NIH Announces Revised Policy: Applications that Include Consortium/Contractual Facilities and Administrative Costs

Notice Number: NOT-OD-05-004

Key Dates
Release Date: November 02, 2004

Issued by
National Institutes of Health (NIH), (

This Notice supersedes Notice NOT-OD-04-040 “Change in Direct Cost Limitations on Solicited Applications,” and broadens the scope of the policy change to apply to all applications involving consortium/contractual facilities and administrative (F&A) costs, regardless of amount of budget or budget format (e.g., modular and non-modular). This change is effective for applications that have submission/receipt dates on or after December 1, 2004.

This policy applies to all solicited and investigator-initiated applications. For solicited applications, this policy change now applies to all currently active announcements (Request for Applications and Program Announcements), regardless of the announcement issue date.

This policy is particularly relevant to all applications that include a limitation on direct costs. While c onsortium F&A costs will continue to be requested and awarded, a pplicants will now separate these costs when determining if a budget exceeds a direct cost limit.

This policy impacts eligibility to submit a modular budget. The modular budget format continues to be used for applications requesting $250,000 or less in direct costs per year. However consortium/contractual F&A costs are no longer factored into this direct cost limit. They may be requested in addition to the $250,000.

The policy also impacts applications requesting a budget of $500,000 direct costs or more for any year. These applications continue to require prior approval from Institute/Center staff; however this limit is now exclusive of any consortium F&A costs.

Note: The implications of this policy do not affect the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs since the statutory budget guidelines are based on total costs, not direct costs. SBIR/STTR applicants should continue to use the PHS 398 grant application forms in accordance with the instructions in the current Omnibus Solicitation for SBIR/STTR applications and the PHS 398.

The PHS 398 (9/2004 version) will be accepted for submission/receipt dates on or after December 1, 2004. This version, which will be available on/about November 2, 2004, includes detailed instructions for applicants to appropriately apply this policy change. To minimize confusion in budget preparation, applicants are urged to use this new version for applications impacted by this policy. A separate Guide Notice (NOT-OD-05-006) announces details of the PHS 398 availability.

As stated in NIH's ROADMAP Research Teams of the Future, the broader implementation of this policy allows applicants to propose appropriate costs in support of interdisciplinary research and research teams. If you have questions on this Notice, please contact the Grants Management Specialist listed in the RFA/PA, or the Division of Grants Policy at (301)435-0949.

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