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>> Good afternoon, my name is Samuel Ashe and I'm a Grants Policy Analyst here within the Office of Policy for Extramural Research Administration, at the NIH.
I'm here to talk to you today about a topic which we know our internal and external community is very interested in hearing about, that's NIH's implementation of the Uniform Guidance.  I would like to start by providing you with a brief update of some recent events that have led up to today's presentation, as you may know, on December 19th, 2014, HHS published in the Federal Register an interim final rule adapting OMB's Uniform Guidance into its own regulations with certain amendments which were inserted based on existing HHS regulations to supplement the guidance needed for the department.  HHS's implemented regulations are actually located at 45 CFR Part 75.
Although the interim final rule went into effect on December 26th, 2014, HHS acknowledged that it would consider and address comments that were received within 60 days of the date of the interim final rule was published in the Federal Register.  For additional information pertaining to the publication of HHS's interim final rule, please see the NIH Guide notice provided at the bottom of the slide.
As encouraged by the research terms and conditions work group, NIH is also working with other federal research agencies to develop a research terms and conditions overlay document.  What this document will do is it would incorporate the entire Uniform Guidance by reference, however, for certain provisions and select provisions it will provide additional or clarification of information as appropriate and where it's needed in accordance with federal research policy.
Until the document is complete, the federal research agencies have been encouraged to develop their own terms and conditions.
As encouraged by the research terms and conditions overlay working group, on February 5th, 2015, NIH published interim grant general conditions of NIH grants awards allowing with HHS regulations implement on these Uniform Guidance.  The interim grant general conditions document was issued in order to serve as the applicable terms and conditions for recipients of NIH awards, until such a time as the revised research terms and conditions become effective.
As identified in the NIH Guide notice provided at the bottom of the slide, these conditions are effective for notices of award issued on or after December 26th, 2014, to obligate new or supplemental funds.
However, Notice of Award issues on or after December 26th, 2014, that do not involve obligation of new or supplemental funds, remain subject to 45 CFR part 75 or 45 CFR part 92 as applicable until such time as new funds are obligated.
So how will this impact NIH Grants Management?
As you take a look at interim document, you will see that it is aligned with the format that the NIH grants policy statement as follows.  Part I contains general information for NIH grants.  Part II contains your terms and conditions of NIH grant awards.  For example, the following sections are provided, section 2, covers your public policy requirements; Section 3, special provisions for I a wards to commercial organizations as recipients; Section 4, the Notice of Award; section 5 your cost considerations; section 6, your NIH standard terms of award; section 7, your management systems; Section 8 your audits, section 9 special award conditions, section 10 closeout provisions and Section 11 grant appeals procedures.
So I would like to start by discussing Section 1.
Section 1 contains your definitions.  As you will see within the interim document, there are approximately 93 definitions contained.  However, during today's presentation, I would only like to highlight a certain amount of those that I would like to bring to your attention, these definitions are the new ‑‑ are new to the NIH grants policy statement or they've actually been definitions that are currently contained within the statement, however they've been modified as a result of the Uniform Guidance.
The first definition is that of commercial organization.  The key take‑away from this definition is it that can be used interchangeably with that of for profit organizations.
When I say this, this is because the context of the definition hasn't really changed.  An organization is defined as an organization, institution, corporation or other legal entity, including, but not limited to, partnerships, sole proprietorships and limited liability companies that is organized or operated for the profit or benefit of its shareholders.  So like I mentioned before, for profit organizations and commercial organizations can be used interchangeably.  However, the definition of for profit organization take it a step further and provides information for characteristics of those organizations that are characterized as a small business.
The next definition is that of expenditure report.  Which means for non‑construction grants, the SF 425, Federal Financial Report, or the other OMB equivalent reports.  However, for construction grants, this is the SF‑271 the outlay report and request for reimbursements.  As identified in SF 425, this can also be or other OMB equivalent document.
Before I go into this definition, I would like to apologize for the large amount of text provided on the slide.  However, hopefully I can sum up this definition with a couple of words.  When we discuss federal award, as it applies to the regulations, we're discussing or we're mentioning either the federal financial assistance or the cost reimbursement contract under the federal acquisition regulations.  When I speak of financial ‑‑ federal financial assistance, I speak of either the grant a agreement or the cooperative agreement.  Another key take‑away from this definition is federal award does not include other contracts that a federal agency uses to buy goods or services from a contractor or a contract to operate a federally owned government owned, contractor operated facilities.
