HHS 

Grants Policy Statement 

U.S. Department of Health and Human Services 

Office of the Assistant Secretary for Resources and 

Technology 

Office of Grants 

January 1, 2007 
Introduction 

The Department of Health and Human Services Grants Policy Statement (HHS GPS) 

is intended to make available in a single document the general terms and conditions 

of HHS discretionary grant and cooperative agreement awards. These general terms 

and conditions are common across all HHS Operating Divisions (OPDIVs)1 and apply 

as indicated in the HHS GPS unless there are statutory, regulatory, or award-specific 

requirements to the contrary (as specified in individual Notices of Award). The HHS 

awarding offices are components of the OPDIVs and Staff Divisions (hereafter 

“OPDIVs”) that have grant-awarding authority. 

This document also is designed to be useful to those interested in the HHS grants 

process by providing information about that process and its associated authorities 

and about responsibilities. The HHS GPS is available online from the HHS home page 

at http://www.hhs.gov/grantsnet. 

HHS GPS Organization 

The HHS GPS has four parts and an appendix, which allow general information, 

application information, and other types of reference material to be separated from 

legally binding terms and conditions: 

• Part I: HHS Grants Process. Part I describes the OPDIVs, their role, and the 

roles of other HHS organizations in HHS grants; specifies recipient and HHS 

staff responsibilities; outlines the grant application and review processes; and 

explains the various resources available to those interested in the HHS grants 

process. 

• Part II: Terms and Conditions of HHS Grant Awards. Part II includes generally 

applicable terms and conditions. This part also specifies the terms and 

conditions that apply to particular types of grants, recipients, and activities 

that differ from, supplement, or elaborate on the general terms and 

conditions. 

• Part III: Points of Contact. Part III lists pertinent offices and officials with 

their addresses and telephone numbers. 

• Part IV: OPDIV-Specific Information and Terms and Conditions. Part IV, which 

supplements Parts I, II, and III for a given OPDIV, contains any OPDIV 

supplementary information and OPDIV-specific terms and conditions of award. 

This includes statutory, regulatory, or public policy requirements that apply 

only to that OPDIV or its programs. OPDIV-specific terms and conditions in 

Part IV take precedence if they conflict with requirements in Part II of the 

HHS GPS. 

 1

 As indicated under “Applicability,” the National Institutes of Health (NIH) 

maintains its own Grants Policy Statement. While the requirements of both policy 

statements are equivalent, the NIH GPS addresses only research and researchrelated matters as well as requirements that apply only to NIH. 

 i 
• Appendices: The appendices include all abbreviations and a glossary of terms 

used throughout the HHS GPS for ease of reference. 

Supersession and Applicability 

Supersession 

Applicants for HHS grants and recipients have historically relied on a variety of 

sources for information about the grants processes and requirements of HHS and its 

component OPDIVs. For the recipients of grants from the OPDIVs constituting the 

Public Health Service (PHS), the primary source of information for recipients was the

Public Health Service Grants Policy Statement. This HHS GPS supersedes in its 

entirety the Public Health Service Grants Policy Statement, dated April 1, 1994, and 

addendum, dated January 24, 1995. 

Applicability 

This policy statement applies only to HHS discretionary grant programs and only to 

awards to organizational entities made by OPDIVs other than the National Institutes 

of Health (NIH). It does not apply to awards under mandatory grant programs 

(e.g., entitlement programs) or to awards made directly to individuals (e.g., 

scholarships). In 1998 (and with subsequent updates), NIH issued its own NIH 

Grants Policy Statement. Until further notice, NIH will continue to issue and maintain 

its own Grants Policy Statement in lieu of the HHS GPS.2 

Recipients are not directly subject to the requirements of HHS Grants Policy 

Directives and implementing HHS Grants Administration Manuals (or any predecessor 

OPDIV manuals), which are internal documents guiding HHS operations. If an OPDIV 

implements a requirement in an internal document that does affect recipients, it will 

not do so by citing that document; rather, the requirement is placed on the recipient 

through explicit coverage in the NoA. 

Cooperative Agreements 

The Federal Grant and Cooperative Agreement Act of 1977, 31 U.S.C. 6301, defines 

the cooperative agreement as an alternative assistance instrument to be used in lieu 

of a grant whenever substantial Federal involvement with the recipient during 

performance is anticipated. The difference between grants and cooperative 

agreements is the degree of Federal programmatic involvement rather than the type 

of administrative requirements imposed. Therefore, statutes, regulations, policies, 

and the information contained in this policy statement that are applicable to grants 

also apply to cooperative agreements, unless the award itself provides otherwise. 

 2

 This HHS GPS is issued as a preliminary step by HHS to standardize and 

streamline award terms and conditions. Once there are government-wide changes 

under the Federal Financial Assistance Management Improvement Act of 1999, 31 

U.S.C. 6101 note, HHS will use this document to reflect those changes. 

 ii 
 iii 

Subrecipients and Contractors under Grants 

The information contained in this policy statement applies directly to the primary 

recipients of HHS funds. The HHS GPS indicates in Part II whether requirements 

must be applied to or “flowed down” to subawards or contracts under grants. 

Recipients are responsible for specifying those requirements in subawards (which 

includes consortium agreements) or contracts, as applicable. 

Effective Date 

This document is effective for all new, competing continuation, and non-competing 

continuation HHS grant and cooperative agreement awards with beginning dates on 

or after January 1, 2007. This document reflects current HHS requirements as 

specified in 45 CFR parts 74 and 92. 

The information in this document is subject to change following its issuance due to 

changes in statutes, regulations, or policies adopted subsequent to its effective date. 

To ensure that applicants and recipients are aware of changes, recipients should 

refer to the Federal Register and Code of Federal Regulations (Titles 45 and 42). 

These documents are available online at http://www.gpoaccess.gov/. 

Conventions 

Certain conventions are followed throughout this document. The term “grant” is used 

to mean both grants and cooperative agreements; however, for clarity, certain 

sections mention both grants and cooperative agreements. The term “recipient” 

generally is used to refer to the organization to which an OPDIV makes a grant or 

cooperative agreement award. However, depending on the context, the terms 

“grantee” may be used rather than “recipient.” “HHS” may be used in this document 

to refer to the entire organization or to its component organizations, or else to 

contrast an action by an OPDIV with an action by a recipient or other organization. A 

reference to Part I, II, III, or IV without further elaboration means the corresponding 

part of the HHS GPS. Although most of the requirements in the HHS GPS apply to 

the covered activities of all OPDIVs, if a requirement applies more narrowly, the 

exception is explicitly noted. 

Maintenance 

The Office of Grants—part of the HHS Office of the Assistant Secretary for Resources 

and Technology—is responsible for developing and maintaining this document, which 

will be reissued periodically. Interim changes will be posted on the HHS and OPDIV 

Web sites (see Part I). Each change, including its applicability and effective date and 

the affected sections of the HHS GPS specified, will be described, and the necessary 

language to implement it as a term or condition of award will be provided. The Office 

of Grants welcomes comments and suggestions for future versions of the HHS GPS. 
Table of Contents 

Part I: HHS Grants Process............................................................................ I-1 

General Information.................................................................................. I-1 

HHS Grant-Awarding Operating Divisions............................................... I-1 

Types of HHS Financial Assistance Programs .......................................... I-3 

Sources of Requirements..................................................................... I-4 

Roles and Responsibilities.................................................................... I-4 

Roles and Responsibilities of OPDIV Staff Members and Other HHS 

Offices ............................................................................... I-5 

Roles and Responsibilities of Recipients and Their Principals.............. I-6 

Fraud, Waste, and Abuse..................................................................... I-7 

Paperwork Reduction Act..................................................................... I-8 

Sources of Information about HHS Grant Processes and Programs............. I-9 

Application and Application Review Processes ............................................... I-9 

Grants.gov and Funding Opportunity Announcements.............................. I-9 

Eligibility......................................................................................... I-11 

Suspension and Debarment........................................................ I-13 

Delinquency on Federal Debt...................................................... I-14 

Lobbying ................................................................................. I-15 

Application Process........................................................................... I-15 

Types of Applications and Letters of Intent ................................... I-15 

Application Forms ..................................................................... I-16 

Preparing an Application ............................................................ I-17 

Public Policy Requirements ................................................................ I-18 

Research-Related Requirements.................................................. I-18 

National Environmental Policy Act ............................................... I-19 

Preservation of Cultural and Historic Resources ............................. I-20 

 iv 
Protection of Wetlands............................................................... I-21 

Uniform Relocation Act and Real Property Acquisition Policies Act..... I-22 

The Application Budget ..................................................................... I-22 

Indirect Costs........................................................................... I-23 

Matching or Cost Sharing ........................................................... I-24 

Research Patient Care Costs ....................................................... I-25 

Third-Party Reimbursement........................................................ I-25 

Submitting an Application.................................................................. I-25 

Executive Order 12372 and Public Health System Reporting RequirementsI-26 

Use of Application Information ........................................................... I-27 

Freedom of Information Act........................................................ I-28 

Privacy Act............................................................................... I-29 

Objective Review of Applications ........................................................ I-29 

Disposition of Applications ................................................................. I-30 

Business Management Reviews and Other Pre-Award Activities ............... I-31 

Assurances of Compliance.......................................................... I-31 

Cost Analysis ........................................................................... I-32 

Assessment of Financial and Other Management Systems............... I-32 

The Notice of Award................................................................................ I-33 

Project Period and Budget Period........................................................ I-34 

Other Terms and Conditions .............................................................. I-35 

Payment................................................................................................ I-36 

SMARTLINK II/ACH........................................................................... I-36 

CASHLINE/ACH................................................................................ I-36 

Cash Request .................................................................................. I-37 

Post-Award Administration ....................................................................... I-37 

 v 
Part II: Terms and Conditions of Award..........................................................II-1 

Overview of Terms and Conditions of Award ................................................II-1 

General, Program-Specific, and Award-Specific Terms and Conditions.......II-1 

Effect and Order of Precedence ...........................................................II-1 

