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.
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, 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.
- 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 45 CFR Part 75.334 and 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. (See 45 CFR 75.433). 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 by the NIH awarding IC.
- 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 but may be treated as direct costs 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 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.
- 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.