ARCHIVED - NIH Grants Policy Statement (10/03)
NIH Grants Policy Statement(12/03)
Part II: Terms and Conditions of NIH Grant Awards
Subpart B: Terms and Conditions for Specific Types of Grants, Grantees, and Activities -- File 5 of 5
TO (OR ON BEHALF OF) FEDERAL EMPLOYEES UNDER GRANTS
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.
In general, Federal institutions are eligible to apply for 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 IHS 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 nonpursuit would have an adverse impact or potentially important effect on the NIH mission, and NIH determines a grant is 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 grantee of record 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 that assures both the assumption of responsibility and authority to receive a grant must accompany each new and competing continuation application. The assurance 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 DoD, the Departments of the Army, Navy, and Air Force are considered the Federal department, and their Secretaries the responsible Department head.) This assurance is in addition to those made by the AOO’s signature on the face page of the application. The assurance requirement does not apply to VAMCs, Bureau of Prisons’ (Department of Justice) hospitals, IHS hospitals, or other PHS organizational segments.
Investigators with joint appointments at a VAMC (VA hospital) and an affiliated university must have an 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 and the VAMC, and must be updated with each significant change of the investigator’s responsibilities or distribution of effort and, without a significant change, not less than 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 institutional base salary as contained in the individual’s university appointment determines the base for computing that request.
The signature of the AOO of the submitting university on an application to NIH that includes such an arrangement certifies that
l 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
l there is no possibility of dual compensation for the same work or of an actual or apparent conflict of interest.
Under the above-described arrangement, there is no involvement of a VA-affiliated non-profit research corporation, which is eligible to apply for and receive NIH grants in its own right as a non-profit organization. The limitations on the payment of Federal salaries apply (see “Allowable and Unallowable Costs” in this section).
NIH grants to DoD normally will be paid by U.S. Treasury check after submission of the appropriate interagency form to OFM, NIH. Payments to all other Federal departments and agencies generally will be accomplished by transfers of funds between appropriations.
Allowable and unallowable 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 the requirements of this subsection. In the absence of a governing organizational 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 Kirschstein-NRSA individual fellowships. Institutional allowances may be requested by Federal institutions sponsoring a predoctoral or postdoctoral fellow.
F&A 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 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 73, Subpart J for additional guidance.)
Only four types of costs—consultant fees, outpatient or subject costs, salary or fringe benefits, and travel costs—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/grantees 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 GMO before the Federal employee’s involvement in the project.
Consultant fees. 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:
l The employees are providing the kind and extent of medical services approved in the grant award.
l 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.
l 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. These costs are allowable when the employee is an outpatient or subject under study in connection with grant-supported activities.
Salary or fringe benefits. Under grants to VANPCs, in accordance with the established policies and salary structure of the VANPC, 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 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 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 one of the following:
l 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).
l A PHS Commissioned Officer on LWOP if the
Ø grantee has obtained written prior approval from the NIH awarding office;
Ø 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
Ø 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.
l A civil service employee participating in a grant to a non-Federal organization and all of the following conditions are met:
Ø The individual is participating as part of an approved 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 restriction, 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.
Ø Before making any payment from NIH grant funds to such an employee, the grantee must certify that the employee 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.
Ø The level of effort required for the research project must be allowed by the employing agency as part of the individual’s 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.
Ø 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.
Unless the payments meet one the above-described exceptions, 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.
Travel costs. Travel costs are allowable if the employee is
l working under a grant to a Federal institution;
l performing allowable reimbursable services as specified under “Salary or Fringe Benefits” immediately above; or
l attending an NIH grant-supported conference
Ø during non-duty hours,
Ø while in a preexisting LWOP status or one that continues beyond the conference, or
Ø 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.
NIH will consider all nonexpendable personal 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, NIH has the right to require transfer of equipment, including title, to NIH or an eligible third party named by the NIH awarding office under the conditions specified in 45 CFR 74.34.
Procurement under grants to Federal institutions is governed by the FAR and the recipient agency’s FAR supplement.
