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ARCHIVED - NIH Grants Policy Statement (03/01)

Part II: Terms and Conditions of NIH Grant Awards
Subpart B: Terms and Conditions for Specific Types of Grants, Grantees, and Activities -- Part 7 of 8


Awards to Foreign Institutions, International
Organizations, and Domestic Grants with
Foreign Components

General

Most of the policies contained in Subpart A of this part apply to NIH grants made to foreign institutions and international organizations (hereafter "foreign grants"), including the requirements of 45 CFR Part 74 or 92 and the cost principles. If an applicant/grantee would be unable to comply with these requirements, the authorized organizational official should contact the GMO. Specific exceptions and modifications of requirements for foreign grants, as well as certain highlighted policies, are set forth in this section. This section also includes policies that apply to domestic grants with a foreign component. It does not apply to agreements under the U.S. Special Foreign Currency Program.

Eligibility

In general, foreign institutions and international organizations, including public or private non-profit or for-profit organizations, are eligible to receive research project grants. Foreign institutions and international organizations are not eligible to receive Institutional National Research Service Awards, program project grants, center grants, resource grants, SBIR/STTR grants, or construction grants. However, some mechanisms, such as research project grants (R01s), may support projects awarded to a domestic institution with a foreign component. For purposes of this policy, a "foreign component" is defined as performance of any significant element or segment of the project outside the U.S. either by the grantee or by a researcher employed by a foreign institution, whether or not grant funds are expended. Activities that would meet this definition include:

  • The involvement of human subjects/or animals.
  • Extensive foreign travel by grantee project staff for the purpose of data collection, surveying, sampling, and similar activities.
  • Any activity that may impact on U.S. foreign policy through the involvement of grantee project staff in the affairs or environment of the foreign country.

Foreign travel for consultation is not considered a "foreign component."

See "Support of Scientific Meetings (Conference Grants)" for NIH policy on support of international conferences.

Grants may not be made to individuals in a foreign location (i.e., outside of the U.S. and its territorial possessions). Occasionally, a fellowship award is made to an American citizen or a non-citizen national to study in a foreign institution. (A "non-citizen national" is a person who although not a citizen of the U.S. owes permanent allegiance to the U.S., such as a resident of American Samoa.)

Review

Applications from foreign institutions will be evaluated and scored during the initial review process using the standard review criteria. In addition, the following will be assessed as part of the review process and award decision:

  • Whether the project presents special opportunities for furthering research programs through the use of unusual talent, resources, populations, or environmental conditions in other countries that are not readily available in the U.S. or that augment existing U.S. resources.
  • Whether the proposed project has specific relevance to the mission and objectives of the IC and has the potential for significantly advancing the health sciences in the U.S.

Research grant applications from foreign or international organizations may not be funded unless approved by the IC Advisory Council/Board.

Public Policy Requirements and Objectives

A complete listing of public policy requirements and objectives and their applicability to foreign grants is contained in Table II-1. Several of the public policy requirements and objectives are highlighted in this subsection.

Research Misconduct. This public policy requirement applies to foreign grants.

Animal Welfare. The animal welfare requirements contained in "Public Policy Requirements and Objectives—Animal Welfare" apply to foreign grants.

Human Subjects. The human subjects requirements contained in "Public Policy Requirements and Objectives—Requirements Affecting the Rights and Welfare of Individuals as Research Subjects, Patients, or Recipients of Services—Human Subjects," including the requirement for an Assurance of Compliance pursuant to 45 CFR Part 46, apply to foreign grants. Foreign consortium participants under domestic or foreign grants also must submit an Assurance of Compliance if human subjects are involved.

Inclusiveness in Research Design. Foreign grants are subject to the requirements for inclusion of women, members of minority groups, and children in research design as specified in "Public Policy Requirements and Objectives—Requirements for Inclusiveness in Research Design."

Civil Rights. None of the civil rights requirements specified in "Public Policy Requirements and Objectives—Civil Rights" apply to foreign grants.

Lobbying. The requirements of "Public Policy Requirements and Objectives—Ethical and Safe Conduct in Science and Organizational Operations—Lobbying," including disclosure reporting, apply to foreign grants.

Debt. Foreign applicants are required to provide a certification of non-delinquency on debts owed to the United States as specified in "Public Policy Requirements and Objectives—Ethical and Safe Conduct in Science and Organizational Operations—Nondelinquency on Federal Debt."

