NIH Grants Policy Statement
Revised October 2017. This document applies to all NIH grants and cooperative agreements for budget periods beginning on or after October 1, 2017.
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18.4 Administrative Requirements

For-profit organizations generally are subject to the same administrative requirements as non-profit organizations, including those relating to personal property title and management. Exceptions to or elaboration of those requirements for for-profit organizations are indicated below.

18.4.1 Equipment Accountability

For-profit recipients of NIH grants are nonexempt and subject to the requirements in 45 CFR 75.320, as well as the conditions set forth in Administrative Requirements-Management Systems and Procedures-Property Management System Standards and Administrative Requirements-Management Systems and Procedures-Procurement Systems Standards and Requirements in IIA. Under the conditions specified in 45 CFR 75.320, for-profit recipients are permitted to retain title to equipment purchased under a research grant though NIH reserves the right to order the transfer of equipment, including title, to NIH or an eligible third party named by the NIH awarding office when such third party is otherwise eligible under existing statutes. In keeping with the provisions of 45 CFR 75.216, for-profit recipients must not use equipment acquired with NIH funds to provide services to non-Federal organizations for a fee to compete unfairly with private companies that provide equivalent services, unless the terms and conditions of the award provide otherwise, and any user charges shall be treated as program income and must be reported on the FFR. Conditions for the sale of equipment are specified at Administrative Requirements-Management Systems and Procedures-Sale of Real Property, Equipment, and Supplies in IIA.

18.4.2 Intellectual Property

Intellectual property requirements set forth in 37 CFR 401 apply to for-profit organizations, whether small businesses or large businesses. However, invention reporting requirements for for-profit organizations differ somewhat from those for non-profit organizations. When the recipient is a for-profit organization, assignment of invention rights to a third party does not require NIH approval, but ongoing reporting remains a requirement for each invention. (See Administrative Requirements-Availability of Research Results: Publications, Intellectual Property Rights, and Sharing Research Resources in IIA.) Additional information about the requirements of 37 CFR 401 may be obtained from the Division of Extramural Inventions and Technology Resources, OPERA, NIH (see Part III for address and telephone number).

To the extent authorized by law, the Federal government will not make public any information disclosing a Federal government-supported invention.

18.4.3 Program Income

Consistent with NIH Standard Terms of Award, for-profit recipients, including those under the SBIR/STTR programs, are subject to the additive alternative for the use of program income described in Administrative Requirements-Management Systems and Procedures-Program Income in IIA.

18.4.4 Operating Authorities

Awards to for-profit organizations are subject to NIH Standard Terms of Award; however, some mechanisms do not allow automatic carryover of unobligated balances of funds. Under those mechanisms, the NIH awarding IC will specify the disposition of the reported unobligated balance in the NoA. (See Administrative Requirements-Changes in Project and Budget in IIA).

18.4.5 Audit

The requirements for non-Federal audits of for-profit organizations are specified in 45 CFR 75.501(h)-(k). A for-profit organization is required to have a non-Federal audit if, during its fiscal year, it expended a total of $750,000 or more under one or more HHS award (as a direct recipient or consortium participant). 45 CFR 75.216(d) (1)(ii) incorporates the thresholds and deadlines of 45 CFR 75, Subpart F-Audit Requirements but provides for-profit organizations two options regarding the type of audit that will satisfy the audit requirements. The recipient either may have (1) a financial-related audit (as defined in, and in accordance with, the Government Auditing Standards (commonly known as the "Yellow Book"), available from the U. S. Government Publishing Office (GPO), of a particular award in accordance with Government Auditing Standards, in those cases where the recipient receives awards under only one HHS program, or (2) an audit that meets the requirements of 45 CFR 75, Subpart F-Audit Requirements. Audits must be completed and submitted to the National External Audit Review Center within 30 days after receipt of the auditor's report(s), or 9 months after the end of the audit period, i.e., the end of the organization's fiscal year, whichever is earlier. The address is found in Part III.

For-profit organizations expending less than $750,000 a year are not required to have an annual audit for that year but must make their grant-related records available to NIH or other designated officials for review or audit.

18.4.6 Labor Distribution Requirements for For-Profit Organizations

Salary and wage amounts charged to grant-supported projects for personal services must be based on an adequate labor distribution system that distributes payroll costs in accordance with generally accepted practices of like organizations. Standards for labor distribution systems are contained in the applicable cost principles (other than those for for-profit organizations).

NIH requires for-profit organizations to conform with industry standards to support salary and wage charges to NIH grants. Therefore, unless an alternate system is approved by the GMO, the recipient must maintain a time and-effort reporting system for both professional and other-than-professional staff reflecting daily after-the-fact reporting of hours expended on individual projects or indirect activities. The system must record both hours worked and hours absent. This information must be certified by an AOR no less frequently than every pay period.