PHS GRANTS POLICY STATEMENT:  HIGHLIGHTED CHANGES AND AVAILABILITY ONTHE NIH GOPHER

NIH GUIDE, Volume 24, Number 2, January 20, 1995

P.T. 34

Keywords:

National Institutes of Health

In early 1994, a revised PHS Grants Policy Statement was published,
and a single copy was sent to the sponsored projects office (or its
equivalent) of all current PHS grantees.  Only one copy is provided
to each grantee; grantees may photocopy the document as needed.  NIH
grantees who did not receive a copy may contact the NIH Division of
Research Grants, Office of Grants Information, on 301/710-0267 to
request a single copy.  The revised version is effective for all PHS
grants with budget periods beginning on or after April 1, 1994.  It
is recommended that grantees maintain the previous PHS Grants Policy
Statement dated October 1, 1990 and interim update of September 1,
1991, for active awards with budget periods that started prior to
April 1, 1994.

In the near future, the PHS Grants Policy Statement will be available
on the NIH Gopher.  The NIH Gopher contains information about NIH,
including the NIH Guide for Grants and Contracts, and has text-
searching capabilities.  It is possible to "tunnel" to the NIH Gopher
if you have access to a system with Gopher.  Local computer support
staff should be consulted for additional information or assistance.

The information below highlights changes and clarifications appearing
in the April 1, 1994, edition of the PHS Grants Policy Statement.
The page numbers indicate where to find the complete discussion of
the referenced topic.

o  TREATMENT OF PROGRAM INCOME (pp. 8-9 through 8-10):  PHS has
elaborated on the discussion and further defined program income.
Specifically highlighted are general program income; the sale of real
property, equipment, and supplies; and other income, e.g., copyright
income, patent income.  The policy also elaborates on the treatment,
disposition, and reporting of general program income.  Much of the
guidance provided reiterates the NIH GUIDE notice of June 11, 1993 on
the reporting of program income using the long-form Financial Status
Report (SF 269).

o  REVIEW OF UNOBLIGATED BALANCES (p. 8-6):  Discussion has been
added regarding unobligated balances in excess of 25 percent of the
total amount awarded or $250,000, whichever is less.  In such cases,
the Grants Management Officer shall review the circumstances
resulting in the large balance to assure that these funds are
necessary to complete the project.  The GMO may request additional
information including a revised budget, withdraw the unobligated
funds, authorize the grantee to spend the unobligated funds, or leave
the unobligated funds in the grant account in the payment system for
utilization as determined by the PHS awarding office.

o  SIGNIFICANT REBUDGETING (pp. 8-1 and 8-7):  Under Changes in
Project, significant rebudgeting continues to be an indicator for a
possible change in scope.  Significant rebudgeting occurs when the
cumulative amount of transfers among direct cost categories for the
current budget period exceeds 25 percent of the total amount awarded
or $250,000, whichever is less.  When this occurs, the grantee shall
consult with the GMO for a decision as to whether the rebudgeting
constitutes a change of scope.  If it does constitute a change of
scope, prior approval of the awarding component is required.

o  SMOKE-FREE WORKPLACE (p. 4-11):  The Assistant Secretary for
Health, PHS, has put in place a policy that strongly encourages all
grant recipients to provide a smoke-free workplace and promote the
non-use of tobacco products.  PHS will gather information about this
by including a new question in the upcoming revision to the PHS 398
grant application regarding whether or not the applicant institution
provides a smoke-free workplace.  The response to this question will
not affect either the review or funding of the application.

o  GUIDANCE ON EXPENDITURES FOR LOBBYING ACTIVITIES (pp. 4-10 and 7-
9):  Lobbying activities continue to be generally unallowable.

o  THE ESTABLISHMENT OF THE SUBSTANCE ABUSE AND MENTAL HEALTH
SERVICES ADMINISTRATION (SAMHSA) (p.1-1):  Effective October 1, 1992,
NIDA, NIMH, and NIAAA, formerly of the Alcohol Drug Abuse and Mental
Health Administration (ADAMHA), became components of the National
Institutes of Health.  At the same time, SAMHSA was established to
assume the remaining programs of ADAMHA.  The mission of SAMHSA is to
provide leadership and national focus for Federal efforts to reduce
national health problems resulting from the abuse of alcohol and
other drugs and to foster improvements in the mental health of
Americans through increased knowledge and the advancement of
effective strategies for dealing with these health problems.