This definition also has a direct link to federal financial assistance as identified before, grant agreement and cooperative agreement.
The next definition is that of federal program.  Which is defined as all federal awards which are assigned a single number in the CFDA.  However, when there is no CFDA provided, all federal awards to a non‑federal entity from the same agency made for the same purpose should be considered a federal program.
The definition of federal program also contains information related to clusters of programs, which there are three types.  There is the student financial aid culture, the research and development cluster and other clusters as described in the definition of cluster of programs.  This is key notice of the award requirement as I will identify later as it relates to research and development.  The next definition is that of non‑federal entity, which is a state or local government, Indian tribe or institution of higher education or non‑profit organization that carries out a federal award as a recipient or subrecipient.
In which I will ask you the nuances between recipient and subrecipient later on during the presentation.  I will discuss.
The next definition is that of participant support costs.  Which are defined by Uniform Guidance as direct costs for items such stipends or subsistence allows, travel allowances and registration fees paid to or owe behalf of participants or trainees but not employees in connection with conferences or training projects.  However, for purposes of NIH awards, in our NRSA programs, these costs are not allowable.  And they do not apply.  These costs will only be allowable if they are particularly identified within a Funding Opportunity Announcement, I will discuss this policy a little bit later when I good it to our select provisions of costs.
The next definition is ‑‑ that of personal property, property of any kind except for real property.  It may be tangible, have a physical existence or intangible such as copyrights, patents or securities.
Now, the next set of definitions are definitions that are currently identified within the NIH grants policy statement, however, as a result of the Uniform Guidance, they have been modified.  The first is that of disallowed costs.  They are defined as those charges to a federal award that a federal award agency or pass through entity determines to be unallowable.  The key take‑away from this definition is that Uniform Guidance actually acknowledges the fact that pass through entities have the ability and authority to disallow costs based on federal statutes, regulations or the terms and conditions of the federal award.
The next definition is equipment.  Which is tangible personal property, including information technology systems, having a useful life of more than one year and a per‑unit acquisition cost which equals or exceeds the lesser of the capitalization level established by the non‑federal entity for financial statement purposes or $5,000.
The key take‑away from this definition is the provision where it discusses which equals or exceeds the capitalization established by the non‑federal entity.  Therefore, if the non‑federal entity policy and their capitalization level is less than $5,000, that capitalization level must be followed.
The next definition is that of federal share.  Which means the portion of the total project costs that are paid by federal funds.
The federal share can still also be described as either a percentage of the total federal award amount.
The next definition is of that grantee, which can be interchangeably used with that of recipient as a result of the Uniform Guidance.  So, therefore, the definition of recipient is that it's any entity, usually but not limited to a non‑federal entity that receives a federal award directly from a federal awarding agency to carry out an activity under a federal program.  However, for NIH, this term may also include an individual.  The term does not include subrecipients except as indicated below when we discuss non‑federal entity.
The next definition is that of suspension of award activities.  This is an action by the NIH awarding IC requiring the recipient to cease all activities on the award pending corrective action by the recipient.  The key take‑away from this definition is that this is a separate action from suspension under HHS regulations, found at 2 CFR Part 376.
The next definition is that of termination, which is the ending of a federal award in whole or in part at any time prior to the planned end of period of performance.
As indicated previously, we discussed the layout of the interim document.  Section 2 identifies the public policy requirements.  And what this section does is it provides a listing of the public policy requirements that recipients must adhere where applicable and they are actually provided in the most recent version of the grants policy statement.  On this slide you will see we provided the link to that statement.  Section 3 is actually a particular amendment that was added to 45 CFR Part 75 in order to supplement the guidance as needed for the department.  So as you will see, Section 3 discussions your special provisions for awards to commercial organizations, which are found within the particular section within the new regulations and also these requirements are found within the most recent version of the grants policy statement.
As you will see within 45 CFR Part 75 section 210, this section contains the Notice of Award requirements that were incorporated as a result of the Uniform Guidance.  So, therefore, NIH developed and deployed on December 19th a revised Notice of Award.  The following information is information that has been modified and included within the revised Notice of Award.
So therefore the new award contains your federal award date, your total approved cost sharing or matching, which actually replaced your non‑federal share, your total amount of federal funds obligated, they added the CFDA name in addition to the CFDA number and also adds a period of performance above the budget period or project period and adds a research and development indicator as alluded to before.  4.1 discusses your funding.
