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Part II: Terms and Conditions of NIH Grant Awards
Subpart A: General – File 4 of 6
The PMS is a centralized grants payment and cash management system, operated by HHS PSC, DPM. HHS grant payments may be made by one of several advance payment methods, including SMARTLINK II/ACH, cash request, or by cash request on a reimbursement basis, as specified in the NoA and as described in this chapter. Payments under NIH grants generally are made as advance payments. Except as indicated in this chapter, NIH grant payments are made by PMS, operated by PSC, DPM, in accordance with Department of the Treasury and OMB requirements, as implemented by 45 CFR parts 74.22 and 92.21. These requirements are intended to minimize the time elapsing between the transfer of funds from the Federal government and disbursement by a grantee. Therefore, although the grant may be financed by advance payments, the intent is that grantees draw funds on an as-needed basis – specifically, no more than 3 business days before the funds are needed.
All Federal funds deposited by PMS in a grantee's bank account as an unrestricted advance payment should be fully disbursed (checks written, signed, and issued to the payees) by the close of business the next workday after receipt of the funds. The potential for excessive Federal cash on hand exists each time a grantee does not disburse Federal funds in this manner. The grantee is responsible for determining when the Federal funds have been deposited into its bank account for each drawdown, ensuring that the funds are fully disbursed by the close of business the next workday after they are received, and immediately returning all undisbursed Federal funds to PMS.
The Treasury and OMB policies also establish accountability for interest earned on advances of grant funds and provide for use of the reimbursement method if cash management requirements are not met. Advances made by grantees to consortium participants and contractors under grants must conform to substantially the same standards of timing and amount that govern advances to the grantee.
Operational guidance for recipients is provided through a training CD from PSC. Inquiries regarding drawdown requests, cash management rules, and the disbursement of funds through the Federal Financial Report (SF 425) should be directed to PSC/DPM (see Part III).
OFM makes payments under grants to foreign or international organizations issued prior to October 1, 2012, awards to individuals, and awards to agencies of the Federal government. Effective for awards issued October 1, 2012 and beyond, payments under grants to foreign or international organizations are administered through PMS in accordance with the information provided in this chapter. Effective for awards issued October 1, 2013 and beyond, payment to agencies of the Federal Government and individuals are also administered through PMS in accordance with the information provided in this chapter.
The SMARTLINK II/ACH method of advance payment makes direct deposit of funds to a grantee's bank account and requires grantees to have Internet access to submit a request for funds to PMS. SMARTLINK II/ACH provides funds the day following the request with direct deposit using the Federal Reserve Bank's (Richmond, Virginia) ACH process.
Grantees not eligible for an unrestricted advance of funds by SMARTLINK II/ACH must submit a cash request, usually monthly. The cash request may be on either an advance or reimbursement basis, as specified by the NIH awarding IC. Cash requests are used when a grantee's cash management must be closely monitored (for example, grantees whose financial management systems do not meet the standards specified in 45 CFR part 74.21 or 92.20) or under programs where reimbursement financing is appropriate. A grantee also may be converted from an unrestricted advance payment method to a cash request basis if, during post-award administration, the GMO determines that a grantee is not complying with the cash management requirements or other requirements of the award, including the submission of complete and timely reports (see Administrative Requirements—Monitoring—Reporting and Administrative Requirements—Enforcement Actions—Modification of the Terms of Award).
If the cash request is for an advance payment, the grantee may request grant funds from PMS monthly on the basis of expected disbursements during the succeeding month and the amount of Federal funds already on hand. A request for reimbursement may be submitted more often, if authorized. For timely receipt of cash, a grantee must submit the request through the awarding IC early enough for it to be forwarded to PMS at least 2 weeks before the cash is needed. PMS makes payment to the grantee electronically through the ACH process upon receipt of the approved payment request from the awarding IC.
Except as provided in 45 CFR 74.22(k), any NIH grantee subject to the requirements of 45 CFR 74 that receives advance payments must maintain those advances in an interest-bearing account.
Grantees are expected to promptly return any funds not spent within three business days. However, any interest earned on advances of Federal funds must be handled as follows:
The Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA) (PL 112-248), signed into law on January 10, 2013, established the Do Not Pay Initiative to reduce improper payments or awards. Improper payments occur when funds go to the wrong recipient, the recipient receives the incorrect amount of funds (including overpayments and underpayments), documentation is not available to support a payment, or the recipient uses funds in an improper manner. HHS has implemented provisions of IPERIA through integrating use of the Do Not Pay system into the current payment processes managed by the DPM, HHS.