Debarment and Suspension. Applicants/grantees 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 certification requirement concerning suspension or debarment nor to suspension or debarment under 45 CFR Part 76. All other foreign institutions and international organizations are subject to these requirements.

Drug-Free Workplace. Foreign applicants/grantees may be exempted from the drug-free workplace requirements of 45 CFR Part 76 based on a documented finding by the IC that application of those requirements is inconsistent with U.S. international obligations or the laws and regulations of a foreign government.

Funding and Payment

The application budget, requests for funds, and financial reports (see "Reporting and Record Retention" in this section) shall be stated in U.S. dollars. Once an award is made, NIH will not compensate foreign grantees for currency exchange fluctuations through the issuance of supplemental awards.

Awards to foreign institutions and international organizations are not paid through the HHS Payment Management System (PMS). These grants will normally be paid by U.S. Treasury check by the NIH Office of Financial Management (OFM) on a predetermined quarterly advance basis, usually in four equal installments. If the amount advanced to an organization based on the predetermined quarterly advance is insufficient to meet the grant's cash requirements, the grantee must make a written request to the GMO for any additional funds needed. All payments will be in U.S. dollars. Foreign grantees are strongly encouraged to use U.S. banks to ensure that payments arrive on time.

Any questions regarding payments to foreign grantees may be addressed to OFM (see Part III for address and telephone and fax numbers).

Allowability of Costs/Activities

The costs that are generally allowable under grants to domestic organizations also are allowable under foreign grants, with the following exceptions:

Alterations and Renovations: Unallowable.

Customs and Import Duties: Unallowable. This includes consular fees, customs surtax, value-added taxes, and other related charges.

Facilities and Administrative (F&A) Costs: With the exception of the American University, Beirut, and the World Health Organization, F&A costs will not be paid (either directly, under a consortium agreement, or through a contract under a grant) to an organization located outside the territorial limits of the U.S. or an international organization regardless of location.

Administrative Requirements

Changes in Project and Budget

Foreign grants are included in expanded authorities. Inclusion in the Streamlined Noncompeting Award Process (SNAP) is at the discretion of the IC and will be specified on the NGA.

Change in Scope

A change in the performance site within a foreign country or performance in a country other than that specified in the approved application is considered a change in scope and requires NIH prior approval. The transfer of work by a domestic grantee to a foreign component always requires NIH prior approval even if it does not constitute a change in scope.

Change of Grantee Organization

A change of grantee that involves the transfer of a grant to or between foreign institutions or international organizations requires competitive review and approval of the IC Advisory Council/Board. Transfer of a grant from a foreign organization to a domestic organization requires the approval of the GMO.

Audit

Foreign grantees are subject to the same audit requirements as for-profit organizations (specified in 45 CFR 74.26(d) and in "Grants to For-Profit Organizations" in this subpart).

Reporting and Record Retention

Foreign grantees must submit annual FSRs in U.S. dollars, whether or not they are under SNAP. This is due to the fact that foreign grantees are not paid through PMS and, therefore, do not submit the SF-272 (which NIH uses in lieu of the annual FSR for domestic awards under SNAP). The currency rate in existence at the time the FSR is prepared should be used in preparing the report.

Record retention requirements are the same as those for domestic grantees.

Grants to Federal Institutions and Payments to
(or on Behalf of) Federal Employees under Grants

General

NIH may award grants to Federal entities. Although the activity under these grants will take place in a research environment, certain terms and conditions vary from those included in Subpart A due to the recipient's status as a Federal institution. This section specifies those differences as well as differences in treatment among different Federal institutions. In addition, this section addresses the policies that apply to payments to (or on behalf of) Federal employees under grants, including grants awarded to organizations other than Federal institutions.

Eligibility

In general, Federal institutions are eligible to receive NIH grants, including research project grants and training grants. Federal institutions also must meet the eligibility requirements of the grant program from which support is sought. PHS organizational segments, other than PHS hospitals, may receive NIH grant support under exceptional circumstances only. Such circumstances may include situations where a project cannot be supported within the mission of the applicant PHS agency or organizational segment, the activity cannot be performed elsewhere or its non-pursuit would have an adverse or potentially important impact on the NIH mission, and a grant is determined to be the appropriate means of carrying out the activity. However, NIH may not award a grant to an NIH component.