So as you know, NIH follows the HHS project period system of funding.  Under this system, projects are programmatically approved for support in their entirety but are funded in annual increments also known as budget periods.  So what this section does is it provides the information that ICs use in order to determine the initial project period or competitive segment or any subsequent competitive segment so the following information is identified by being used.  Any statutory or regulatory requirements, the length of the time requested by the applicant to complete the project, the limitation on the length of the project period recommended by peer reviewers, the awarding IC's programmatic determination of the frequency of the competitive review desirable for managing the promise and any NIH funding principles.
Additionally payments.  As previously indicated, NIH may use terms and conditions for programmatic specific or award specific reasons.  These can be used if the GMO finds at any time of the award or any subsequent time that the grantee's management systems and practices are not adequate to ensure the appropriate stewardship of NIH funds.  The following section identified within HHS regulations in order to address these particular situations.
Section 5.  As a result of the nature of research, NIH provides flexibility for recipients to deviate from the award budget depending on the deviation's significance to the project or the activity.  So as in line with previous policies, more significant post‑award changes will require NIH prior approval.  In addition to these prior approvals, this chapter also addresses the general principles underlying the liability of costs, differentiates direct costs and F&A costs and costs for NIH applicants and recipient.  Section 5.1, the cost principles.
As we all know, the cost principles which were previously founded or found at OMB circulars 821, 87 and A‑122 have been consolidated into a single source document now located in 45 CFR Part 75 subpart E which is equivalent to the OMB regulations 2 CFR.  So although these cost principles have now been consolidated the cost principles still address the four tests to determine the liability of costs.  These costs or these tests are as follows:  Reasonableness, allocability, consistency and conformance.
Section 5.2, direct costs and F and A costs.  In line with prevision provisions direct cost are any costs that can be specifically identified with a particular project, program or activity that can be directly assigned to such activities relatively easily and with a high degree of accuracy.
Supplies directly benefit the grant supported project or activity.
However, most organizations also incur costs for comment or joint objectives that can be readily identified with an individual project, program or activity.
Such ‑‑ such costs are facilities, operation and maintenance costs, depreciation and administrative expenses, are a couple of examples which should normally be treated as F&A costs.  Reimbursement of F&A costs, they are negotiated by DCA, DFAS in the office of acquisition management policy or other kinds of agencies for F&A or indirect cost negotiations.  Another organization may be the office of [indiscernible] research.  However, consistent with the new regulations, any non‑federal entity that never received a negotiated indirect cost rate, may elect to charge a dim minimum unanimous rate of 10% of modified total direct costs which may be used entirely.
Section 5.3, reimbursement of F&A costs.  NIH will continue to not reimburse indirect costs under the following classes of awards.  Fellowships, construction and modernization, grants to individuals, grants to federal institutions, and grants in support of scientific meetings, conference grants, or endowment grants.  NIH will also limit the amount in the F&A base for the following, geneic arrays and in these policies NIH is also going to continue to provide F&A without the need for negotiated rates under following classes of awards.  Research and training grants will still follow the 8% follow and also grants to foreign organizations and international organizations will also follow the 8% policy.
As alluded to before, NIH is also incorporated certain provisions in response to Uniform Guidance, these provisions are the value added tax policy under section 5.4, participant support cost policy alluded to earlier, these costs are only and you allowable when identified in the Funding Opportunity Announcement and the family friendly temporary dependent care cost policy.
In addition, you will see the Uniform Guidance actually incorporates rearrangement and reconversion costs.  However, for NIH this policy is closely aligned with alteration of renovation costs.  Therefore, as a result a recipient may rebudget up to 25% of the total approved budget for budget period into A and R costs without NIH prior approval unless it results in a exchange of scope or any A and R project exceeding $500,000, NIH will always consider the rebudgeting to be a change of scope.
Also, we contain in our interim document proposal costs, which are defined as costs of preparing bids, proposals or applications on potential federal and non‑federal awards or projects, includes the development of data necessary to support the non‑federal entity's bids or proposals.  So as alluded to, this new cost was actually added to the interim document and allowableness is actually now defined and the characteristics for allowability are provided within section 5.4, as alluded to previous, rearrangement and reversion costs, there are now alterations to renovation cost policy.  Section 6 discusses the NIH standard terms of award, also known as expanded authorities.
Under this authority, federal administrative requirements are allowed ‑‑ federal agencies are allowed the ability to waive certain cost related and administrative prior approvals.  Certain award instruments or grant programs and types of recipients are routinely excluded from the authority to automatically carry over unobligated balances.