Inventions resulting from grants supporting the activities of Federal employees under grants to Federal institutions must be reported simultaneously to NIH 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 grant recipient, and the recipient institution chooses not to elect title or pursue practical application of an invention, the recipient must note VA’s involvement on its notice to NIH and provide a courtesy copy of the NIH notification to the appropriate VA office. NIH will notify the recipient and the VA whether NIH has an interest in taking title and/or continuing the pursuit of practical application of the invention.
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 OFM, NIH rather than through PMS.
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 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 in Subpart A that apply equally to for-profit and non-profit recipients. 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.
For-profit organizations are eligible to apply under all NIH programs and support mechanisms unless specifically excluded by statute.
There are no cost principles specifically applicable to grants to for-profit organizations. Therefore, the cost principles for commercial organizations set forth in the FAR (48 CFR Part 31.2) generally are used to determine allowable costs under NIH grants to for-profit organizations. As provided in those costs principles, allowable travel costs may not exceed those established by the FTR (available on-line at http://www.gsa.gov). The cost principles in 45 CFR Part 74, Appendix E, are used to determine allowable costs under NIH grants to proprietary hospitals.
As provided in 45 CFR 74.27(a), NIH does not allow for-profit organizations to be reimbursed for IR&D (self-sponsored) costs.
Facilities and Administrative Costs (Indirect Costs)
F&A costs are allowable under awards to for-profit organizations.
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 not a cost, but is an amount in excess of actual allowable direct and F&A costs. In accordance with normal commercial practice, a profit/fee may be paid to a contractor under an NIH grant providing routine goods or services to the grantee.
For-profit organizations generally are subject to the same administrative requirements as non-profit organizations, including those relating to personal property title and management. Exceptions to or elaboration of those requirements for for-profit organizations are indicated below.
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 grantee is a for-profit organization, assignment of invention rights to a third party does not require NIH approval. (See “Administrative Requirements—Availability of Research Results: Publications, Intellectual Property Rights, and Sharing Research Resources.”). Additional information about the requirements of 37 CFR 401 may be obtained from the Extramural Inventions and Technology Resources Branch, OPERA, NIH (see Part III for address and telephone number).
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.
Consistent with expanded authorities, for-profit grantees, including those under the SBIR/STTR programs, are subject to the additive alternative for the use of program income described in “Administrative Requirements—Management Systems and Procedures—Program Income.”
Awards to for-profit organizations generally are subject to expanded authorities; however, some mechanisms do not allow automatic carryover of unobligated balances of funds. Under those mechanisms, the NIH awarding office will specify the disposition of the reported unobligated balance in the NGA. (See “Administrative Requirements—Changes in Project and Budget”).
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 grantee and/or under a consortium participant) and at least one of those awards is an HHS grant. 45 CFR 74.26(d) 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 must be completed and submitted to the following office 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 address is:
National External Audit Review Center
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 NIH or other designated officials for review or audit.
NIH is 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:
l 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.
l 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. Unless submitted as a Fast-Track application (see below), Phase II applications may be submitted only after the Phase I award is made. NIH expects 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.
l 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:
l 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 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.
l 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, NIH also requires the PI to devote at least 10 percent of his or her time to the STTR project.
The NIH 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. NIH 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 cognizant NIH program staff. SBIR/STTR Phase I and Phase II applications submitted concurrently without prior consultation with NIH may be redirected for review under NIH’s normal review procedures. For additional information on the submission of Fast-Track applications, see the SBIR/STTR program solicitations and instructions at http://grants.nih.gov/grants/funding/sbir.htm.
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:
l The entity is organized for profit, with a place of business located in the United States, which operates primarily within the United States, or which makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor.
l 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.
l 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 ownership of the entity by a U.S. citizen does not satisfy the requirements of 13 CFR 121.702(a).
Ø 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.
Ø 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.
l The entity, including its affiliates, cannot have more than 500 employees. 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 under an SBIR/STTR award is to be conducted in research space occupied by, available to, and under the control of, the 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 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 as an SBC, 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. NIH will consider these instances on a case-by-case basis, and they should be discussed with cognizant NIH staff before submitting an application. Whether the request is approved or disapproved, it will be explicitly addressed in the NGA if an award is made. Whenever 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 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—Financial Conflict of Interest”) do not apply to applications or awards under Phase I of the SBIR/STTR programs.