Although the performance site may be at a level lower than the agency or department level of the Federal institution, when an award is made to an eligible Federal institution, the Federal agency or department will be the designated grantee and must assume responsibility for the project. A Federal institution also must ensure that its own authorizing legislation will allow it to receive NIH grants and to 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 accompany 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 shall be considered the Federal department, and their Secretaries the responsible Department head.) This certification is in addition to any certifications that are made by the authorized organizational official's signature on the face page of the application. The certification requirement does not apply to Department of Veterans Affairs' Medical Centers (VAMC), Bureau of Prisons' (Department of Justice) hospitals, PHS hospitals (including Indian Health Service hospitals), or other PHS organizational segments.

Department of Veterans Affairs (VA)-University Affiliations

Investigators with joint appointments at a Department of Veterans Affairs (VA) hospital (medical center) (VAMC) and an affiliated university must have a memorandum of understanding (MOU) that specifies the title of the investigator's appointment, the responsibilities (at both the university and the VAMC) of the proposed investigator, and the percentage of effort available for research. The MOU must be signed by the appropriate officials of the grantee organization and the VAMC and must be updated at least annually. The joint VA/university appointment of the investigator constitutes 100 percent of his or her total professional responsibilities. However, NIH will recognize such a joint appointment only when a university and an affiliated VA hospital are the parties involved.

A grant application from a university may request the university's share of an investigator's salary in proportion to the effort devoted to the research project. The individual's institutional base salary as contained in their university appointment determines the base for computing that request.

The signature of the authorized organizational official (of the submitting university) on an application to NIH that includes such an arrangement certifies that (1) the individual whose salary is included in the application serves under a joint appointment documented in a formal MOU between the university and the VA, and (2) there is no possibility of dual compensation for the same work or of an actual or apparent conflict of interest.

Under the above-described mode, there is no involvement of a VA-affiliated non-profit research corporation (VANPC). VANPCs are eligible to apply for and receive NIH grants in their own right as non-profit organizations. The limitations on the payment of Federal salaries apply (see "Allowability of Costs/Activities" in this section).

Payment

Under NIH grants, the Department of Defense will normally be paid by U.S. Treasury check after submission of the appropriate interagency form to the Office of Financial Management, NIH. Payments to all other Federal departments and agencies will generally be accomplished by transfers of funds between appropriations.

Allowability of Costs/Activities

The allowability of costs under grants to Federal institutions shall be determined by the established policies of the institution consistently applied to both its own activities and to grant-supported activities and by the following. In the absence of a governing institutional policy, the cost principles for State, local, and Indian tribal governments (OMB Circular A-87) will apply.

Salaries: See "Federal (U.S. Government) Employees" in this subsection.

Institutional Allowances under Fellowships: Institutional allowances may be requested by Federal institutions sponsoring a predoctoral or postdoctoral fellow unless otherwise restricted by law or regulation.

Facilities and Administrative Costs: F&A costs will not be provided to Federal institutions.

Federal (U.S. Government) Employees: Whether or not costs will be charged to the grant, when a Federal employee will be involved in an NIH 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, special conditions apply as provided in this subsection. The limitations in this subsection do not apply to individuals that are considered part-time Federal 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 73, Subpart J for additional guidance.)

The following four specified types of costs are the only ones that can be charged to NIH grants on behalf of Federal employees, whether by a grantee or a consortium participant, 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 organization must submit, as part of the grant application, any letters or documentation specified below, and that documentation must be deemed acceptable by the designated GMO prior to the Federal employee's involvement in the project.

Consultant fees 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; and
  • The applicant 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 are allowable when the employee is an outpatient or subject under study in connection with grant-supported activities.

Salary or Fringe Benefits

Except as provided below, no salary or fringe benefit payments may be made from NIH 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 given Federal component. While the level of effort required for the research project must be allowed by the employing agency as part of the individuals' official duties, salary costs associated with an individual participating in an official capacity as a Federal employee are not allowable costs under an NIH grant. Payments to temporary employees specifically hired to assist in the performance of an NIH grant are allowable.

Under grants to VANPCs, if the PI is a part-time VA employee, NIH 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 accordance with the established policies and salary structure of the VANPC, 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 paid by the non-profit VANPC may be charged to the NIH grant. An NIH 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).

