NOT-OD-11-005: Notice of New NIH Term of Award on Transparency Act Subaward and Executive Compensation Reporting Requirements

Notice of New NIH Term of Award on Transparency Act Subaward and Executive Compensation Reporting Requirements

Notice Number: NOT-OD-11-005

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

November 10, 2011 - See Notice NOT-OD-12-010. Notice of Expanded Transparency Act Subaward and Executive Compensation Reporting Requirements for FY2012 and Beyond.

Key Dates

Release Date: October 22, 2010

Related Notices:
NOT-OD-11-004
NOT-OD-10-006

Issued by
National Institutes of Health (NIH)

Purpose

The Federal Funding Accountability and Transparency Act of 2006, as amended ("Transparency Act"), requires the Office of Management and Budget to establish a single searchable database, accessible to the public, with information on financial assistance awards made by Federal agencies. The Transparency Act also includes a requirement for recipients of Federal grants to report information about first-tier subawards and executive compensation under Federal assistance awards.

To fully implement the subaward reporting and executive compensation requirements of the Transparency Act, all recipients of applicable NIH grants and cooperative agreements are required to report on all subawards over $25,000 to the Federal Subaward Reporting System (FSRS) available at www.FSRS.gov. This must occur no later than the end of the month following the month in which the obligation was made. The following examples are illustrative of the timeline:

1) Subaward obligation made to Company A of $78,000 on October 29: Subaward reporting through FSRS is required as of November 30.
2) Subaward obligation made to Company B of $17,000 on October 15: No subaward reporting required.
3) Additional subaward obligation made to Company B of $14,000 on November 1: Subaward reporting through FSRS is required as of December 30.

Awards issued directly to individuals, awards receiving less than $25,000 in total direct costs in a single NIH budget period, awards issued to organizations with under $300,000 in gross income in the previous tax year, and awards issued to other Federal agencies are excluded from these requirements.

Additionally, certain grantees are required to report the total compensation of their five most highly-compensated executives as part of the registration profile in CCR. This requirement applies to all awardees that 1) received 80% or more of their annual gross revenues from Federal grants, contracts, subcontracts, and subawards; and 2) received $25,000,000 or more in annual gross revenues from Federal grants, contracts, subcontracts, and subawards; and 3) had gross income, from all sources, of $300,00 or more; and 4) the public does not have access to this information through periodic reports filed under section 13(a) or 15(d) of the Securities and Exchange Act of 1934 or section 6104 of the Internal Revenue Code of 1986.

Grantees are also required to collect the names and total compensation of the five most highly compensated officers of all first-tier subrecipients receiving $25,000 or more and meeting the four conditions enumerated above. Similar to the reporting of subaward information through FSRS, this information should be collected no later than the end of the month following the month the subaward was obligated.

Additional information on implementing FFATA, including NIH and OMB FAQs and training resources, can be found on the NIH FFATA web site at http://grants.nih.gov/grants/public_accountability/ffata.htm.

Policy

On September 14, 2010, the Office of Management and Budget (OMB) issued Interim Final Guidance in the Federal Register (Volume 75, No. 177) on Requirements for Federal Funding Accountability and Transparency Act Implementation (2 CFR Part 170). Although a final notice is still expected to be issued in the future, the Department of Health and Human Services has instructed DHHS agencies to implement this new award term based on the Interim Final Guidance.

Effectively immediately with this NIH Guide Notice, NIH hereby implements this term into all Notices of Award issued on/after the date of this announcement by incorporating it on the Award Conditions and Information website found at: http://grants.nih.gov/grants/policy/awardconditions.htm. This website is already provided as a reference in all Notices of Award, Section III.

Although referenced on all Notices of Award, the following NIH Term of Award is applicable to all New (Type 1) NIH grant and cooperative agreement awards issued on or after October 1, 2010. Additionally, all NIH Renewal (Type 2) grant and cooperative agreement awards and Competing Revision awards (Competing T-3s) issued on or after October 1, 2010 may also be subject to the following award term. Further guidance on Renewal and Competing Revision awards is expected to be provided as it becomes available.

Full text of the award term is provided below. Grantees are reminded that this award term must be incorporated into all consortium agreements with first-tier subrecipients when applicable.

REPORTING SUBAWARDS AND EXECUTIVE COMPENSATION

A. Reporting of first-tier subawards.

Applicability. Unless you are exempt as provided in paragraph D. of this award term, you must report each action that obligates $25,000 or more in Federal funds that does not include Recovery funds (as defined in section 1512(a)(2) of the American Recovery and Reinvestment Act of 2009, Pub. L. 111 5) for a subaward to an entity (see definitions in paragraph E. of this award term).
Where and when to report.

i. You must report each obligating action described in paragraph A.1. of this award term to http://www.fsrs.gov.
ii. For subaward information, report no later than the end of the month following the month in which the obligation was made. (For example, if the obligation was made on November 7, 2010, the obligation must be reported by no later than December 31, 2010.)
What to report. You must report the information about each obligating action that the submission instructions posted at http://www.fsrs.gov specify.