Flow-Down of Requirements under Subawards and Contracts under GrantsII-2 

Public Policy Requirements........................................................................II-2 

Standards of Conduct for Recipient Employees ......................................II-7 

Hatch Act.........................................................................................II-8 

Age Discrimination Act of 1975............................................................II-8 

Civil Rights Act of 1964......................................................................II-8 

Education Amendments of 1972 ..........................................................II-8 

Rehabilitation Act of 1973 ..................................................................II-8 

Biological Agents and Toxins...............................................................II-9 

USA PATRIOT Act.......................................................................II-9 

Public Health Security and Bioterrorism Preparedness and 

Response Act.....................................................................II-9 

Human Subjects................................................................................II-9 

Office for Human Research Protections’ and Recipient Responsibilities II10 

Protection of Research Subjects’ Identities .................................. II-12 

Animal Welfare ............................................................................... II-12 

Other Research-Related Requirements ............................................... II-13 

Research Misconduct................................................................ II-13 

Financial Conflict of Interest ...................................................... II-14 

Recombinant DNA and Human Gene Transfer Research ................. II-15 

Human Embryonic Stem Cell Research and Cloning....................... II-16 

Research on Human Fetal Tissue................................................ II-16 

Transplantation of Human Fetal Tissue........................................ II-18 

 vi 
Certificates of Confidentiality ..................................................... II-18 

Investigational New Drug Applications/Investigational Device 

Exceptions....................................................................... II-18 

Controlled Substances .............................................................. II-19 

Construction-Related Requirements ................................................... II-20 

Flood Insurance....................................................................... II-20 

Architectural Barriers................................................................ II-20 

Clean Air and Clean Water Act ................................................... II-20 

Safe Drinking Water Act............................................................ II-20 

Health, Safety, and Related Requirements .......................................... II-21 

Restriction on Funding Abortions ................................................ II-21 

Restriction on Distribution of Sterile Needles/Needle Exchange ....... II-21 

Standards for Privacy of Individually Identifiable Health InformationII-21 

Confidentiality of Patient/Client Records ...................................... II-21 

Drug-Free Workplace................................................................ II-21 

Pro-Children Act ...................................................................... II-22 

Smoke-Free Workplace............................................................. II-22 

Health and Safety .................................................................... II-22 

Acknowledgment of Federal Funding .................................................. II-23 

Activities Abroad ............................................................................. II-23 

Limited English Proficiency................................................................ II-23 

Resource Conservation and Recovery Act............................................ II-23 

Seat Belts ...................................................................................... II-23 

Cost Considerations ............................................................................... II-24 

General ......................................................................................... II-24 

The Cost Principles .......................................................................... II-24 

Direct Costs and Indirect Costs ......................................................... II-25 

 vii 
Reimbursement of Indirect Costs....................................................... II-26 

Applicable Credits............................................................................ II-28 

Allowable Costs and Activities ........................................................... II-28 

Cost Transfers ................................................................................ II-43 

Cost Overruns and Rate of Expenditure .............................................. II-44 

Allocation of Costs........................................................................... II-44 

Services Provided by Affiliated Organizations....................................... II-45 

Matching or Cost Sharing........................................................................ II-45 

Valuation of Donated Goods and Services ........................................... II-46 

Donated Supplies, Equipment, Space, or Land ............................. II-46 

Volunteer Services ................................................................... II-47 

Using Program Income to Meet a Matching or Cost-Sharing Requirement II-48 

Documentation ............................................................................... II-48 

Prior-Approval Requirements ................................................................... II-48 

OPDIV Prior Approval....................................................................... II-48 

Carryover of Unobligated Balances ............................................. II-51 

Change of Grantee Organization ................................................ II-51 

Change in Scope...................................................................... II-53 

Change in Status, including Absence, of Principal Investigator/Project 

Director and Other Key Personnel ....................................... II-54 

Need for Additional OPDIV Funding............................................. II-54 

Need for Additional Time to Complete Project- or Program-Related 

Activities (“No-Cost Extension”).......................................... II-55 

Significant Rebudgeting ............................................................ II-55 

Transfer of Substantive Programmatic Work ................................ II-56 

Requesting OPDIV Prior Approval ............................................... II-56 

Expanded Authorities....................................................................... II-57 

Carryover of Unobligated Balances ............................................. II-58 

 viii 
Extension of Final Budget Period of a Previously Approved Project 

Period............................................................................. II-58 

Financial Management............................................................................ II-59 

Financial Management System .......................................................... II-59 

Program Income ............................................................................. II-60 

Accountability and Alternatives for Use ....................................... II-60 

Reporting of Program Income .................................................... II-62 

Interest Earned on Advances of Grant Funds....................................... II-62 

Property Management ............................................................................ II-63 

Exempt Property ............................................................................. II-64 

Nonexempt Property........................................................................ II-64 

Equipment Management System ....................................................... II-64 

Sale of Equipment and Supplies ........................................................ II-65 

Revocable License ........................................................................... II-65 

Debt Instruments............................................................................ II-66 

Real Property.................................................................................. II-66 

Acquisition, Use, and Management ............................................. II-66 

Disposition.............................................................................. II-67 

Notice of Federal Interest.......................................................... II-67 

Insurance ............................................................................... II-67 

Intellectual Property............................................................................... II-68 

Rights in Data................................................................................. II-69 

Access to Research Data .................................................................. II-69 

Publications.................................................................................... II-70 

Patents and Inventions .................................................................... II-71 

Royalties and Licensing Fees from Copyrights, Inventions, 

and Patents ..................................................................... II-71 

Invention Reporting ................................................................. II-72 

 ix 
Sharing Research Tools.................................................................... II-74 

Procurement Management ...................................................................... II-75 

Approval Requirements .................................................................... II-76 

Requirements for Using Small Businesses, Minority-Owned Firms, and 

Women-Owned Businesses........................................................ II-77 

Subawards ..................................................................................... II-78 

Changes in Organizational Status............................................................. II-79 

Federally Sponsored Surveys................................................................... II-81 

Monitoring ............................................................................................ II-82 

Reporting ............................................................................................. II-82 

Financial Reporting.......................................................................... II-83 

Progress Reporting .......................................................................... II-84 

Other Reporting .............................................................................. II-85 

Overdue Reports ............................................................................. II-85 

Record Retention and Access................................................................... II-86 

Audit Requirements................................................................................ II-86 

Enforcement Actions .............................................................................. II-88 

Modification of the Terms and Conditions of Award............................... II-89 

Withholding a Non-Competing Continuation Award............................... II-89 

Suspension or Termination ............................................................... II-89 

Closeout............................................................................................... II-90 

Final Financial Status Report............................................................. II-90 

Final Progress Report....................................................................... II-91 

Final Invention Statement and Certification......................................... II-92 

Debt Collection...................................................................................... II-92 

Appeals ................................................................................................ II-93 

Requirements for Specific Types of Grants................................................. II-94 

 x 
Conference Grants........................................................................... II-94 

Definitions .............................................................................. II-94 

Representation ........................................................................ II-95 

Funding.................................................................................. II-95 

Acknowledgment of Support and Disclaimer................................. II-95 

Use of HHS and OPDIV Logos .................................................... II-95 

Allowable and Unallowable Costs................................................ II-96 

Intellectual Property: Publications, Copyright, and Public Disclosure II-97 

Reporting and Record Retention................................................. II-98 

Construction and Modernization of Facilities ........................................ II-98 

Funding.................................................................................. II-99 

Allowable and Unallowable Costs and Activities ............................ II-99 

Prior-Approval Requirements ................................................... II-101 

Procurement Requirements ..................................................... II-102 

Equal Employment Opportunity, Labor Standards, and Other Contract 

Requirements ................................................................ II-102 

Use of Facility and Disposition.................................................. II-104 

Traineeship, Fellowship, and Similar Awards Made to Organizations on 

Behalf of Individuals............................................................... II-105 

Initiation of Support............................................................... II-105 

Payment............................................................................... II-106 

Allowable Costs ..................................................................... II-106 

Supplementation of Stipends, Compensation, and Other Income... II-109 

Reporting Requirements ......................................................... II-110 

Changes in the Project/Activity ................................................ II-111 

Consecutive Support .............................................................. II-112 

Termination .......................................................................... II-112 

Copyright ............................................................................. II-112 

 xi 
Inventions and Patents ........................................................... II-112 

Disposition of Professional Fees ............................................... II-113 

Requirements for Specific Types of Recipients.......................................... II-113 

Grants to Foreign Organizations, International Organizations, and Domestic 

Grants with Foreign Components and Subawards to Foreign 

Organizations........................................................................ II-113 

Public Policy Requirements ...................................................... II-113 

Funding and Payment............................................................. II-114 

Allowable Costs ..................................................................... II-114 

Prior-Approval Requirements ................................................... II-114 

AuditII-115 

Subawards............................................................................ II-115 

Grants to Federal Institutions and Allowable Costs and Payments to 

(or on Behalf of) Federal Employees under Grants ...................... II-115 

Eligibility .............................................................................. II-116 

Payment............................................................................... II-116 

Allowable Costs under Grants to Federal Institutions ................... II-116 

Equipment Accountability........................................................ II-117 

Procurement Requirements ..................................................... II-117 

Intellectual Property............................................................... II-117 

Reporting Requirements ......................................................... II-118 

Allowable Costs and Payments to (or on Behalf of) Federal Employees 

under Grants ................................................................. II-118 

Grants to For-Profit Organizations.................................................... II-120 

General ................................................................................ II-120 

Allowable Costs and Payment of Fee......................................... II-120 

Intellectual Property............................................................... II-121 

AuditII-121 

 xii 
 xiii 

Small Business Innovation Research and Small Business Technology 

Transfer Programs .......................................................... II-122 

Part III: Points of Contact ...........................................................................III-1 

Appendix A: Abbreviations ........................................................................... A-1 

Appendix B: Glossary .................................................................................. B-1 

Index ........................................................................................................ C-1 
Part I: HHS Grants Process 

General Information 

This section provides information about how HHS is organized to award and 

administer grants and cooperative agreements. This section describes the roles of 

organizations within HHS with responsibilities for the HHS grants process, as well as 

organizations external to HHS that have a role in that process. 