Salary payments may be made from NIH 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 component only if prior approval is obtained from an authorized official of the employee's agency and the employee is:

  • A PHS Commissioned Officer or a civil service employee carrying out duties for which specific legislative 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 leave-without-pay (LWOP) if
    • The grantee has obtained written prior approval from the NIH awarding office;
    • The total amount of salary paid from NIH 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
    • 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.


  • A civil service employee participating in a grant to a non-Federal organization and the following conditions are met:
    • The individual is participating as part of an approved Intergovernmental Personnel Act (IPA) assignment in a role other than as PI. 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 limitation, the involvement of the civil service employee should be limited in scope. Therefore, the proposed PI for an NIH grant may not be participating through an IPA. On a case-by-case basis, the NIH awarding office 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.
    • Prior to making any payment from NIH grant funds to such an employee, the grantee must certify that the employee(s) is on an IPA assignment and must provide adequate documentation, as determined by NIH, of the IPA assignment and information about its nature and duration.
    • The level of effort required for the research project must be allowed by the employing agency as part of the individuals' official duties. Salary payments from NIH 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.

Travel costs are allowable if the employee is:

  • Working under a grant to a Federal institution;
  • Performing allowable reimbursable services as specified under 1., 2., or 3. immediately above; or
  • Attending an NIH grant-supported conference during non-duty hours; while in a pre-existing LWOP status or one that continues beyond the conference; or on detail to a State or local government, educational institution, or other non-profit organization, provided such payments are made in accordance with established institutional policy, consistently applied regardless of the source of funds, and the parties concerned have taken reasonable steps to ensure that there is no actual or apparent conflict of interest.

Administrative Requirements

Equipment Accountability

NIH will consider all property acquired under a grant awarded to a Federal institution as exempt (see 45 CFR 74.33) for purposes of determining the accountability requirements of 45 CFR 74.34. However, for items of equipment having a unit acquisition cost of $5,000 or more, NIH has the right to require transfer of the equipment, including title, to NIH or to an eligible third party named by the IC under the conditions specified in 45 CFR 74.34.

Procurement Requirements

Procurement under grants to Federal institutions is governed by the Federal Acquisition Regulation (FAR) and the recipient agency's FAR supplement.

Intellectual Property: Inventions and Patents

Inventions resulting from grants supporting the activities of Federal employees under grants to Federal institutions shall be reported simultaneously to NIH pursuant to the terms of the award and to the employing agency under the terms of Executive Order 10096, as amended, and are subject to the licensing requirements of 37 CFR Part 501.

Reporting Requirements

Federal institutions must submit annual FSRs regardless of whether the award is subject to SNAP. This is due to the fact that these grants are paid by the NIH Office of Financial Management rather than through the Payment Management System.

Grants to For-Profit Organizations

General

Some of the terms and conditions for grants to for-profit (commercial) organizations vary from the standard terms and conditions included in Subpart A of this part. In addition, the terms and conditions of the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (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. If an exception is not stated below or in the NGA, the terms and conditions specified in Subpart A apply, including requirements for the protection of human subjects and animal welfare.

Eligibility

For-profit organizations are eligible to receive awards under all NIH programs and support mechanisms unless specifically excluded by statute.

Allowability of Costs

Cost Principles

There are no cost principles specifically applicable to grants to for-profit organizations. Therefore, the cost principles for commercial organizations set forth in the Federal Acquisition Regulation, 48 CFR Part 31.2, generally will be used. For proprietary hospitals, the cost principles in 45 CFR Part 74, Appendix E, will be used.

Profit or Fee

Except for grants awarded under the SBIR/STTR programs, under an NIH grant, no profit or fee will be provided to a for-profit organization, whether as a grantee or as a consortium participant. A profit or fee under a grant is considered to be an amount in excess of actual allowable direct and F&A (indirect) costs. A profit or fee may be paid to a contractor providing routine goods or services.

Independent Research and Development Costs

As provided in 45 CFR 74.27(a), NIH does not allow for-profit organizations to be reimbursed for independent (self-sponsored) research and development (IR&D) costs.

Facilities and Administrative Costs (Indirect Costs)

F&A costs are allowable under awards to for-profit organizations.

Administrative Requirements

For-profit organizations are generally subject to the same administrative requirements as non-profit organizations, including those relating to personal property title and management. Exceptions to those requirements for for-profit organizations are indicated below.