Allowable Costs and Fee
A reasonable profit or fee may be paid to a 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; however, the amount of the profit or fee normally will not exceed seven (7) percent of total costs (direct and F&A) for each phase of the project. The profit or fee should be drawn from PMS in increments proportional to the drawdown of funds for direct and F&A 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.
Facilities and Administrative Costs (Indirect Costs)
If the applicant SBC has a currently effective indirect cost rate(s) with a Federal agency, such rate(s) should be used when calculating proposed F&A costs for an NIH application. (However, the rates(s) 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 F&A costs at a rate not to exceed 40 percent of the total direct costs. However, SBCs 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 SBC negotiates an indirect cost rate(s) with a Federal agency.) NIH will not negotiate indirect cost rates for Phase I awards.
If the applicant SBC 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 for an NIH application. (However, the rates(s) 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 F&A rate in the application. If the requested F&A cost rate is 25 percent of total direct costs or less, no further justification is required at the time of award, and F&A costs will be awarded at the requested rate. However, SBCs 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 SBC negotiates an indirect cost rate(s) with DFAS. DFAS—the office authorized to negotiate indirect cost rates with SBC’s receiving NIH 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 is 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 website or by telephone (see Part III of the NIHGPS).
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 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.
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 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 shall not be released outside the Federal government without the grantee’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 grantee 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, entitled “Allocation of Rights in Intellectual Property and Rights to Carry Out Follow-On Research, Development, or Commercialization,” is available at the NIH website 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 NIH awarding office.
SBIR/STTR grantees are covered by 37 CFR 401 with respect to inventions and patents (see “Grants to For-Profit Organizations—Administrative Requirements—Intellectual Property” in this section).
Applicants for SBIR Phase II funding of $500,000 or more of direct costs in any single year must comply with the NIH policy on data sharing as modified by 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, NIH will not release data outside the Federal government without the grantee’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.
This section provides NIH policy on the determination and reimbursement of research patient care costs under grants. This general policy is intended to be applied in conjunction with the requirements of 45 CFR Part 74, Appendix E, Principles for Determining Costs Applicable to Research and Development under Grants and Contracts with Hospitals. In addition, specific NIH programs may have additional or alternative requirements with which an applicant/grantee must comply. This includes the GCRC guidelines as specified in this section.
Research Patient Care Costs. The costs of routine and ancillary services provided by hospitals to individuals participating in research programs. The costs of these services normally are assigned to specific research projects through the development and application of research patient care rates or amounts (hereafter “rates”). Research patient care costs do not include: (1) the otherwise allowable items of personal expense reimbursement, such as patient travel or subsistence, consulting physician fees, or any other direct payments related to all classes of individuals, including inpatients, outpatients, subjects, volunteers, and donors, (2) costs of ancillary tests performed in facilities outside the hospital on a fee-for-service basis (e.g., in an independent, privately owned laboratory) or in an affiliated medical school/university based on an organizational fee schedule, or (3) the data management or statistical analysis of clinical research results.
Hospital. Includes all types of medical, psychiatric, and dental facilities, such as clinics, infirmaries, and sanatoria.
Research Patients. Inpatient and outpatient subjects, volunteers, or donors participating in a research protocol.
Routine Services. 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. Those special services for which charges are customarily made in addition to routine services, e.g., x-ray, operating room, laboratory, pharmacy, blood bank, and pathology.
Outpatient Services. Services rendered to subjects/volunteers who are not hospitalized.
Usual Patient Care. Items and services (routine and ancillary) ordinarily furnished in the treatment of patients by providers of patient care under the supervision of the physician or other responsible health professional. Such items or services may be diagnostic, therapeutic, rehabilitative, medical, psychiatric, or any other related professional heath services. These expenses are for care that would have been incurred even if the research study did not exist. The patient and/or third-party insurance generally will provide for reimbursement of charges for “usual patient care” as opposed to not reimbursing those charges generated solely because of participation in a research protocol.