HHS is the Federal government’s principal agency for protecting the health of 

Americans and providing essential human services, especially for those who are least 

able to help themselves. In support of its mission, HHS awards grants under more 

than 300 programs, making it the largest grant-awarding agency in the Federal 

government. 

HHS Grant-Awarding Operating Divisions (OPDIVs) 

HHS grant programs are the responsibility of 12 OPDIVs (see Exhibit 1). 

Exhibit 1. OPDIVs with Responsibilities for HHS Grant Programs 

OPDIV Mission 

Administration for 

Children and Families 

ACF is responsible for programs that promote the economic and social wellbeing of children, families and communities. Administers the State-Federal 

welfare program, Temporary Assistance for Needy Families, providing 

assistance to an estimated 5 million people, including 4 million children. 

Administers the national child support enforcement system. Administers the 

Head Start program, serving more than 900,000 preschool children. 

Provides funds to assist low-income families in paying for child care, and 

supports State programs to support foster care and provide adoption 

assistance. Funds programs to prevent child abuse and domestic violence. 

http://www.acf.dhhs.gov/

Administration on Aging AoA supports a nationwide aging network, providing services to the elderly, 

especially to enable them to remain independent. Supports close to 240 

million meals for the elderly each year, including home-delivered "meals on 

wheels." Helps provide transportation and at-home services. Supports 

ombudsman services for the elderly, and provides policy leadership on aging 

issues. 

http://www.aoa.dhhs.gov

Agency for Healthcare 

Research and Quality 

AHRQ supports research to improve the quality, safety, efficiency, and 

effectiveness of health care for all Americans. 

http://www.ahrq.gov

Office of the Assistant 

Secretary for Planning 

and Evaluation 

The ASPE is the principal advisor to the Secretary of HHS on policy 

development and is responsible for major activities in policy coordination, 

legislation development, strategic planning, policy research, evaluation, and 

economic analysis. 

http://aspe.hhs.gov/_/index.cfm

 I-1 
Exhibit 1. OPDIVs with Responsibilities for HHS Grant Programs 

OPDIV Mission 

Centers for Disease 

Control and Prevention 

Working with States and other partners, CDC provides a system of health 

surveillance to monitor and prevent disease outbreaks (including 

bioterrorism), implement disease prevention strategies, and maintain 

national health statistics. Provides for immunization services, workplace 

safety, and environmental disease prevention. Working with the World 

Health Organization, CDC also guards against international disease 

transmission, with personnel stationed in more than 25 foreign countries. 

CDC helps prevent exposure to hazardous substances from waste sites on 

the U.S. Environmental Protection Agency's National Priorities List, and 

develops toxicological profiles of chemicals at these sites through the 

Agency for Toxic Substances and Disease Registry. 

http://www.cdc.gov

Centers for Medicare and 

Medicaid Services 

CMS administers the Medicare and Medicaid programs, which provide 

health care to about one in every four Americans. Medicare provides health 

insurance for more than 41 million elderly and disabled Americans. 

Medicaid, a joint Federal-State program, provides health coverage for some 

44 million low-income persons, including 19 million children, and nursing 

home coverage for low-income elderly. CMS also administers the State 

Children's Health Insurance Program that covers more than 4.2 million 

children. 

http://www.medicare.gov, http://www.cms.gov

Food and Drug 

Administration 

FDA ensures the safety of foods and cosmetics, and the safety and efficacy 

of pharmaceuticals, biological products, and medical devices, products 

which represent almost 25 cents out of every dollar in U.S. consumer 

spending. 

http://www.fda.gov

Health Resources and 

Services Administration 

HRSA provides access to essential health care services for people who are 

low-income, uninsured, or live in rural areas or urban neighborhoods where 

access to or availability of health care is limited. HRSA-funded health 

centers provide medical care to more than 13 million patients each year at 

more than 3,600 sites nationwide. HRSA also helps prepare the nation's 

health care system and providers to respond to bioterrorism and other public 

health emergencies, is responsible for the National Health Service Corps, 

and helps build the health care workforce through many training and 

education programs. HRSA administers a variety of programs to improve the 

health of mothers and children and serves people living with HIV/AIDS 

through the Ryan White CARE Act programs. HRSA also oversees the 

nation's organ transplantation system. 

http://www.hrsa.gov

Indian Health Service IHS is the principal Federal health care provider and health advocate for 

Indian people, and its goal is to raise their health status to the highest 

possible level. 

http://www.ihs.gov

National Institutes of 

Health 

NIH is the world's premier medical research organization. Its mission is to 

improve human health by increasing scientific knowledge related to disease 

and health. NIH carries out its mission through the conduct of intramural and 

extramural support of biomedical and behavioral research, research training, 

research infrastructure, and communications. NIH makes extramural awards 

though its Institutes and Centers. 

http://www.nih.gov

 I-2 
Exhibit 1. OPDIVs with Responsibilities for HHS Grant Programs 

OPDIV Mission 

Office of Public Health 

and Science 

OPHS is located within the Office of the Assistant Secretary for Health, who 

is the primary adviser to the Secretary, HHS on matters involving the 

nation’s public health and oversees the U.S. Public Health Service (PHS). 

OPHS includes several offices—Office of Minority Health, Office of 

Population Affairs, and Office of Disease Prevention and Health Promotion. 

http://www.osophs.dhhs.gov/ophs/

Substance Abuse and 

Mental Health Services 

Administration 

SAMHSA works to improve the quality and availability of substance abuse 

prevention, addiction treatment, and mental health services. Provides 

funding through block grants to States to support substance abuse and 

mental health services, including treatment for more than 650,000 

Americans with serious substance abuse problems or mental health 

problems. Helps improve substance abuse prevention and treatment 

services through the identification and dissemination of best practices. 

Monitors prevalence and incidence of substance abuse. 

http://www.samhsa.gov

There are several references throughout the HHS GPS to “PHS OPDIVs.” Unless 

otherwise specified for a specific requirement, the PHS OPDIVs include the following: 

AHRQ, CDC, FDA, HRSA, IHS, OPHS, and SAMHSA. NIH also is a PHS OPDIV; 

however, the requirements that apply to NIH grants are included in the NIH Grants 

Policy Statement. 

Types of HHS Financial Assistance Programs 

HHS financial assistance programs reflect a breadth of programmatic activity, 

consistent with the mission of each OPDIV. Activities are carried out under a variety 

of types of grants as well as by use of cooperative agreements. HHS generally 

classifies its financial assistance programs in two major categories of grants—

discretionary and mandatory. Discretionary grants are those for which the OPDIV 

may exercise judgment (“discretion”) in determining the recipient and the amount of 

the award. Discretionary grants may be further categorized by purpose (for example, 

research, training, services, construction, and conference support). Generally such 

awards are made following a competitive process. Mandatory grants are those that 

an OPDIV is required to award if the recipient (usually a State) submits an 

acceptable plan or application and meets the statutory and regulatory eligibility and 

compliance requirements for the program. Mandatory grants include block grants 

and entitlement grants. 

When an OPDIV expects to be substantially involved in carrying out the 

project/program, it awards a cooperative agreement rather than a grant. Substantial 

involvement pertains to programmatic involvement rather than administrative 

oversight. 

These distinctions help in determining the appropriate relationship between the 

OPDIV and the recipient and in determining which governing requirements apply. In 

general, discretionary grants are subject to more detailed programmatic and 

administrative requirements than block grants, which afford States a significant 

degree of programmatic and administrative discretion within broad guidelines. 

However, even within discretionary grants, a range of potential requirements may 

 I-3 
apply depending on the type of recipient and the nature of the programmatic 

activity. For example, different requirements apply to university-based research 

grants than to community-based services grants. The applicable requirements are 

communicated to potential recipients as part of the funding opportunity 

announcement process and also are observed as part of the award and post-award 

administration processes. 

Sources of Requirements 

This policy statement is based on generally applicable public laws and Executive 

orders, OMB circulars and the HHS implementation of them, and HHS-specific 

policies and procedures applicable to discretionary grants and cooperative 

agreements. Among these are the regulations that implement OMB Circular A-102 

(applicable to grants to State, local, and Indian tribal governments) and OMB 

Circular A-110 (applicable to grants to institutions of higher education, hospitals, and 

other non-profit organizations), reissued as 2 CFR part 215, and OMB circulars 

incorporated in them—the OMB cost principles and single audit circular. These 

regulations are codified at 45 CFR part 743 (Uniform Administrative Requirements for 

Awards and Subawards to Institutions of Higher Education, Hospitals, Other NonProfit Organizations, and Commercial Organizations) and 45 CFR part 92 (Uniform 

Administrative Requirements for Grants and Cooperative Agreements to State, Local, 

and Tribal Governments). These requirements provide the framework for the terms 

and conditions of OPDIV awards as specified in Part II and apply generally; however, 

where applicable, differences based on grant purpose or type of recipient will be 

highlighted. In addition, grants are awarded and administered under a variety of 

programmatic authorities (established in statute and program regulations) and under 

OPDIV and award-specific requirements. Part II also addresses the relationship 

among these differing types of requirements. Part IV includes OPDIV requirements 

that differ from those in Part II of the HHS GPS. The NoA includes any requirements 

that are specific to that award. 

Roles and Responsibilities 

HHS, as a Federal grantor agency, is responsible to Congress and the U.S. taxpayer 

for carrying out its mission cost-effectively and in compliance with applicable 

requirements. HHS seeks to ensure integrity and accountability in the award and 

administration of grants by relying on a system of checks and balances and 

separation of responsibilities within its own staff and by establishing a similar set of 

expectations for recipient organizations. The recipient’s roles and responsibilities 

have assumed greater importance as HHS has shifted to increased reliance on 

systems compliance and provided greater decision-making authority to recipients. 