Intellectual Property: Inventions and Patents

As described in "Administrative Requirements—Availability of Research Results: Publications, Intellectual Property Rights, and Sharing Biomedical Research Resources," the requirements set forth in 37 CFR Part 401 govern the development, reporting, and disposition of rights to inventions and patents resulting from all NIH grants to for-profit organizations, whether small businesses or large businesses (see "Availability of Research Results: Publications, Intellectual Property Rights, and Sharing Biomedical Research Resources—Inventions and Patents" for the full text of the clause). Additional information about the requirements of 37 CFR 401 should be obtained from the Inventions and Extramural Reporting Branch, OPERA, NIH (see Part III for address and telephone number).

To the extent authorized by 35 U.S.C. 205, the Government will not make public any information disclosing a Government-supported invention for a reasonable period to allow the grantee time to file a patent application, nor will the Government release any information that is part of that patent application. See "Small Business Innovation Research and Small Business Technology Transfer Programs" for requirements specific to those programs.

Disposition of royalties or licensing fees earned on patents and inventions arising out of activities supported by NIH grants shall be governed by determinations made or agreements entered into under 37 CFR Part 401. Invention reporting requirements for for-profit organizations are those specified in "Administrative Requirements—Monitoring—Reporting—Invention Reporting."

Program Income

For-profit grantees other than those under the SBIR/STTR programs are subject to the deductive alternative for the use of program income described in "Administrative Requirements—Management Systems and Procedures—Program Income," and in 45 CFR 74.24(b).

Operating Authorities

The operating authorities (expanded authorities or standard NIH authorities) for awards issued to for-profit organizations are usually determined by the support mechanism (see "Administrative Requirements—Changes in Project and Budget").

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 $300,000 or more under one or more HHS awards and at least one of those awards is an HHS grant (as a direct grantee and/or under a consortium agreement). 45 CFR 74.26(d) essentially 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 grantee 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.

OMB Circular A-133 is available electronically at http://www.whitehouse.gov/OMB/circulars/a133/a133.html.

The Government Auditing Standards are available electronically at http://www.gao.gov/govaud/ybk01.htm. Audits shall be completed and submitted to the following office within a period of time that is the earlier of (1) 30 days after receipt of the auditor's report(s), or (2) 9 months after the end of the audit period, i.e., the end of the organization's fiscal year. The address is:

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 $300,000 a year are not required to have an annual audit for that year but must make their grant-related records available to NIH or other designated officials for review or audit.

Small Business Innovation Research and Small Business Technology
Transfer Programs

NIH is currently required by statute to reserve a portion of its annual extramural budget for projects under the SBIR and STTR programs. These programs are primarily intended to emphasize private sector commercialization of technology and to increase small business participation in federally funded research and development (R&D).

Both the SBIR and STTR programs consist of the following 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 grantee (small business concern) prior to 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 grantees are eligible to receive Phase II funding. Phase II applications may be submitted after the Phase I award is made, and NIH expects they will 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 small business concern 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 a small business concern (applicant organization) to "team" with a research institution to collaboratively conduct a project that has potential for commercialization. The SBIR program does not have this requirement, i.e., the small business concern either may conduct the entire project without outside collaboration or with outside collaboration within the limits described under "Eligibility" in this section.
  • The SBIR program requires that the primary employment of the PI (greater than 50 percent of the individual's time) be with the small business concern 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 small business concern, including the collaborating research institution. However, there must be an official relationship between the PI and the small business concern. As an eligibility criterion, NIH also requires the PI to devote at least 10 percent of his or her time to the STTR project.

Eligibility

Each organization receiving a grant under the SBIR/STTR programs must qualify as a U.S.-owned small business concern. In determining whether the organization is a small business concern, NIH will assess several factors, including:

  • Whether the small business is independently owned and operated; and
  • Whether it is an affiliate of a larger organization whose employees, when added to those of the applicant organization, do not exceed 500.

In conducting this assessment, all appropriate factors will be considered, including common ownership, common management, and contractual relationships.

In accordance with 13 CFR Part 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 grantee organization is to be conducted in research space occupied by, available to, and under the control of, the SBIR/STTR grantee. However, when required by the project activity, access to special facilities or equipment in another organization is permitted, as in cases where the SBIR grantee has entered into a consortium agreement with another organization for a specific, limited portion of the research project.

Joint ventures and limited partnerships are eligible provided the entity created qualifies as a small business concern.

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 U.S. (The U.S. 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.)