B. Reporting Total Compensation of Recipient Executives.

Applicability and what to report. You must report total compensation for each of your five most highly compensated executives for the preceding completed fiscal year, if

i. the total Federal funding authorized to date under this award is $25,000 or more;
ii. in the preceding fiscal year, you received

(a) 80 percent or more of your annual gross revenues from Federal procurement contracts (and subcontracts) and Federal financial assistance subject to the Transparency Act, as defined at 2 CFR 170.320 (and subawards); and
(b) $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts) and Federal financial assistance subject to the Transparency Act, as defined at 2 CFR 170.320 (and subawards); and

iii. The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm.)
Where and when to report. You must report executive total compensation described in paragraph A.1. of this award term:

i. As part of your registration profile at http://www.ccr.gov.
ii. By the end of the month following the month in which this award is made, and annually thereafter.

C. Reporting of Total Compensation of Subrecipient Executives.

Applicability and what to report. Unless you are exempt as provided in paragraph D. of this award term, for each first-tier subrecipient under this award, you shall report the names and total compensation of each of the subrecipient’s five most highly compensated executives for the subrecipient’s preceding completed fiscal year, if

i. in the subrecipient’s preceding fiscal year, the subrecipient received

(a) 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal financial assistance subject to the Transparency Act, as defined at 2 CFR 170.320 (and subawards); and
(b) $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal financial assistance subject to the Transparency Act (and subawards); and

ii. The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at http://www.sec.gov/answers/execomp.htm.)
Where and when to report. You must report subrecipient executive total compensation described in paragraph c.1. of this award term:

i. To the recipient.
ii. By the end of the month following the month during which you make the subaward. For example, if a subaward is obligated on any date during the month of October of a given year (i.e., between October 1 and 31), you must report any required compensation information of the subrecipient by November 30 of that year.

D. Exemptions
If, in the previous tax year, you had gross income, from all sources, under $300,000, you are exempt from the requirements to report:

i. Subawards, and
ii. The total compensation of the five most highly compensated executives of any subrecipient.

E. Definitions. For purposes of this award term:

Entity means all of the following, as defined in 2 CFR part 25:

i. A Governmental organization, which is a State, local government, or Indian tribe;
ii. A foreign public entity;
iii. A domestic or foreign nonprofit organization;
iv. A domestic or foreign for-profit organization;
v. A Federal agency, but only as a subrecipient under an award or subaward to a non-Federal entity.
Executive means officers, managing partners, or any other employees in management positions.
Subaward:

i. This term means a legal instrument to provide support for the performance of any portion of the substantive project or program for which you received this award and that you as the recipient award to an eligible subrecipient.
ii. The term does not include your procurement of property and services needed to carry out the project or program (for further explanation, see Sec. ___.210 of the attachment to OMB Circular A 133, Audits of States, Local Governments, and Non-Profit Organizations ).
iii. A subaward may be provided through any legal agreement, including an agreement that you or a subrecipient considers a contract.
Subrecipient means an entity that:

i. Receives a subaward from you (the recipient) under this award; and
ii. Is accountable to you for the use of the Federal funds provided by the subaward.
Total compensation means the cash and noncash dollar value earned by the executive during the recipient’s or subrecipient’s preceding fiscal year and includes the following (for more information see 17 CFR 229.402(c)(2)):

i. Salary and bonus.
ii. Awards of stock, stock options, and stock appreciation rights. Use the dollar amount recognized for financial statement reporting purposes with respect to the fiscal year in accordance with the Statement of Financial Accounting Standards No. 123 (Revised 2004) (FAS 123R), Shared Based Payments.
iii. Earnings for services under non-equity incentive plans. This does not include group life, health, hospitalization or medical reimbursement plans that do not discriminate in favor of executives, and are available generally to all salaried employees.
iv. Change in pension value. This is the change in present value of defined benefit and actuarial pension plans.
v. Above-market earnings on deferred compensation which is not tax-qualified.
vi. Other compensation, if the aggregate value of all such other compensation (e.g. severance, termination payments, value of life insurance paid on behalf of the employee, perquisites or property) for the executive exceeds $10,000.

Inquiries

Please direct all inquiries to:

Division of Grants Policy
Office of Policy for Extramural Research Administration
National Institutes of Health
6705 Rockledge Drive, Suite 350
Bethesda, MD 20892
Telephone: (301) 435-0938
FAX: (301) 435-3059
EMAIL: [email protected]