o  AUDIT REQUIREMENTS FOR FOR-PROFIT RECIPIENTS (p. A6-1):  The
following exception has been added regarding audit requirements for
SBIR Phase I grantees:  Recipients of SBIR Phase I awards receiving
no more than $100,000 in cumulative Federal awards are exempt from
the audit requirements of OMB Circular A-133.  However, the
organization should have its records available for review by the PHS
agency should the agency elect to do so.

o  ALLOWABILITY OF FEE UNDER SMALL BUSINESS INNOVATION RESEARCH
GRANTS (p. A6-1):  Appendix 6 contains the following new information:
Beginning July 1, 1992, PHS awarding offices shall negotiate fixed
fees for competing grants awarded under the Small Business Innovation
Research (SBIR) program when (1) requested by the grantee
organization and (2) the amount of the fixed fee, together with the
direct and indirect costs to be awarded, is within the Phase I and
Phase II award limitations set by the program.  The STTR Program,
although not explicitly identified, is also subject to this
provision.

o  OUTPATIENT DRUG PROVISIONS UNDER THE VETERANS HEALTH CARE ACT OF
1992 (p. 4-11):  Section 602 of the Veterans Health Care Act of 1992
(Public Law 102-585) established section 340B of the Public Health
Service Act, Limitation on Prices of Drugs Purchased by Covered
Entities.  Effective December 1, 1992, certain health services
delivery grantees of PHS ("covered entities") shall receive drug
discounts from drug manufacturers for outpatient drugs.  Grantees
that receive grant funds related to the treatment of sexually
transmitted diseases or tuberculosis, or receive certain assistance
under Title XXVI of the PHS Act, must be certified by the Secretary
of HHS before they become eligible for drug discount prices.  Section
340B contains prohibitions requiring covered entities to develop
alternative drug management systems and identifies potential problem
areas concerning drug diversion.  Information regarding HHS-approved
alternative tracking systems, rebates to State Medicaid agencies
required under the Omnibus Budget Reconciliation Act of 1990, and
mechanisms to prevent double price reductions, is also provided.

o  INSURANCE REQUIREMENTS FOR REAL PROPERTY CONSTRUCTED OR ACQUIRED
WITH PHS GRANT FUNDS (p. 8-12):  The section on insurance
requirements for real property constructed or acquired with PHS grant
funds, and specifically the term "immediately upon acquiring real
property," has been expanded. The policy states that a grantee shall,
at a minimum, provide the same insurance coverage as provided to
other property owned by the recipient at the time the facility is
turned over to the grantee institution, e.g. the date of the final
acceptance of the building, or the point of beneficial occupancy,
whichever comes first.

o  USE OF STATE-CERTIFIED OR LICENSED REAL ESTATE APPRAISERS WHERE
APPRAISALS ARE NEEDED ON REAL PROPERTY (p. 8-13):  All real estate
transactions funded in whole or in part with PHS funds that require
the use of real estate appraisals, including but not limited to
appraisals to determine the Federal share of real property and
appraisals to determine required insurance levels, must by performed
by appraisers certified or licensed by the applicable State in
accordance with the requirements established by Title XI of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989
(FIRREA) (Public Law 101-73).

o  SEISMIC SAFETY STANDARDS FOR FEDERALLY ASSISTED CONSTRUCTION (p.
A2-1):  A new design requirement has been added to those applicable
to PHS-assisted construction.  Seismic safety standards for federally
assisted construction -- Earthquake Hazard Reduction Act of 1977
(Public Law 95-124), as amended, and Executive Order 12699, Seismic
Safety of Federal and Federally Assisted or Regulated New Building
Construction, dated January 5, 1990, has been added under the design
requirements to be included in the review and evaluation of all
working drawings and specifications.

o  PUBLIC HEALTH SYSTEM REPORTING REQUIREMENTS (p. 4-14):  The
external review process now includes instructions regarding Public
Health System Reporting Requirements for community-based,
nongovernmental organizations applying for health services grants.
These organizations will be notified in the application materials if
the program is subject to these requirements.  Such applicants are
instructed to submit the application face page (SF-424) and a one-
page summary of the project called the Public Health System Impact
Statement (PHSIS).  This summary should include a description of the
population to be served, a summary of the services provided, and a
description of any coordination planned with the appropriate State or
local health agency(ies).

For additional information, contact the grants management specialist
of the NIH awarding component that issued your grant award.

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