RELEASE DATE:  March 3, 2004

NOTICE:  NOT-HS-04-005 (see NOT-HS-04-006)

Agency for Healthcare Research and Quality (AHRQ)

This announcement provides information to applicants, grantees and 
contractors of the Agency for Healthcare Research and Quality (AHRQ) 
regarding the salary cap limitations imposed for Fiscal Year 2004. 
The Consolidated Appropriations Act, Public Law 108-199, which includes 
appropriations for the Department of Health and Human Services, restricts the 
amount of direct salary which may be paid to an individual under an AHRQ 
grant, cooperative agreement or applicable contract to a rate of no greater 
than Executive Level I of the Federal Executive Pay Scale. The Executive 
Level I annual salary rate was $171,900 for the period January 1, 2003, 
through December 31, 2003. Effective January 1, 2004, the Executive Level I 
salary level is increased to $174,500. 

According to P.L.108-199, "None of the funds appropriated in this Act for the 
National Institutes of Health, the Agency for Healthcare Research and 
Quality, and the Substance Abuse and Mental Health Services Administration 
shall be used to pay the salary of an individual, through a grant or other 
extramural mechanism, at a rate in excess of Executive Level I." 

AHRQ grant/contract applications/proposals that request direct salaries for 
individuals in excess of the applicable RATE per year will be adjusted in 
accordance with the legislative salary limitation, and will include 
notification of this adjustment. For grants and cooperative agreements, 
adjustments will be made in the current and all future years; no funds will 
be awarded or committed in excess of the salary cap limitation. Multi-year 
contracts may be subject to unilateral modifications by AHRQ if any salary 
rate ceilings are established in future DHHS appropriation acts. 

In accordance with AHRQ policy, awarded salary levels will be determined 
using information provided in the application. Applicants for AHRQ grants and 
applicable contracts are reminded to reflect in their proposals the actual 
institutional base salary of all individuals for which support is requested. 
In lieu of actual base salary, however, applicants/offerors may elect to 
provide an explanation indicating that actual institutional base salary 
exceeds the current salary limitation. When this information is provided, 
AHRQ staff will make necessary adjustments to requested salaries prior to 

No adjustments will be made to awards from prior fiscal years. However, if 
funds are available, and, if the FY04 salary cap increase is consistent with 
the institutional base salary, grantees may rebudget to accommodate the FY04 
salary cap and contractors may bill at the higher level. 

The salary limitation applies to all subawards and subcontracts; it does NOT 
apply to consultants. 

For individuals whose salary rates are in excess of Executive Level I, the 
grantee/contractor may pay the excess from non-federal funds. 

Inquiries regarding this notice should be directed to Grants Management (301) 
427-1447 or Contract Management (301) 427-1780.

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