Discrete Centers. Groups of beds that have been set aside for occupancy by research patients and are physically separated from other hospital beds in an environment that normally permits an ascertainable allocation of costs associated with the space they occupy and the service needs they generate.
Scatter Beds. Beds assigned to research patients based on availability. These beds are not physically separate from nonresearch beds. Scatter beds are geographically dispersed among all the beds available for use in the hospital and are not usually distinguishable in terms of services or costs from other general service beds within the hospital.
Cost-Finding Process. The technique of apportioning or allocating the costs of the non-revenue-producing cost centers to each other and to the revenue-producing centers on the basis of the statistical data that measure the amount of service rendered by each center to other centers.
NIH provides funds for research patient care costs under grants. Research patients may receive routine services as inpatients or ancillary services as either inpatient or outpatient subjects/volunteers. In order to receive reimbursement for research patient care costs, any hospital that, as a direct recipient of NIH funds, expects to incur more than $100,000 in patient care costs in any single budget period on a single NIH grant must either have in place or take steps to negotiate a research patient care rate agreement with the cognizant DCA office. These rates must be shown in all requests and/or claims for reimbursement of research patient care costs. Hospital grantees that expect to incur $100,000 or less in research patient care costs per budget period on a single NIH grant and consortium participants/contractors under grants are subject to the requirements specified in the subsection on “Special Procedures for Certain Hospitals” below. Failure to negotiate a research patient care rate with DCA when required may result in the disallowance of all research patient care costs charged to a grant.
The type of patient and services received are the determining factors for allowing research patient care costs as charges to NIH grants. If the patient is receiving service or care that neither differs from usual patient care nor results in expenses greater than those that would have been incurred if the study had not existed, then the patient is considered to be hospitalized for usual care purposes and the grant will not support the costs. When the research extends the period of hospitalization beyond that ordinarily required for usual care, or imposes procedures, tests or services beyond usual care, whether in an inpatient or outpatient setting, the grant may pay the additional costs. The grantee must decide whether, in fact, the hospitalization period, the tests, or the services have been extended beyond or added to what would ordinarily have been expected, and to what extent. Patient care costs for individuals who are receiving accepted treatment according to standard regimens would not ordinarily be acceptable charges to an NIH grant. Similarly, in certain kinds of clinical trials where accepted treatments are compared against new therapies, research patient care costs generally may be charged to a grant only insofar as they are measurements or services above and beyond those that constitute usual patient care and are specified by the study protocol.
NIH funds may be used to pay all costs (whether usual care costs or research care costs) for the entire period of hospitalization or research tests or services for individuals who would not have been hospitalized or received such tests or services except for their participation in the research study. Any such exceptions should be documented in the grantee’s records. These individuals may include the following:
l People to whom no health advantages may be expected to accrue as a result of the hospitalization. Examples would be normal controls for metabolic or other studies; people with genetic or certain abnormalities of interest to the investigator; and sick people brought to the hospital solely for studies when they otherwise would not require hospitalization.
l Sick people of research importance to the investigator but without funds of their own or without funds available to them through a responsible third party to pay hospitalization expenses. This includes patients for whom some third-party payer, such as a city, county, or State government, might pay hospitalization expenses in some other hospital but has no responsibility to pay in the hospital in which the approved clinical research is being conducted.
l Sick people with limited personal funds or health insurance but who are not willing to spend their own money or use their hospital plan coverage at that particular time. (Fear of more urgent need in the future for both personal funds and health insurance might be one reason for the patient’s reluctance to participate in the study.) The investigator has a special responsibility in making the decision to include patients in this group with full charges to the grant. Ordinarily, NIH expects the patient and/or third party to pay the total costs of the usual care portions of the hospitalization. However, in exceptional circumstances, the investigator may decide to pay the total expenses for hospitalization, research services, or tests from the grant if this is required to secure timely cooperation of a valuable study patient not otherwise available.