 3

 Currently, the HHS implementation of OMB Circular A-110 continues to be 45 

CFR part 74 even with the publication of A-110 in Title 2 of the CFR (2 CFR part 

215). 

 I-4 
The following sections highlight the major functions and areas of responsibility of 

Federal and recipient offices and staffs. HHS recognizes that additional staff 

members in a number of different organizations may be involved in grant-related 

activities; however, this section details only the major participants representing the 

Federal government and the recipient. 

Roles and Responsibilities of OPDIV Staff Members 

and Other HHS Offices 

The roles and responsibilities of HHS participants are as follows: 

• Grants Management Officer. The GMO is the OPDIV official whose name 

appears on the NoA and is the official responsible for the business 

management and other non-programmatic aspects of an award. These 

activities include, but are not limited to, evaluating grant applications for 

administrative content and compliance with statutes, regulations, and 

guidelines; negotiating awards; providing consultation and technical 

assistance to applicants and recipients, including interpretation of grants 

administration policies and provisions; and administering and closing out 

grants. The GMO is the focal point for receiving and acting on requests for 

prior approval or for changes in the terms and conditions of award. The GMO 

is the only official authorized to obligate the OPDIV to the expenditure of 

Federal funds or to change the funding, duration, or other terms and 

conditions of an award. OPDIVs may have one or more GMOs with 

responsibility for particular programs or awards. The GMO works closely with 

his or her counterparts at the recipient organization and with the designated 

HHS PO. 

• Grants Management Specialist. The GMS is an OPDIV employee with assigned 

responsibility for the day-to-day management of a portfolio of OPDIV grants. 

The GMS performs many of the activities described above on behalf of the 

GMO and usually is the primary point of contact for the recipient when dealing 

with grant-related issues. 

• Project Officer/Program Official. The PO is the OPDIV official responsible for 

the programmatic, scientific, and/or technical aspects of assigned applications 

and grants. The PO’s responsibilities include, but are not limited to, 

development of programs to meet the OPDIV mission; preparation of funding 

opportunity announcements; provision of programmatic technical assistance; 

post-award monitoring of project/program performance, including review of 

progress reports and making site visits; and other activities complementary to 

those of the GMO. The PO and the GMO work as a team in many of these 

activities. 

 I-5 
• Review Administrator. In some OPDIVs, RAs manage application review 

activities for discretionary grants. The RA, who may be an employee of the 

funding OPDIV, another OPDIV that provides review services, or a contractor, 

reviews applications for completeness and conformity to requirements; 

ensures that an adequate number of reviewers with appropriate expertise is 

available for application review; and assigns applications to individual 

reviewers. 

• Other HHS Functions. In addition to the GMO and PO, an applicant or 

recipient may be required to interact with other HHS staff members or offices 

with respect to its organization-wide systems and/or individual transactions. 

These include the office responsible for negotiating indirect cost rates (known 

as “facilities and administrative costs” for some organizations) and research 

patient care rates, typically the responsible4 DCA office or NIH’s DFAS; the 

HHS OIG; the Assistant Secretary for Resources and Technology’s Division of 

Financial Systems, Payment Integrity, and Audit Resolution; OHRP; OLAW; 

DPM; and ORI. Staff members in these offices generally coordinate with the 

GMO on grant-related matters, but they are responsible for discrete areas of 

specialization and are not required to channel their communications with the 

applicant or recipient through the GMO. Part III of this policy statement 

includes a list of these organizations and contact information. 

Roles and Responsibilities of Recipients and Their Principals 

HHS grant awards generally are made to organizations. The organization is legally 

accountable for the performance of the award and the expenditure of funds. The 

roles and responsibilities of designated individuals at recipient organizations, who 

serve as agents of the recipient, are as follows: 

• Authorized Organizational Representative. The authorized organizational 

representative is the designated representative of the applicant/recipient 

organization with authority to act on the organization’s behalf in matters 

related to the award and administration of grants. In signing a grant 

application, this individual agrees that the organization will assume the 

obligations imposed by applicable Federal statutes and regulations and other 

terms and conditions of the award, including any assurances, if a grant is 

awarded. These responsibilities include accountability both for the appropriate 

use of funds awarded and the performance of the grant-supported project or 

activities as specified in the approved application. Although HHS requires that 

the recipient organization designate such an individual, HHS does not specify 

the organizational location or full set of responsibilities for this individual. 

• Principal Investigator/Program or Project Director. The PI/PD is the individual, 

designated by the recipient, responsible for the scientific, technical, or 

programmatic aspects of the grant and for day-to-day management of the 

project or program. The PI/PD generally is an employee of the recipient. 

However, because the grant, if awarded, is made to the recipient 

organization, if the PI/PD is not an employee of that organization, the 

organization must have a formal written agreement with the PI/PD that 

specifies an official relationship between the parties even if the relationship 

 4

 The responsible DCA office generally is determined on the basis of geographical 

location. 

 I-6 
does not involve a salary or other form of remuneration. If the PI/PD is not an 

employee of the applicant organization, the OPDIV will assess whether the 

arrangement will result in the organization being able to fulfill its 

responsibilities under the grant, if awarded. 

The PI/PD is a member of the recipient team responsible for ensuring 

compliance with the financial and administrative aspects of the award. This 

individual works closely with designated officials within the recipient 

organization to create and maintain necessary documentation, including both 

technical and administrative reports; prepare justifications; appropriately 

acknowledge Federal support in publications, announcements, news 

programs, and other media; and ensure compliance with other Federal and 

organizational requirements. The PI/PD is encouraged to maintain contact 

with the PO with respect to the scientific, technical, or programmatic aspects 

of the project or program and, as applicable, the GMO concerning the 

business and administrative aspects of the award. 

Organizations receiving HHS grant funds, whether such funds are received directly 

from an OPDIV, indirectly under a contract, subaward, or as student assistance 

under a training grant, are responsible for and must adhere to all applicable Federal 

statutes, regulations, and policies, including income tax regulations. Questions 

concerning the applicability of income tax regulations to grant funds should be 

directed to the IRS. Organizations also are expected to be in compliance with 

applicable State and local laws and ordinances. 

Fraud, Waste, and Abuse 

Anyone who becomes aware of the existence (or apparent existence) of fraud, 

waste, or abuse related to HHS grants or use of grant funds should report this 

information to HHS. The HHS OIG provides several means, including toll-free 

numbers, for this purpose. The OIG hotline may be reached by telephone at 1-800-

HHS-TIPS (1-800-447-8477) or TTY at 1-800-377-4950; by fax at 1-800-223-8164; 

by e-mail at HHSTips@oig.hhs.gov; or by mail at Office of the Inspector General, 

Department of Health and Human Services, Attn: HOTLINE, 330 Independence 

Avenue, SW, Washington, DC 20201. Fraud, waste, and abuse includes, but is not 

limited to, embezzlement, misuse, or misappropriation of grant funds or property, 

and false statements, whether by organizations or individuals. Examples are theft of 

grant funds for personal use; using funds for non-grant-related purposes; theft of 

federally owned property or property acquired or leased under a grant; charging 

inflated building rental fees for a building owned by the recipient; submitting false 

financial reports; and submitting false financial data in bids submitted to the 

recipient (for eventual payment under the grant). 

Callers are not required to give their names and, if they do, their identities are kept 

confidential. Contact information for the OIG and the OIG hotline also is included in 

Part III of this policy statement. In addition, some OPDIVs have a designated point 

of contact within the OPDIV for receiving information from third parties about 

administrative or programmatic concerns relating to an application or award. These 

contacts may be found in Part IV or on the OPDIV’s Web site. 

The Federal government may pursue administrative, civil, or criminal action under a 

variety of statutes that relate to fraud and false statements or claims. Even if a grant 

is not awarded, the applicant may be subject to penalties if the information 

 I-7 
contained in or submitted as part of an application, including its certifications and 

assurances, is found to be false, fictitious, or fraudulent. 

The Program Fraud and Civil Remedies Act of 1986, 31 U.S.C. 3801 et seq., provides 

for the imposition by HHS of civil penalties and assessments against people who 

knowingly make false, fictitious, or misleading claims to the Federal government for 

money, including money representing grants, loans, or benefits. A civil penalty of not 

more than $5,000 may be assessed for each such claim. If a grant is awarded and 

payment is made on a false or fraudulent claim, an assessment of not more than 

twice the amount of the claim, up to $150,000, may be made in lieu of damages. 

Regulations at 45 CFR part 79 specify the process for imposing civil penalties and 

assessments, including hearing and appeal rights. 

The Criminal False Claims Act, 18 U.S.C. 287 and 1001, provides for criminal 

prosecution of a person who knowingly makes or presents any false, fictitious, or 

fraudulent statements, representations, or claims against the United States. 

Violations carry a maximum sentence of 5 years imprisonment (or 8 years for 

offenses involving international or domestic terrorism) and/or a fine. 

The Civil False Claims Act, 31 U.S.C. 3729(a), provides for imposition of penalties 

and damages by the United States, through civil litigation, against any person who 

knowingly makes a false or fraudulent claim for payment, makes or uses a false 

record or false statement to get a false claim paid or approved, or conspires to 

defraud the Federal government to get a false claim paid. A “false claim” is any 

request or demand for money or property made to the United States or to a 

contractor, grantee, or other recipient, if the Federal government provides or will 

reimburse any portion of the funds claimed. Civil penalties of $5,500 to $11,000 may 

be imposed for each false claim, plus damages of up to three times the amount of 

the false claim. 

Part II of this policy statement addresses the administrative remedies included in 45 

CFR parts 74 and 92 that the Federal government may use after award if a recipient 

deliberately withholds information, submits fraudulent information, or does not 

comply with applicable requirements. These remedies include recovery of misspent 

grant funds. 