In addition to this, recipient should be aware that any consistent pattern of failure to adhere these deadlines for reporting or notification will be grounds for excluded them from certain authorities.
The ability to car over unobligated balances from one budget period to any subsequent budget period will be a term identified within the Notice of Award.  However, automatic carry‑over of unobligated balances of all awards except for the centers provided on the slide.
Section 6.2, discusses our cost related prior approvals.  Under this section, NIH prior approval is not required to rebudget funds for any direct cost item that the applicable cost principles identify as requiring the federal awarding agency's prior approval, unless the incurrence of such a cost is associated or considered to be a change of scope.  So therefore, under this policy, recipients may incur pre‑award costs up to 90 days before the beginning date of the initial budget period of a new or renewal award.  They will also continue to have the ability to initiate a one‑time intention of the final budget period of a previously approved project period without additional funds.  And as alluded to earlier, they will have the ability to carry forward unobligated balances from one budget period to any subsequent budget period.  They may change the authority to rebudget among budget categories and they also can rebudget between direct and F&A costs.
A new provision that was added provides recipients the ability to provide subawards based on fixed amounts, provided that the subawards meet the requirements for fixed amount of awards contained within 45 CFR Part 75 section 201.
Another related approval that has been waived by NIH is the ability for recipients to direct charge salaries of administrative and clerical staff if conditions in 45 CFR Part 75 ‑‑ sorry, 45 CFR section 75.413 are met.
In addition, they may also direct charge capital expenditures for general purpose equipment and they may also charge directly charge capital expenditures for special purpose equipment with the unit cost over $500,000.  $5,000.  Section 7 discusses your management systems and your procedures.  So what this section actually does is identifies the fact that OMB has provided a one‑year Grace period for implementation of these subsections for institutions of higher education and non‑profit organizations.  Thus these requirements are expected to take effect for these entities for their first fiscal year after December 26th, 2015.
Section 8 discusses the audit requirements, which were previously located on the circular A 133.  Moving forward NIH recipients are subject to the requirements of 2 CFR subpart F, which was implemented in 45 CFR subpart F and in the most recent version of the NIH grants policy statement.  In line with these regulations, recipients that expend $750,000 or more per year under federal grants, cooperative agreements or procurement contracts have to have an annual audit.  What this higher threshold does is actually reduces the burden for approximately 5,000 non‑federal entities.  However, it may change coverage for over 99% of federal funds.
Section 9 discusses your special award conditions.
As alluded to before, a recipient's failure to comply with the terms and conditions of the award, including confirmed instances of research misconduct, may cause NIH to take one or more actions, depending on the severity and the duration of the non‑compliance.  Provisions described in the most recent edition of the grants policy statement remain in effect, such as the modification of terms of award, enforcement actions, suspension, termination and withholding of support, other enforcement actions, such as the recovery of funds and debt collection.
Section 10 discusses our closeout.  So as alluded to earlier, recipient must submit a final FFR, final progress report, and final invention statement and certification within 120 calendar days of the end of grant support.  The report becomes overdue the day after the 120 day period ends.  This provision is aligned with the clarification being proposed by the research terms and conditions overlay document workgroup.
Section 11 actually discusses our grant appeals procedures.  These procedures also notify within the most recent version of the NIH grants policy statement, therefore, HHS permits recipients to appeal certain post‑award adverse administrative decisions made by HHS officials.  For additional information please see 45 CFR 16.
In addition to the development of interim grant conditions document, NIH has also developed frequently asked questions, such questions that we've actually developed, which we've actually received inquiries from our grantee community are:  Why is NIH issuing the interim grant general conditions document?  I received a Notice of Award on or after December 26th, 2014, documenting the approved carryover amount from a previous fiscal year.  Which HHS regulations apply?  Has NIH changed its policy regarding cost‑related prior approval requirements?  Are participant support costs allowable.  What is allowable regarding childcare costs when traveling under a research grant.  As alluded to we have provided feedback based on the questions we received from our grantee community.  Hopefully these questions are very helpful for you all as you administer your awards.
So to conclude, we've acknowledged that how we implement these changes at the operational level will have a major impact on the success of reaching the overall goals of the Uniform Guidance on the promise of a 21 century government that is more efficient, effective and transparent.
That concludes today's presentation.  I hope this information provided is very helpful and therefore as you know we've actually planned additional sessions in which we would address comments and address questions in reference to the interim general conditions document.  Thank you and have a good day.
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