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 small business concern (grantee). Furthermore, 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 budget (direct and F&A (indirect) costs).

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 small business concern (grantee). Furthermore, 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 budget (direct and F&A (indirect) costs).

For STTR awards (both Phase I and Phase II), at least 40 percent of the work is to be performed by the small business concern (grantee) and at least 30 percent of the work is to be performed by the single, "partnering" research institution. The basis for determining the percentage of work to be performed by each of the cooperative parties is the total of direct and F&A (indirect) 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 and Objectives

The requirements concerning disclosure of financial conflicts of interest (see "Public Policy Requirements and Objectives—Ethical and Safe Conduct in Science and Organizational Operations—Standards of Conduct—Financial Conflict of Interest") do not apply to Phase I of the SBIR/STTR programs.

Allowability of Costs and Fee

Profit or Fee

A reasonable fixed fee may be paid to small business concerns receiving awards under Phases I and/or II of the SBIR and STTR programs. The fee is not considered a "cost" for purposes of determining allowability of use, program income accountability, or audit thresholds. The fee may be used by the small business concern for any purpose, including additional effort under the SBIR/STTR award. The fee is intended to provide a reasonable profit consistent with normal profit margins for for-profit organizations for R&D work; however, the amount of the fee approved will not normally exceed seven (7) percent of total costs (direct and F&A) for each phase of the project. The fixed fee applies solely to the small business concern (grantee) receiving the SBIR/STTR award and not to any other participant; however, the grantee may pay a profit/fee to a contractor providing routine goods or services in accordance with normal commercial practice.

Facilities and Administrative Costs (Indirect Costs)

Phase I

If the applicant small business concern has a currently effective indirect cost rate(s) with a Federal agency, such rate(s) should be used when calculating proposed F&A costs. (However, the rates(s) must be adjusted for IR&D expenses, which are not allowable under HHS awards.) If the applicant small business concern does not have a currently effective negotiated indirect cost rate with a Federal agency, the applicant should propose estimated F&A costs at a rate not to exceed 40 percent of the total direct costs. However, small business concerns are reminded that only actual F&A costs are to be charged to projects. (If awarded at a rate of 40 percent or less, the rate used to charge actual F&A costs to projects cannot exceed the awarded rate unless the small business concern negotiates an indirect cost rate(s) with a Federal agency.)

Phase II

If the applicant small business concern has a currently effective negotiated indirect cost rate(s) with a Federal agency, such rate(s) should be used when calculating proposed F&A costs. (However, the rates(s) must be adjusted for IR&D expenses, which are not allowable under HHS awards.) If the applicant small business concern does not have a currently effective negotiated indirect cost rate with a Federal agency, the applicant should propose estimated F&A costs. If the small business concern is being considered for an award, it will be asked to submit detailed documentation if a rate in excess of 25 percent of total direct costs is requested. If the requested F&A cost rate is 25 percent or less, no further justification is required at the time of award, and F&A costs will be awarded at the requested rate. However, small business concerns are reminded that only actual F&A 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 F&A costs to projects cannot exceed the awarded rate unless the small business concern negotiates an indirect cost rate(s) with a Federal agency.)

Administrative Requirements

Market Research

NIH 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 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 require 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.

Program Income

Unless the specific terms and conditions of an award provide otherwise, program income generated under SBIR/STTR Phase I and II awards shall be used under the additive alternative (see "Administrative Requirements—Management Systems and Procedures—Program Income").

Intellectual Property: Rights in Data, and Inventions and Patents

Rights to data, including software developed under the terms of any funding agreement resulting from an NIH award, shall remain with the grantee except that any such copyrighted material shall be subject to a royalty-free, nonexclusive and irrevocable license to the 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 shall not be released outside the Government without the grantee's permission for a period of 4 (four) years from completion of the project from which the data were generated.

The STTR program requires that the grantee organization (small business concern) and the single, "partnering" 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. (For guidance, a model agreement, entitled "Allocation of Rights in Intellectual Property and Rights to Carry Out Follow-On Research, Development, or Commercialization," is included in the STTR Phase I grant solicitation and in the Phase II application package.) By signing the face page of the STTR grant application, the official signing for the applicant organization (small business concern) 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 NIH IC awarding office.

SBIR/STTR grantees are covered by 37 CFR 401 with respect to inventions and patents (see "Intellectual Property: Inventions and Patents" in this section).




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