Paperwork Reduction Act 

OMB clearance is required for OPDIV “information collections.” An information 

collection occurs when identical questions are posed to, or identical reporting, 

recordkeeping, or disclosure requirements are imposed on, 10 or more people, 

whether the collection is mandatory, voluntary, or required to obtain or retain a 

benefit. All application or reporting forms, whether paper or electronic, that an 

OPDIV requires an applicant or recipient to complete and submit must receive OMB 

approval before the OPDIV may collect the information. Information collection under 

a cooperative agreement award or a grant award, under specified conditions, also 

requires OMB clearance. See Part II of this policy statement for OMB clearance 

requirements under the PRA. 

 I-8 
Sources of Information about HHS Grant Processes and 

Programs 

The Catalog of Federal Domestic Assistance is a government-wide publication 

available to members of the public that can be used to obtain general information 

about assistance programs. It is updated twice a year. A listing of current entries in 

the CFDA is available at http://www.cfda.gov/. HHS programs are found under the 

prefix 93.XXX. 

Grants.gov FIND is a government-wide source of information about specific funding 

opportunities. HHS uses detailed funding opportunity announcements to invite 

applications for specific funding opportunities. Synopses of these announcements are 

posted at Grants.gov FIND. The “Application and Review Processes” section of this 

policy statement provides information about Grants.gov FIND and the types of HHS 

funding opportunity announcements. 

HHS and its individual OPDIVs maintain a number of information resources about 

their grant programs and activities that can be accessed through their Web sites. 

Some are descriptive materials that enable interested parties to learn about OPDIV 

grant initiatives, funding opportunities, and proposed and actual policy changes. 

Others provide historical data. This information is updated periodically. The HHS Web 

site address for grant-related materials and links to OPDIVs is 

http://www.hhs.gov/grantsnet/. 

Application and Application Review Processes 

This section provides an overview of the following: 

• Funding opportunity announcements 

• Types of entities generally eligible to receive grants 

• Types of applications 

• The application submission process (including application forms, application 

receipt points and deadlines, and use of information in applications) 

• The objective review of applications. 

Several of these areas also pertain after award. For example, an organization must 

remain eligible in order to continue to receive funding. In addition, post-award 

changes may invoke requirements that in this section are identified as “application” 

requirements, e.g., undertaking an activity not contemplated at the time of award 

that might affect a historic property. 

Grants.gov and Funding Opportunity Announcements 

It is HHS policy to maximize competition for discretionary grants to the greatest 

extent practicable. As such, OPDIVs promote the widest and earliest possible 

dissemination of information for potential applicants concerning the availability of 

competing funding opportunities. A synopsis of each new competing funding 

opportunity is posted at Grants.gov FIND. Grants.gov FIND 

(http://grants.gov/applicants_grant_opportunities.jsp) is a government-wide 

 I-9 
electronic site that includes, in a single place, postings of available Federal grant and 

other financial assistance opportunities. Each synopsis includes a brief description of 

the funding opportunity, eligibility requirements, cost sharing or matching 

requirements, application deadline date, and other information that allows a potential 

applicant to determine whether it wants to read the funding opportunity 

announcement to obtain further details about the funding opportunity. 

All HHS funding opportunity announcements follow the standard government-wide 

format and must be available on the Internet.5 Each synopsis is required to provide 

an electronic link to the full funding opportunity announcement. For HHS, that link 

may be to the OPDIV or a program Web site, the Federal Register, or the NIH Guide 

for Grants and Contracts. An OPDIV also may choose to issue a notice in the Federal 

Register that indicates the availability of the funding opportunity announcement and 

its location (e.g., directing the reader to the OPDIV or program Web site). 

In addition, if the OPDIV can identify all eligible applicants, the OPDIV may send the 

funding opportunity announcement directly to each eligible organization (generally 

the business office with a copy to the PI/PD). This may be the case if a competition is 

limited to a certain class or group of eligible organizations (see “Eligibility” below); 

for example, a program may be limited, by statute, to States, or a funding 

opportunity may be limited to incumbent recipients, based on a justified limitation of 

competition. Synopses/funding opportunity announcements generally will allow 

applicants a minimum of 30 days to prepare and submit applications. 

There are several types of authorized exceptions to the requirements for use of 

Grants.gov FIND, Internet posting of an announcement, and/or the maximum time 

to prepare an application. The authorization is provided on a case-by-case basis 

according to an internal HHS justification process. The recognized exceptions include 

applications for single-source awards and urgent applications. 

A single-source application is one resulting from an OPDIV request to only one 

applicant. Urgent applications are ones required to fulfill immediate needs such as 

public health needs after a natural disaster. For urgent awards, which may be made 

on a single-source or limited-competition basis, OPDIVs are required to allow the 

maximum feasible time for application preparation. 

Because single-source (including urgent single-source) applications do not represent 

competitive funding opportunities, information about them is not posted at 

Grants.gov FIND. When an awarding office anticipates making a single-source award, 

the OPDIV is required to publish in the Federal Register a notice of its intent to make 

the award prior to or simultaneous with issuance of the award. 

 5

 The standard government-wide format was promulgated by the Office of 

Federal Financial Management, OMB, on June 23, 2003 (68 FR 37370). 

 I-10 
Eligibility 

Authorizing legislation and governing programmatic regulations specify eligibility for 

individual grant programs. In general, HHS grants may be awarded to domestic 

public or private, non-profit or for-profit organizations.6 Eligible organizations may 

include State, local, and Indian tribal governments; institutions of higher education; 

other non-profit organizations (including faith-based, community-based, and tribal 

organizations); and hospitals. In some cases, grants also may be made to foreign or 

international organizations. Eligibility for a particular funding opportunity 

announcement is specified in the Grants.gov FIND synopsis, with more detailed 

eligibility information found in the funding opportunity announcement. 

On the basis of a statute or regulation or a limitation, with appropriate justification, 

described in a funding opportunity announcement, an OPDIV may limit eligibility to, 

or exclude from eligibility, classes or types of entities. Examples are limitations on 

the participation of foreign entities, and programs under which only small businesses 

are eligible applicants. In addition to organizational eligibility, an OPDIV may include 

responsiveness criteria in a funding opportunity announcement. Responsiveness 

criteria are objective criteria, such as possessing a particular certification or, if 

specified by the OPDIV, not exceeding a stated page limitation. These are sometimes 

called “go-no-go” criteria. 

The applicant may be required to provide proof of its status by submitting 

documentation. For non-profit entities, except where the grant program’s authorizing 

statute sets particular limits, acceptable evidence of eligibility includes the following: 

• A copy of a currently valid Internal Revenue Service tax exemption certificate 

• A statement from a State taxing body, State attorney general, or other 

appropriate State official certifying that the applicant organization has a nonprofit status 

• A certified copy of the organization’s certificate of incorporation or similar 

document that clearly establishes non-profit status 

• Any of the above proof for a State or national parent organization and a 

statement signed by the parent organization that the applicant organization is 

a local non-profit affiliate. 

Any requirements, such as citizenship, affecting the eligibility of the PI/PD or others 

(e.g., trainees) will be specified in the funding opportunity announcement (which 

may provide a link or reference to another document in which the requirements are 

found). For example, for career awards, the individual to be trained must be a citizen 

or a non-citizen national of the United States or have been lawfully admitted for 

permanent residence at the time of award. A non-citizen national is a person who, 

although not a citizen of the United States, owes permanent allegiance to the United 

States. They generally are individuals born in U.S. outlying possessions (American 

Samoa and Swains Island) 

 6

 Section 1611 of Title 2 of the U.S.C. prohibits non-profit entities organized 

under (501)(c)(4) of the Internal Revenue Code that engage in lobbying activities 

from receiving Federal grants. 

 I-11 
• on or after the date of formal acquisition of the possession, or 

• to parents who are non-citizen nationals and have had a residence in the 

United States or one of its outlying possessions before the birth of that 

individual.7

In most cases, individuals are required to have the appropriate citizenship status 

when the award is made rather than when the application is submitted. For research 

grants, the applicant is required to determine that individuals identified as key 

personnel possess visas that will allow them to remain in this country long enough 

for them to be productive on the research project. Recipient organizations are 

expected to have policies, consistently applied regardless of the source of funds, to 

address this area. If a grant is awarded and an individual’s visa will not allow a long 

enough stay to be productive on the project, the grant may be terminated. Trainees 

must have been lawfully admitted for permanent residence at the time of 

appointment. This must be documented by the individual's possession of an alien 

registration receipt card I-151 or I-551. Individuals on temporary or student visas 

are not eligible to receive training grant (or fellowship) support. 

Upon receipt of applications, the awarding office performs an initial screening for 

eligibility. Unless an applicant is required to submit proof of eligibility, the authorized 

organizational representative’s signature on the application generally serves as 

assurance that the applicant is eligible to apply for and receive an award (e.g., a 

small business applying under the SBIR or STTR programs). However, an awarding 

office may independently verify the applicant’s status. 

If an applicant is found to be ineligible or if the applicant or application does not 

meet published responsiveness criteria, the OPDIV will return the application without 

further review. If a grant is awarded, in the post-award phase, the OPDIV monitors 

changes in recipient and project status to ensure continued eligibility. 

 7

 Title 8 Section 1101(a)(29) of the U.S.C. includes an additional criterion that is 

not applicable to this eligibility determination. 

 I-12 
Suspension and Debarment 

HHS regulations published in 45 CFR part 768 implement the government-wide 

debarment and suspension requirements for HHS’s non-procurement transactions. 

“Non-procurement transactions” include grants and cooperative agreements (as well 

as scholarships, fellowships, and loans). Organizations or individuals that are 

suspended, debarred, declared ineligible, or voluntarily excluded from eligibility for 

covered transactions by any Federal department or agency cannot, during the period 

of suspension, debarment, or exclusion, receive HHS grants or be paid from HHS 

grant funds, whether under a primary or lower-tier transaction. Because individuals 

who have been debarred, suspended, declared ineligible or who have been 

voluntarily excluded from covered transactions may not receive Federal funds for a 

specified period of time, charges made to HHS grants for such individuals (e.g., 

salary) are unallowable. 

