Construction, Modernization, Allowable and Unallowable costs and activities, major alteration and renovation, major A&R

10.7 Allowable and Unallowable Costs and Activities

The following lists indicate types of costs and activities generally allowable and unallowable under NIH construction or modernization grants and major A&R projects unless otherwise noted in the FOA. The lists are not all-inclusive. Program guidelines, the NoA Notice of Award: The official, legally binding document, signed (or the electronic equivalent of signature) by a Grants Management Officer that: (1) notifies the recipient of the award of a grant; (2) contains or references all the terms and conditions of the grant and Federal funding limits and obligations; and, (3) provides the documentary basis for recording the obligation of Federal funds in the NIH accounting system., and other terms and conditions of the award should be consulted for the specific costs allowable under a particular program or grant.

Major A&R is unallowable under foreign grants and foreign components in domestic grants.

The allowability and unallowability of costs and activities applies to the use of Federal funds and funds expended by the recipient to satisfy a matching requirement (see Matching Requirement in this chapter).

Allowable costs and activities include the following:

• Acquisition and installation of fixed equipment.
• Appraisals
• Architectural and engineering services. Also see Pre-award costs below.
• Bid advertising
• Bid guarantees and performance and payment bonds. Bid guarantees and performance and payment bonds are allowable as provided in 2 CFR Part 200.326 and 45 CFR Part 75.334 and 2 CFR Part 200.427 and 45 CFR Part 75.427. A bid guarantee is a form of security assuring that the bidder will not withdraw a bid within the period specified for acceptance and will execute a written contract and furnish required bonds. Performance bonds secure fulfillment of all the contractor's obligations under the contract and payment bonds assure payment as required by law to all persons supplying labor and material in the execution of the work provided for in the contract.
• Contingency fund. To provide for unanticipated costs, applicants for construction grants may include a project contingency amount with the initial total allowable cost estimates. Contingency funds will be limited to 15 percent of the total allowable costs before bids are received and must be reduced to 10 percent after a construction contract has been awarded. NIH may maintain control up to 3% of the total contingency for unanticipated program specific changes during the course of the project.
• Filing fees for recording the NFI. See Real Property Management Standards-Notice of Federal Interest in this chapter.
• Force Account Labor. If the recipient's own construction and maintenance staffs are used in carrying out construction or modernization activities (i.e., force account), the associated costs are allowable provided the recipient can document that a force account is less expensive than if the project were competitively bid and can substantiate all costs with appropriate receipts for the purchase of materials and certified pay records for the labor involved. This requires prior approval Written approval by an authorized HHS official, e.g., a designated IC GMO, evidencing prior consent before a recipient undertakes certain activities or incurs specific costs (see Administrative Requirements-Changes in Project and Budget-Prior Approval Requirements). by the NIH awarding IC The NIH organizational component responsible for a particular grant program or set of activities. The terms "NIH IC," or "awarding IC" are used throughout this document to designate a point of contact for advice and interpretation of grant requirements and to establish the focal point for requesting necessary prior approvals or changes in the terms and conditions of award..
• General conditions (e.g. moveable site trailers, port-a-johns, hard hats, temporary or limited duration signage, security costs during construction).
• Inspection and commissioning fees.
• Insurance. Costs of builders risk insurance, title insurance, physical destruction insurance, and liability insurance are generally allowable. Physical destruction, and liability insurance usually are treated as F&A costs Necessary costs incurred by a recipient for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved. To facilitate equitable distribution of indirect expenses to the cost objectives served, it may be necessary to establish a number of pools of F&A (indirect) costs. F&A (indirect) cost pools must be distributed to benefitted cost objectives on bases that will produce an equitable result in consideration of relative benefits derived. but may be treated as direct costs Costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy. in accordance with the established policy of the recipient, consistently applied regardless of the source of funds. Builder's risk insurance and title insurance may be charged to the grant in proportion to the amount of NIH participation in the property (see Real Property Management Standards-Insurance Requirements in this chapter).
• Legal fees. Legal fees related to obtaining a legal opinion regarding title to a site.
• Pre-award costs. Costs incurred before award for architect's fees, consultant's fees and environmental analysis necessary to the planning and design of the project are allowable if the project is subsequently approved and funded. Pre-award construction or modernization costs are generally unallowable unless NIH grants an exception.
• Profit/fee for contractors/subcontractors. Allowable as part of the overall cost/price of a contract consistent with commercial practice.
• Project management.
• Relocation expenses related to the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (49 CFR Part 24).
• Sidewalks necessary for use of facility.
• Site survey and soil investigation.
• Site clearance. Site clearance costs are allowable as long as they are reflected in the bid.
• Threat-risk assessment. Costs incurred for a site-specific or project-specific assessment of security risk by a qualified professional are allowable.
• NEPA and historic preservation analysis. Costs associated with evaluation of the environmental effects and historic preservation effects of proposed construction, modernization, or A&R activity and obtaining public input, producing the necessary studies, analysis, and resultant reports are allowable. Also see Pre-award costs above.

Unallowable costs and activities include the following:

• Bonus payments to contractors. Bonus payments other than earned incentive payments to contractors under formal incentive arrangements are unallowable. An incentive arrangement is used to motivate contractors to provide required supplies or services at lower costs and, in certain instances, with improved delivery or technical performance, by relating the amount of profit or fee payable under the contract to the contractor's performance.
• Construction of shell space designed for completion at a future date.
• Consultant fees not related to actual construction.
• Damage judgment suits.
• Equipment purchased through a conditional sales contract. A conditional sale is a type of agreement to sell under which the seller retains title to goods sold and delivered to a purchaser until full payment has been made.
• F&A costs Necessary costs incurred by a recipient for a common or joint purpose benefitting more than one cost objective, and not readily assignable to the cost objectives specifically benefitted, without effort disproportionate to the results achieved. To facilitate equitable distribution of indirect expenses to the cost objectives served, it may be necessary to establish a number of pools of F&A (indirect) costs. F&A (indirect) cost pools must be distributed to benefitted cost objectives on bases that will produce an equitable result in consideration of relative benefits derived..
• Fund-raising expenses.
• Interior and exterior decorating fees (e.g. purchase of artwork, sculpture, etc).
• Land acquisition.
• Landscaping and irrigation costs.
• Legal services not related to title certification.
• Movable equipment.
• Off-site improvements. Off-site improvements, such as parking lots, are not allowable.