Release Date:  February 14, 2002

NOTICE:  NOT-HS-02-003

Agency for Healthcare Research and Quality (AHRQ)

This announcement provides information to applicants and grantees of the 
Agency for Healthcare Research and Quality (AHRQ) regarding the salary cap 
limitations imposed for Fiscal Year 2002.  The Departments of Labor, Health 
and Human Services, and Education, Related Agencies Appropriation Act, 2002 
(P.L. 107-116), 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 is $161,200 for the period 
October 1, 2001, through December 31, 2001.  Effective January 1, 2002, the 
Executive Level I salary level is increased to $166,700.   

According to P.L.117-116, "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 award.  

No adjustments will be made to awards from prior fiscal years. However, if 
funds are available, and, if the FY02 salary cap increase is consistent with 
the institutional base salary, grantees may rebudget to accommodate the FY02 
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 the Division of Grants 
Management, AHRQ (301) 594-1845 or the Division of Contract Management (301) 

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