Applicants are required to disclose if any of the following conditions apply to them or 

their principals, including PIs and other key personnel: 

• Within the 3-year period preceding the application, they have been convicted 

of, or had a civil judgment rendered against them for: 

h fraud or a criminal offense in connection with obtaining, attempting to 

obtain, or performing a public (Federal, State, or local) transaction or 

contract under a public transaction; 

h violation of a Federal or State antitrust statute; 

h embezzlement, theft, forgery, bribery, falsification, or destruction of 

records; or 

h false statements or receipt stolen property. 

• They are presently indicted or otherwise criminally or civilly charged by a 

governmental entity (Federal, State, or local) with commission of any of the 

offenses enumerated above. 

• Within a 3-year period preceding the application, they have had any public 

transaction (Federal, State, or local) terminated for cause or default. 

Disclosure of unfavorable information will not necessarily cause an OPDIV to return 

an application. If the applicant discloses unfavorable information, the application still 

may undergo objective review (see “Objective Review of Applications” in this 

section). If appropriate, the OPDIV will consider the information as part of the 

determination of whether to award a grant. The OPDIV also will consider any 

additional information or explanation that an applicant elects to submit with the 

disclosed information. If an awarding office makes an award and later determines 

that the recipient failed to disclose relevant information, the OPDIV may void the 

award, terminate the award for material failure to comply with the terms and 

 

8

 Consistent with the OMB guidance on debarment and suspension in 2 CFR part 180, 

the regulations at 45 CFR part 76 will be superseded, for HHS, by 2 CFR part 376. 

 I-13 
conditions of the award, or pursue any other available remedies, including 

suspension and debarment. 

In addition to reviewing any information submitted by the applicant, the GMO will 

determine whether the applicant is included on the Excluded Parties Listing System 

maintained by GSA.9 This system is a centrally maintained government-wide 

database that includes the names of organizations and individuals that have been 

debarred, suspended, declared ineligible, or been voluntarily excluded; the reasons 

for that status; and the duration of that status. 

A variety of “lower-tier” transactions also are subject to these requirements. 

Contracts (including individual consultants) under grants (where the contract 

requires the provision of goods or services that will equal or exceed $25,000) and all 

subawards (including consortium agreements) also are subject to these suspension 

and debarment rules. A recipient is required to comply with the requirements of 45 

CFR 76.300 through 76.365 as a condition of its award from HHS. The recipient must 

include a requirement in any covered transaction at the next lower tier to comply 

with those same regulatory provisions. One of those provisions is that, before 

entering into a covered transaction, the recipient or lower-tier participant must verify 

that the entity is not suspended or debarred or otherwise excluded. This requirement 

extends to trainees under an institutional training grant before their appointment. 

This verification may be accomplished by checking the Excluded Parties Listing 

System, collecting a certification from the organization or individual, or adding a 

clause or condition to the covered transaction with that entity. 

Delinquency on Federal Debt 

Any organization or individual that is indebted to the United States, and has a 

judgment lien filed against it for a debt to the United States, is ineligible to receive a 

Federal grant. Applicants are required to indicate in their applications if they are 

delinquent on any Federal debt. If the applicant discloses a delinquency, HHS may 

not award the grant until the debt is satisfied or satisfactory arrangements are made 

with the agency to which the debt is owed. In addition, once the debt is repaid or 

satisfactory arrangements made, an OPDIV will continue to take that delinquency 

into account when determining whether the applicant would be responsible with 

respect to an HHS grant, if awarded. 

Anyone who has been judged to be in default on a Federal debt and who has had a 

judgment lien filed against him or her should not be listed as a participant in an 

application for an HHS grant until the judgment is paid in full or is otherwise 

satisfied. No funds may be rebudgeted following an award to pay such an individual. 

The OPDIV will disallow costs charged to awards that provide funds to individuals in 

violation of this requirement. 

 9

 The information contained in the Excluded Parties Listing System is available in 

printed and electronic formats. The printed version is published monthly. Copies may 

be obtained by purchasing a yearly subscription from the Superintendent of 

Documents, U.S. Government Printing Office, Washington, DC 20402, or by calling 

the Government Printing Office Inquiry and Order Desk at 202-783-3238. The 

electronic version can be accessed on the Internet (http://www.epls.gov). 

 I-14 
Lobbying 

Applicants for (and recipients of) Federal grants, cooperative agreements, contracts, 

and loans are prohibited by 31 U.S.C. 1352, “Limitation on use of appropriated funds 

to influence certain Federal contracting and financial transactions,” from using 

appropriated Federal funds to pay any person for influencing or attempting to 

influence any officer or employee of an agency, a member of Congress, an officer or 

employee of Congress, or an employee of a member of Congress with respect to the 

award, extension, continuation, renewal, amendment, or modification of any of these 

instruments. These requirements are implemented for HHS in 45 CFR part 93, which 

also describes types of activities, such as legislative liaison activities and professional 

and technical services that are not subject to this prohibition. 

Applicants for HHS grants with total costs expected to exceed $100,000 are required 

to certify that they 

• have not made, and will not make, such a prohibited payment; 

• will be responsible for reporting the use of non-appropriated funds for such 

purposes; and 

• will include these requirements in consortium agreements, other subawards, 

and contracts under grants that will exceed $100,000 and will obtain 

necessary certifications from those consortium participants and contractors. 

Disclosure reporting is required after award as indicated in Part II of this policy 

statement. 

Application Process 

Types of Applications and Letters of Intent 

Under the project period system, a project may be approved for a multi-year period, 

but generally is funded in annual increments known as “budget periods.” This system 

provides the recipient with an indication of the OPDIV’s intent to non-competitively 

fund the project during the approved project period as long as required information 

is submitted, funds are available, and certain criteria are met. For some types of 

projects, e.g., construction, an award covering multiple years is issued at the outset 

at the fully funded amount. HHS uses the following types of applications and 

requests for funding under the project period system: 

• New Application—a request for financial assistance for a project or activity 

that is not currently receiving support, which must compete for support 

unless justified as a single-source application. 

• Competing Continuation Application—a request for funding to renew, by one 

or more additional budget periods (described as a “competitive segment”), a 

project period that would otherwise expire. This type of application is 

sometimes referred to as “renewal.” These applications must compete for 

support in the same manner as new applications. 

• Supplemental Application—a request for an increase in support in a current 

budget period for expansion of the scope of the approved project or program 

 I-15 
or to meet an unforeseen increase in costs. The request may specify 

budgetary changes required for the remainder of the project period as well as 

for the current budget period. Supplemental applications requesting a 

programmatic expansion (change in scope) must undergo objective review 

and generally are required to compete for support; requests for 

administrative supplements may be awarded without objective review or 

competition. 

• Revised (Amended) Application—an unfunded application that the applicant 

has modified following objective review and has resubmitted for a subsequent 

review cycle. 

• Non-Competing Continuation Application—a request for funding, whether the 

OPDIV terms the request an application or a progress or performance report, 

for funding the second or subsequent budget period within an approved 

competitive segment. A non-competing continuation application does not 

compete with other applications for support. 

Generally, funding opportunity announcements will invite the submission of full 

applications at the outset. However, an OPDIV may require or encourage submission 

of preliminary documents before submission of applications for initial (new) support. 

If pre-applications are used, they must be submitted as specified by the OPDIV in 

the funding opportunity announcement. Pre-applications may be required as a means 

of screening out, through an objective review process, those applications with little 

or no chance for Federal funding before applicants incur significant expenditures in 

preparing an application. 

OPDIVs may request submission of LOIs preliminary to submission of applications. 

LOIs generally are not required to include detailed information about a proposed 

project or application. Instead, LOIs are used to estimate the number of applications 

that may be submitted. When used in this way, potential applicants are not required 

to submit them, and, if an LOI is submitted, it is not binding and does not require 

the respondent to submit an application. 

Application Forms 

Exhibit 2 lists the application forms used by the OPDIVs. The forms vary by applicant 

or grant type and they may differ for non-competing continuation applications and 

other applications. These forms and associated instructions are available 

electronically at the specified Web site and, as appropriate, at the Grants.gov APPLY 

site (http://www.grants.gov/Apply). Questions about application forms and 

instructions may be directed to the OPDIV to which the application will be submitted. 

Exhibit 2. Required Forms for Applications 

Application title Form number Use/availability 

Application for Federal 

Assistance 

SF 424 Face page for applications from State, local, and Indian tribal 

governmental applicants for all types of grants, and 

nongovernmental applicants for construction and health 

services grants submitted through Grants.gov 

http://www.whitehouse.gov/omb/grants/grants_forms.html 

 I-16 
Exhibit 2. Required Forms for Applications 

Application title Form number Use/availability 

Public Health Service 

Grant Application for 

Use by State and Local 

Government Applicants 

and Nongovernmental 

Applicants for Health 

Services Projects 

PHS 5161-1, with 

budget and 

assurances 

applicable to nonconstruction (424-A 

and 424-B) or 

construction (424-C 

and 424-D) 

All applications, including non-competing continuation 

applications, from State, local, and Indian tribal governmental 

applicants and non-governmental applicants for construction 

and health services projects 

http://www.hhs.gov/forms/publicuse.html 

Research Grant 

Application 

SF 424 (R&R) Suite of forms for use as specified by the OPDIV when 

applying through Grants.gov 

Application for a Public 

Health Service Grant 

PHS 398 New and competing continuation applications for research 

project grants and cooperative agreements, program 

projects, centers, career awards, Kirschstein-National 

Research Service Awards institutional research training 

grants, research-related conference grants, and SBIR and 

STTR grants10 

Available at http://grants.nih.gov/grants/forms.htm

Application for Ruth L. 