Research patient care costs, whether expressed as a rate or an amount, shall be computed in an amount consistent with the principles and procedures used by the Medicare program for determining the portion of Medicare reimbursement based on reasonable costs. Separate cost centers must be established for each discrete bed unit for purposes of allocating or distributing allowable routine costs to the discrete unit.
When provisional rates are used as the basis for award of research patient care costs, the amount awarded shall constitute the maximum amount that the NIH awarding office is obligated to reimburse the grantee for such costs. Provisional rates must be adjusted if a lower final rate is negotiated.
F&A costs should not be paid on any cost component representing the cost of research patient care activities. Research patient care rates (routine and ancillary) include F&A costs related to “hospital-type” employees (nurses, medical technicians, and similar personnel) supported as a direct cost under a grant. Therefore, to preclude over-recoveries of costs similar to these F&A costs, salaries and wages of all “hospital-type” employees working on the grant must be excluded from the S&W base used to claim F&A costs. Related fringe benefits also should be excluded if such costs are part of the S&W base. If a “total-direct-costs” base is used to compute and claim F&A costs, the above-mentioned “hospital-type” salaries also must be excluded from the base as well as any other base costs chargeable to the grant through the application of a research patient care rate.
If the grant or a consortium agreement/contract under a grant provides funding exclusively for research patient care activities, no F&A costs normally will be allowed as a separate cost element since all allocable F&A costs will be accounted for in the routine or ancillary activity costs contained in research patient care rates.
If a grantee does not meet the threshold for negotiation of a research patient care rate agreement with DCA in a given budget period, as specified under “Policy” in this section, but has a currently negotiated research patient care rate, that rate will be used in awarding and reimbursing research patient care costs, regardless of the amount that the grantee expects to incur. In all other cases, the grantee will be reimbursed at a rate not to exceed the lesser of actual research patient care costs or the rate included in its Medicare cost report.
If a hospital incurring research patient care costs is not the grantee, the grantee will be responsible for establishing the rate or amount that will be reimbursed for such costs unless the hospital also is a direct recipient of other HHS awards and in that capacity has established a research patient care rate with DCA.
If a participating hospital expects to incur more than $100,000 in research patient care costs as specified under “Policy” in this section, the grantee must negotiate a rate for that hospital unless the relationship between the grantee and the hospital is considered “less-than-arms-length.” In this case, the grantee should contact the GMO to determine whether DCA should negotiate the rate.
If a participating hospital expects to incur $100,000 or less in research patient care costs (as provided under “Policy” in this section), the grantee will use the lesser of actual costs or the rate in the hospital’s Medicare cost report as the basis for determining reimbursement. For purposes of this paragraph, the grantee will apply the thresholds to each hospital individually.
If the costs of patient care are funded by the grant, and whether those costs are classified as usual patient care or research patient care, the amount recovered from third parties must be credited to the grant. However, patient charges must be adjusted for both routine services and ancillaries prior to applying the third-party recoveries. The grantee is obligated to pursue recovery to the fullest extent possible and should be able to document those efforts. An example of such an adjustment follows:
If the standard fee schedule charge for a CT scan is $500, the negotiated research patient care agreement rate is 75 percent, and third-party insurance pays $300, the maximum amount that may be charged to the NIH grant is $75, based on the following calculation.
Standard Fee Schedule X (multiplied by) Negotiated Rate = Cost—(minus) Insurance = Maximum Charge to NIH Grant
$500 x .75 = $375 - $300 = $75
In those instances when the grantee determines that the balance of the patient’s bill may be charged to the grant (see “Allowable Costs” in this section), the total bill must be adjusted to cost before applying any third-party recoveries. The remaining balance of allowable costs may then be charged to the grant.
In certain circumstances, funds may be awarded that support tests specifically developed for research purposes that are subsequently billed to third parties. In such cases, funds recovered from third parties must be credited to the grant account.
An individual NIH IC/program may adopt special implementing procedures consistent with this section to meet its own specific needs. As an example, the majority of NIH-supported discrete centers are funded by NCRR’s GCRC program, which has developed detailed guidelines for the operation of these centers (see Part III for NCRR contact information).
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