funding would not be in the best interests of the Government.

If a noncompeting continuation award is denied (withheld) because the grantee failed to comply with the terms and conditions of award in a previous budget period, the grantee may appeal that determination.

Depending on the nature of the deficiency, NIH may use other means of obtaining grantee compliance. Other options available to NIH include, but are not limited to, temporary withholding of payment or other actions specified at 45 CFR 74.62 or 92.43, conversion from an advance payment method to a reimbursement method, suspension or debarment under 45 CFR Part 76, and other available legal remedies, including civil action. Suspension under 45 CFR Part 76 is a distinct action from "suspension" as a postaward remedy described under "Suspension, Termination, and Withholding of Support" above. The subject of debarment and suspension as an eligibility criterion is addressed in the "Completing the Preaward Process     Eligibility" and "Public Policy Requirements and Objectives     Ethical and Safe Conduct in Science and Organizational Operations     Debarment and Suspension".

NIH may administratively recover funds paid to a grantee in excess of the amount to which the grantee is finally determined to be entitled under the terms and conditions of the award, including misspent funds or unallowable costs incurred. If the grantee does not pay back the funds in accordance with the demand by the IC within a reasonable period of time after the demand, the IC 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.

The Federal Debt Collection Act (Act), 31 U.S.C. 3711, and the Federal Claims Collection Standards (4 CFR Parts 101-105) require NIH to collect debts due to the Government and, except where prohibited by law, to charge interest on all delinquent debts owed to NIH by grantees (see also HHS claims collection regulations at 45 CFR Part 30). Debts may result from 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 grantee of the indebtedness. The interest on delinquent debts will be computed from the original notification date to the grantee of the indebtedness. The interest rate applied will be at the higher of the Current Value of Funds Rate or the private consumer rate of interest fixed by the Department of the Treasury. A higher rate may be charged if necessary to protect the interests of the Government. Penalties and administrative collection costs will also be charged in accordance with the Act and the implementing HHS regulations, as follows:

  • A penalty charge of six 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 Government's administrative costs of collecting overdue debts. From time to time, HHS will publish a notice in the Federal Register setting forth the amounts to be assessed for administrative collection costs.

If a grantee appeals a monetary adverse determination under 42 CFR Part 50, Subpart D or 45 CFR Part 16, 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 grantee of the indebtedness.

NIH will close out grants as soon as possible after expiration of a grant that will not be extended or after termination of a grant as provided in 45 CFR 74.71 to 74.73 or 92.50. Closeout includes timely submission of all required reports and adjustments for amounts due the grantee or NIH. Closeout of a grant does not automatically cancel any requirements for property accountability, record retention, or financial accountability. Following closeout, the grantee 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.

Grantees are required to submit a final Financial Status Report, Final Invention Statement and Certification, and final progress report within 90 days of the end of grant support unless an extension is granted by the GMO. Failure to submit timely final reports may affect future funding to the organization or awards with the same PI.

A final FSR is required for:

  • Any grant that is terminated.
  • Any grant that is transferred to a new grantee.
  • Awards, including awards under SNAP, that will not be competitively extended through award of a new competitive segment.

The final FSR must cover the period of time since the previous FSR submission or, for awards under SNAP, the entire competitive segment or as much of the competitive segment as has been funded prior to termination. Final FSRs must have no unliquidated obligations, and must indicate the exact balance of unobligated funds. Unobligated funds must be returned to NIH 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 responsibility of the grantee to reconcile reports submitted to PMS and to the NIH awarding office. Withdrawal of the unobligated balance following expiration or termination of a grant is not considered an adverse action and may not be appealed (see "Administrative Requirements     Enforcement Actions     Recovery of Funds").

Where the submission of a revised final FSR results in additional claims by the grantee, NIH will consider the approval of such claims subject to the following minimum criteria:

  • The charges must represent allowable costs under the provisions of the grant.
  • There must have been an unobligated balance for the given budget period that is sufficient to cover the additional claim. Such a claim may be considered regardless of whether the unobligated balance was moved forward to offset the award for a subsequent budget period.
  • Funds must be available from the applicable appropriation.

The final progress report should include, at a minimum, a summary of progress toward the achievement of the originally stated aims, a list of the results (positive or negative) considered significant, and a list of publications. An original and one copy of this report should be submitted to the GMO.

The grantee must submit a Final Invention Statement and Certification (HHS-568), whether or not an invention(s) results from work under the grant. The final invention statement/certification must be signed by the PI and an authorized institutional official and must list all inventions that were conceived or first actually reduced to practice during the course of work under the project, from the original effective date of support through the date of expiration or termination, whether or not previously reported. If there were no inventions, the statement should indicate "None."

HHS permits grantees to appeal certain postaward adverse administrative decisions made by HHS officials to an HHS Grant Appeals Board (see 45 CFR Part 16). NIH has established a first-level grant appeal procedure for discretionary grants and cooperative agreements that must be exhausted before an appeal may be filed with the HHS Departmental Appeals Board (see 42 CFR Part 50, Subpart D). NIH will assume jurisdiction for the following adverse determinations:

  • Termination, in whole or in part, of a grant for failure of the grantee to carry out its approved project in accordance with the applicable law and the terms and conditions of such assistance or for failure of the grantee 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 grantee has otherwise failed to discharge its obligation to account for grant funds.
  • Denial (withholding) of a noncompeting continuation award under the project period system of funding 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 grantee's appeal rights. As the first level in appealing an adverse determination, the grantee must submit a request for review to the NIH official specified in the adverse determination letter, detailing the nature of the disagreement with the adverse determination and providing supporting documents in accordance with the procedures contained in the notification. The grantee's request to NIH for review must be postmarked no later than 30 days after receipt of the written notification of the adverse determination except that, if the grantee can show good cause why an extension is warranted, an extension may be granted (42 CFR 50.406).

If the NIH decision on the appeal is adverse to the grantee or if a grantee's request for review is rejected on jurisdictional grounds, the grantee then has the option of submitting a request to the Departmental Appeals Board (DAB) for a further review of the case in accordance with the provisions of 45 CFR Part 16.

A grantee may not submit an appeal directly to the DAB, as it will review only appeals that have been reviewed and acted on by NIH.

In addition to the adverse determinations cited above, the DAB is the single level of appeal for disputes related to the establishment of F&A rates, research patient care rates, and certain other cost allocations used in determining amounts to be reimbursed under NIH grants (e.g., cost allocation plans negotiated with State or local governments), and computer, fringe benefit, and other negotiated special rates10.The grantee will be advised of any adverse determinations in these areas by the Division of Cost Allocation.

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