Kirschstein National 

Research Service 

Award Individual 

Fellowship 

PHS 416-1 Kirschstein-National Research Service Award fellowships 

http://grants.nih.gov/grants/forms.htm

Public Health Service 

Non-Competing Grant 

Progress Report 

PHS 2590 Non-competing continuation applications for research project 

grants and cooperative agreements, program projects, 

centers, career awards, Kirschstein-National Research 

Service Awards institutional research training grants, 

research-related conference grants (when applicable), and 

SBIR and STTR grants. 

Available at http://grants.nih.gov/grants/forms.htm

Preparing an Application 

Regardless of any preliminary documentation required or submitted, to be 

considered for support, an applicant must be an eligible entity and must submit a 

complete application that complies with OPDIV instructions. In addition to indicating 

the substantive information required, OPDIVs may specify page limitations or other 

formatting requirements, whether for hard-copy or electronic applications. 

A complete new or competing continuation application typically includes a project 

description, detailed budget and budget justification, biographical sketches of key 

personnel, and other information specified in the funding opportunity announcement. 

The funding opportunity announcement (or related application package) may provide 

specific instructions for completion of these forms that differ from the standard 

instructions for completion.

 10 This form may continue to be used in accordance with OPDIV instructions until 

transition to use of Grants.gov is complete. 

 I-17 
In preparing an application, an applicant should ensure that it addresses 

requirements specified (or incorporated by reference) in the funding opportunity 

announcement that relate to the project or program narrative, public policy 

requirements, and the application budget. 

The same project may not be submitted concurrently to two PHS OPDIVs, a 

limitation that applies to the PHS OPDIVs only. Any such applications will be returned 

to the applicant without review. 

Public Policy Requirements 

Public policy requirements are requirements with a broader national purpose than 

that of the Federal sponsoring program or award that an applicant/recipient must 

adhere to as a prerequisite to and/or condition of an award. Public policy 

requirements are established by statute, regulation, or Executive order. In some 

cases they relate to general activities, such as preservation of the environment, 

while, in other cases they are integral to the purposes of the grant-supported 

project, such as protecting the welfare or identity of subjects in research projects. 

Some public policy requirements require an indication of intent to comply with the 

requirement if an award is made, others require submission of specific 

documentation before award (sometimes in the form of a certification or assurance 

or an environmental assessment), and still others require a demonstration of 

compliance that is an integral part of the application review for technical or scientific 

merit (e.g., the requirement in 45 CFR 46.111(a)(6) that, when appropriate, the 

research plan must make adequate provision for monitoring the data collected to 

ensure the safety of subjects). Applicants and recipients should take particular note 

of these requirements. If an applicant or recipient does not provide the required 

information or the information is incomplete or is otherwise not adequate, depending 

on the requirement the organization may be deemed ineligible for award, the award 

may be delayed, an award may be terminated, or other appropriate action may be 

taken by the OPDIV. 

The signature of the authorized organizational representative on the application 

indicates that the organization complies, or intends to comply, with all applicable 

public policy requirements specified in the funding opportunity announcement, 

generally by reference to another document such as application instructions or a 

grants policy statement. Some requirements (human subjects assurance, civil rights 

assurance, environmental analysis) are in the form of separate documents that an 

applicant must have on file with the applicable HHS office before an award may be 

made. Other requirements may be satisfied by means of “just-in-time” 

documentation submitted, at OPDIV request, by those applicants being considered 

for award. 

Part II contains general guidance to help the applicant/recipient determine which 

public policy requirements apply to its activities after award, including whether a 

requirement should be included in subawards or contracts under the grant. 

Research-Related Requirements 

Just-in-time procedures may be used in relation to requirements for submission of 

certification of IRB approval of the project’s proposed use of human subjects, 

verification of IACUC approval of the project’s proposed use of live vertebrate 

animals, and evidence of compliance with the requirement for education in the 

 I-18 
protection of human research participants. Applications from organizations with 

approved Animal Welfare Assurances will be considered incomplete if they do not 

contain the information concerning the use of vertebrate animals required as part of 

the application (see application instructions for completing the specific points that 

need to be addressed). In the case of apparent or potential violation of the policy, 

the application may be referred back to the applicant for further IACUC review. 

The funding opportunity announcement will specify the timing and nature of required 

just-in-time submissions. These requirements differ from any need to describe the 

involvement of human subjects or animals in an application, which is reviewed by the 

objective reviewers. 

In addition, several OPDIVs have policies concerning the inclusion of women, 

minorities, and children as subjects in their grant-supported research. These policies, 

which implement Section 492B of the PHS Act, 42 U.S.C. 289 a-2, require that 

women and members of minority groups and their subpopulations be included in 

OPDIV-supported research projects involving human subjects, unless a clear and 

compelling rationale and justification establishes that inclusion is inappropriate with 

respect to the health of the subjects, the purpose of the research, or other 

circumstances. When these policies apply (as specified in the funding opportunity 

announcement), the applicant is required to address inclusion of these groups in the 

application narrative, and the applicant’s plans will be assessed as part of the 

objective (peer) review process. Failure to comply with this policy or to adequately 

address use of human subjects and animals may adversely affect the score for 

technical merit, which may result in the OPDIV not making an award. 

National Environmental Policy Act 

NEPA, as amended, 42 U.S.C. 4331 et seq., establishes national policy goals and 

procedures to protect and enhance the environment, including protection against 

natural disasters. To comply with NEPA for its grant-supported activities, HHS 

requires the environmental aspects of construction grants (and certain nonconstruction projects as specified by the OPDIV) to be reviewed and evaluated before 

final action on the application. 

If the OPDIV determines that NEPA applies (or may apply), the OPDIV will address 

NEPA requirements in the funding opportunity announcement. If the OPDIV has not 

indicated in the funding opportunity announcement that NEPA applies, no 

environmental analysis is necessary, unless, in an unusual situation, the applicant 

anticipates a significant environmental consequence or, following receipt of an 

application, an OPDIV official indicates the need for an environmental analysis. In 

those cases, an environmental analysis must be provided with the application or as 

requested by the OPDIV. An environmental analysis means a written review that 

indicates the expected environmental effects resulting from the proposed action, 

defines the current and future implications of those effects, and lists any proposed 

actions or safeguards to avoid or reduce any negative environmental effects. If NEPA 

applies, the application must be accompanied by the applicant’s own separately 

bound environmental analysis to facilitate review and evaluation for environmental 

concerns before approval or other action on the application. 

Public Disclosure 

 I-19 
Section 102 of NEPA, 42 U.S.C. 4332, and EO 11514 (March 5, 1970) provide for 

public comment and participation in the environmental impact review process. If it is 

determined that there is an environmental impact, applicants are required to publicly 

disclose the project in a newspaper or other publicly available medium and to 

describe its environmental impact concurrent with notification to the SPOC (see 

“Intergovernmental Review under Executive Order 12372” in Part I). An example of 

a suitable disclosure statement follows: 

Notice is hereby given that the Uptown Community Health Center proposes to 

construct additional space, partially utilizing Federal funds. The proposed 

construction project is the addition of 2,700 square feet connected to the existing 

Allen Building, which is located at 5333 Main Street, Downtown, Ohio. 

The Uptown Community Health Center has evaluated the environmental and 

community impact of the proposed construction. There will be construction noise 

and increased construction traffic during the construction period. No significant 

permanent environmental impacts are foreseen. All building permits and zoning 

approvals have been obtained. In accordance with Executive Order 11514 

(March 5, 1970), which implements the National Environmental Policy Act of 

1969, as amended, any individual or group may comment on, or request 

information concerning, the environmental implications of the proposed project. 

Communications should be addressed to the Uptown Community Health Center, 

and must be received by (date). The Federal grant application may be reviewed 

at 5333 Main Street, during normal working hours. 

Preservation of Cultural and Historic Resources 

Under Section 106 of the National Historic Preservation Act (16 U.S.C. 470 et seq., 

agencies must consider the effect on historic properties before making a decision on 

whether to fund a project. Historic properties include any district, site, building, 

structure, or object that is listed on, or is eligible for listing on, the National Register 

of Historic Places (National Register). In addition, the Advisory Council on Historic 

Preservation must be afforded a reasonable opportunity to comment on such 

undertakings. The purchase, construction, or alteration/renovation of a facility with 

Federal funds, whether that activity is the purpose of the project or is one activity 

under a grant with a broader purpose (e.g., alteration of a facility under a research 

project), is an “undertaking” as that term is defined under 36 CFR 800.16(y). 

However, these are not the only activities that may result in the need to comply with 

Section 106. The procedures to be followed by Federal agencies in complying with 

Section 106 are set forth in the Council’s regulations at 36 CFR part 800. 

Pursuant to the regulations at 36 CFR part 800, before deciding to make an award, 

the OPDIV approving official for a grant-funded project or program must determine 

the project’s or program’s effect on historic properties in consultation with the 

involved State Historic Preservation Officers, Tribal Historic Preservation Officers, 

representatives of the local government, affected Indian tribes and Native Hawaiian 

organizations, the applicant organization, and other interested parties. In order for 

an OPDIV to carry out these responsibilities, applicants (and recipients) must identify 

to the OPDIV any property listed or eligible for listing on the National Register of 

Historic Places that will be affected by the award. Generally this will be at the time of 

application, but may not be known until after award as a result of a planned postaward change. 

 I-20 
The term “effect” is defined under 36 CFR 800.16(i) as an “alteration to the 

characteristics of a historic property qualifying it for inclusion in or eligibility for the 

National Register.” The project’s impact on the property’s use, character, location, 

and setting, including whether it will have an adverse effect, are considered when 

determining its effect on the historic property. The project or program will be 

considered to have an adverse effect if it will endanger those qualities that make the 

property eligible for inclusion in the National Register. 

If the undertaking will have an adverse effect on a historic property, the consultation 

process must proceed as provided under 36 CFR 800.6 in the effort to develop either 

a memorandum of agreement or a programmatic agreement detailing the steps 

necessary to avoid, minimize, or mitigate the adverse effects. In cases where the 

consultation is terminated without an agreement to resolve the adverse effects, the 

OPDIV will follow the applicable requirements of 36 CFR 800.7. These requirements 

must be satisfied before approval of the application or a post-award change to an 

approved application. 

