Notice Number: NOT-OD-11-073

Update: The following update relating to this announcement has been issued:

• January 20, 2012 - See Notice NOT-OD-12-035. Notice of Salary Limitation on Grants, Cooperative Agreements, and Contracts.

Related Notice: May 4, 2011 - See Notice NOT-OD-11-072. The intent of this Notice is to provide information on the statutory provisions that limit the use of funds on National Institutes of Health (NIH) grant, cooperative agreement, and contract awards for FY2011.

Key Dates
Release Date: May 4, 2011

Issued by
National Institutes of Health (NIH)

This notice provides information regarding the salary limitation for NIH grant and cooperative agreement awards and extramural research and development contract awards (referred to here as grants). On January 6, 2010 NIH published Fiscal Year (FY) 2010 information on the salary limitation in the NIH Guide for Grants and Contracts (NOT-OD-10-041).
Every year since 1990 Congress has legislatively mandated a provision limiting the direct salary that an individual may receive under an NIH grant. For FY 2011, the Department of Defense and Full-year Continuing Appropriations Act of 2011 (Public Law 112-10) continues implementation of Public Law 111-117: Consolidated Appropriations Act, 2010 which restricts the amount of direct salary to Executive Level I of the Federal Executive Pay scale. No increase has been provided for Federal salaries. Therefore the Executive Level I salary level remains at $199,700 which will be the salary limitation for the remainder of FY2011.

For the purposes of the salary limitation, the terms "direct salary," "salary," and "institutional base salary" have the same meaning and are exclusive of fringe benefits and facilities and administrative (F&A) expenses, also referred to as indirect costs. An individual's institutional base salary is the annual compensation that the applicant organization pays for an individual's appointment, whether that individual's time is spent on research, teaching, patient care, or other activities. Base salary excludes any income that an individual may be permitted to earn outside of the duties to the applicant organization.

NIH grant/contract awards for applications/proposals that request direct salaries of individuals in excess of the applicable RATE per year will be adjusted in accordance with the legislative salary limitation and will include a notification such as the following: None of the funds in this award shall be used to pay the salary of an individual at a rate in excess of the current salary cap.

This is the eleventh year that the limitation has been linked to Executive Level I of the Federal Pay Scale. Please see the salary cap summary and the time frames associated with salary caps at https://grants.nih.gov/grants/policy/salcap_summary.htm.

Implementation of salary limitation:

• NIH competing grant awards with categorical budgets reflecting salary levels at or above the new cap(s) issued in FY 2011 will reflect adjustments to the current and all future years so that no funds are awarded or committed for salaries over the limitation.
• An individual's base salary, per se, is NOT constrained by the legislative provision for a limitation of salary. The rate limitation simply limits the amount that may be awarded and charged to NIH grants and contracts. An institution may pay an individual's salary amount in excess of the salary cap with non-federal funds.
• The salary limitation does NOT apply to payments made to consultants under an NIH grant or contract although, as with all costs, those payments must meet the test of reasonableness and be consistent with institutional policy.
• The salary limitation provision DOES apply to subawards/subcontracts for substantive work under an NIH grant or contract.

COMPETING grant applications and contract proposals that include a categorical breakdown in the budget figures/business proposal should continue to reflect the actual institutional base salary of all individuals for whom reimbursement 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, NIH staff will make necessary adjustments to requested salaries prior to award.

Questions & Answers

1. If an application/proposal fails to provide needed salary information, will an adjustment be made based on the new rates? No adjustment will be made if an application fails to provide adequate information regarding the individual's actual salary level.

2. Does the NIH appropriation language link the salary cap to a Federal Executive Level or to a dollar level? The link is to the Federal Executive Level pay scale (i.e., Executive Level III for FY 1999, Executive Level II for FY 2000, and Executive Level I for FYs 2001-2011).

3. As the cap is linked to Federal Executive Levels, can grantees/contractors with ongoing awards rebudget/charge up to the various salary caps, based on the fiscal year of the award and the time the salary expense is incurred? Yes, salary may be charged in accordance with the FY cap(s), as long as the levels are consistent with the individual's institutional base pay. Please refer to the salary cap summary with times frames for existing salary caps, at https://grants.nih.gov/grants/policy/salcap_summary.htm.

The following are examples of the adjustments that NIH will make when salaries exceed the current salary limitation:

Example 1. Individual with Full-Time Appointment (based on grant award/contract issued after January 1, 2010 with salary limitation of $199,700)

Example 2. Individual with Half-Time Appointment (based on a grant award/contract issued after January 1, 2010 with salary limitation of $199,700)

Example 3. Individual with a Nine-Month Appointment (based on a grant award/contract issued after January 1, 2010 with salary limitation of $199,700)

Inquiries

Questions concerning this notice or other policies relating to grants or contracts should be directed to the grants management or contracts management office in the appropriate NIH Institute or Center.