Under the Council’s regulations, applicants/recipients may initiate the Section 106 

compliance consultations when authorized to do so by the OPDIV. If the OPDIV 

provides that authorization, it must notify the involved State Historic Preservation 

Officers, Tribal Historic Preservation Officers, and other consulting parties that the 

applicant has been given that authority. The OPDIV remains legally responsible for 

all findings and determinations made on its behalf. Each organization that plans to 

use OPDIV funds for purchase, construction, or renovation of a facility, other activity 

specified by the OPDIV, or activity deemed by the applicant to have an effect on a 

historic property must ensure that it has provided complete and accurate 

documentation to assist the agency with meeting its Section 106 compliance 

responsibilities. Failure to obtain this clearance and make this assurance will delay 

action on an application or change request. The State Historic Preservation Liaison 

Officer or the National Trust for Historic Preservation may be contacted for additional 

details. 

Protection of Wetlands 

EO 11990 provides that federally funded construction and improvements minimize 

the destruction, loss, or degradation of wetlands. The EO provides that, in 

furtherance of Section 101(b)(3) of NEPA (42 U.S.C. 4331(b)(3)), Federal agencies, 

to the extent permitted by law, must avoid undertaking or assisting with new 

construction located in wetlands unless the head of the agency finds that there is no 

practicable alternative to such construction, and that the proposed action includes all 

practicable measures to minimize harm to wetlands that may result from such use. 

In making this finding, the head of the agency may take into account economic, 

environmental, and other pertinent factors. The public disclosure requirement 

described above also pertains to early public review of any plans or proposals for 

new construction in wetlands. 

 I-21 
Uniform Relocation Act and Real Property Acquisition Policies Act 

The Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 

(the Uniform Relocation Act), 42 U.S.C. 4601 et seq., applies to all programs or 

projects undertaken by Federal agencies or with Federal financial assistance that 

cause the displacement of any person. 

The HHS requirements for complying with the Uniform Relocation Act are set forth in 

49 CFR part 24. Those regulations include uniform policies and procedures regarding 

treatment of displaced people. They encourage entities to negotiate promptly and 

amicably with property owners so property owners’ interests are protected and 

litigation can be avoided. 

The Application Budget 

Applicants generally will be required to prepare a detailed budget as part of the 

application consistent with instructions in the funding opportunity announcement and 

application instructions. Among other things, applicants need to understand the 

types of costs that are allowable under the program or award, the cost principles to 

which it will be subject, differences between direct and indirect costs, circumstances 

requiring establishment of an indirect cost rate or research patient care cost rate, 

and any requirement for non-Federal participation (in the form of matching or cost 

sharing). 

In general, HHS discretionary grant awards provide for reimbursement of actual, 

allowable program/project costs incurred. Except for those types of awards for which 

HHS will not reimburse indirect costs as specified below, program/project costs 

consist of allowable direct costs plus the allocable portion of indirect costs of the 

organization, less applicable credits (as described in Part II and in the cost 

principles). A “direct cost” is any cost that can be specifically identified with a 

particular project, program, or activity or that can be directly assigned to such 

activities relatively easily and with a high degree of accuracy. Direct costs include, 

but are not limited to, salaries, travel, equipment, and supplies directly benefiting 

the grant-supported project or activity. Most organizations also incur costs for 

common or joint objectives that, therefore, cannot be readily identified with an 

individual project, program, or organizational activity. These costs are identified as 

“indirect costs” or “facilities and administrative costs.” They generally include 

facilities operation and maintenance costs, depreciation, and administrative 

expenses. Organizations must have or negotiate an indirect cost rate to support a 

request for reimbursement of indirect costs (with limited exceptions specified below). 

 I-22 
The various sets of government-wide (or, in the case of hospitals, HHS) cost 

principles establish the general standards for the allowability, including allocability, of 

costs and provide detailed guidance on the cost accounting treatment of costs as 

direct or indirect costs. Applicability of a particular set of cost principles depends on 

the type of organization making the expenditure. For example, if a State government 

recipient collaborates with a university as a contractor under the grant, the State 

would be subject to the cost principles for States, while the university would be 

subject to the cost principles for institutions of higher education. The allowability of 

costs also is subject to any requirements or limits established in the governing 

statute, program regulations, or the terms and conditions of awards. Because these 

considerations apply throughout the grants process, they are addressed in detail in 

Part II. 

Indirect Costs 

If indirect costs are reimbursable under an award, applicants may request indirect 

costs in their applications. Indirect costs should not be requested in applications for 

the following types of awards: 

• Construction grants 

• Conference grants 

• Fellowships. 

The following types of organizations may not request indirect costs: 

• Federal institutions 

• International or foreign organizations if the grant will be performed entirely 

outside the territorial limits of the United States (indirect costs may be paid to the 

American University, Beirut, which is not considered a foreign organization, and 

the World Health Organization). 

For other types of awards and organizations, OPDIVs will not reimburse indirect costs 

unless the recipient has an indirect cost rate covering the applicable activities and 

period. Indirect cost rates are negotiated by DCA, DFAS in the Office of Acquisition 

Management and Policy, NIH (responsible for negotiating indirect cost rates for forprofit entities receiving awards from HHS), or other Federal agency with cognizance 

for indirect cost rate negotiation. However, as indicated in OMB Circular A-87, certain 

governmental organizations other than Indian tribal governments are not required to 

submit their indirect cost rate proposals to the Federal government, but must retain 

the documentation related to their indirect cost requests for audit purposes. Further, 

awarding offices will not require a recipient to establish an indirect cost rate if the 

organization’s total operations consist of a single grant-supported project or if the 

organization appropriately and consistently treats all costs as direct costs to projects 

and accounts for them as such. In the latter case, the GMO must be satisfied that 

the organization’s accounting system can adequately identify and support all costs as 

direct costs to the project or program. This includes being able to identify and 

segregate costs on the basis of a process that assigns costs commensurate with the 

benefits provided to individual projects or programs. 

 I-23 
If an organization is advised by the GMO of the need to establish a rate, the GMO will 

refer the organization to the appropriate office. Indirect cost proposals must be 

prepared in accordance with the applicable cost principles and guidance provided by 

the cognizant office or agency. Further information concerning the establishment of 

indirect cost rates and the reimbursement of indirect costs may be obtained from 

DCA or DFAS. 

Even if an organization has an established indirect cost rate, under training grants 

(including education grants and career awards) to all types of entities other than 

State, local, or Indian tribal governmental agencies, OPDIVs reimburse indirect costs 

at a fixed rate. Therefore, when requesting indirect costs, these applicants should 

budget indirect costs at a rate of 8 percent of modified total direct costs, exclusive of 

tuition and fees, expenditures for equipment, and subawards and contracts in excess 

of $25,000. Training grant applications from State, local, or Indian tribal 

governmental agencies may request full indirect cost reimbursement. State 

universities and hospitals are not considered governmental agencies for this purpose. 

Matching or Cost Sharing 

If the funding opportunity announcement specifies that matching or cost sharing is 

required, it also will specify the following: 

• Whether the inclusion of matching or cost sharing in the application is an 

eligibility requirement or is an evaluation criterion 

• The nature of the requirement, e.g., whether it is a fixed percentage or the 

OPDIV cannot fund more than a specified percentage of costs 

• Required documentation, such as letters of commitment. 

The terms “matching” and “cost sharing” are often used interchangeably. However, 

“matching” usually refers to a statutorily specified percentage, whether specified as a 

fixed or minimum percentage of non-Federal participation in allowable program or 

project costs that must be contributed by a recipient in order to be eligible for 

Federal funding or a not-to-exceed percentage of Federal participation. “Cost 

sharing” refers to any situation in which the recipient shares in the costs of a project 

other than as statutorily required matching. This includes situations in which 

contributions are voluntarily proposed by an applicant and accepted by the OPDIV by 

inclusion in the approved budget as shown in the NoA. 

Unless restricted by statute or regulation, matching or cost sharing may be provided 

as direct and/or indirect costs, consistent with the recipient’s accounting system—

and its usual method of charging for similar items—and any restrictions or limitations 

in the applicable cost principles. Recipient contributions may be derived from any 

non-Federal source; from Federal sources if received as fees, payments, or 

reimbursements for the provision of a specific service, such as patient care 

reimbursements received under Medicare or Medicaid; or from other program 

income, if authorized by the OPDIV (see Part II). Otherwise, unless there is specific 

statutory authority, Federal funds may not be used to match HHS grant funds. 

The source and amount of costs and/or the value of third-party in-kind contributions 

proposed by the applicant to meet a matching or cost-sharing requirement must be 

identified in the application budget. The determination of allowability of costs for 

 I-24 
matching or cost-sharing purposes is based on the same requirements, including the 

cost principles, that apply to use of Federal funds. Also, the classification of a 

contributed cost as either direct or indirect must be consistent with the classification 

of other costs incurred by the recipient for the same purpose in like circumstances. 

Guidance on the valuation of in-kind contributions is found in 45 CFR 74.23, 45 CFR 

92.24, and Part II of this policy statement. 

Research Patient Care Costs 

HHS provides funds for research patient care costs under grants to hospitals to cover 

the costs of routine services for inpatients or ancillary services for inpatient or 

outpatient subjects/volunteers involved in research studies. In order to receive 

reimbursement for research patient care costs, any hospital that, as a direct 

recipient of OPDIV funds, expects to incur more than $100,000 in patient care costs 

in any single budget period on a single OPDIV grant must either have in place, or 

take steps to negotiate, a research patient care rate agreement with the cognizant 

DCA office. Detailed information on research patient care costs is included in Part II. 

Third-Party Reimbursement 

Under health services delivery programs, OPDIV funding may serve as seed money 

to allow recipients to develop necessary capabilities and the ability to obtain funding 

from non-Federal sources or may be conditioned on recipients maximizing their 

funding from other sources, with Federal funding for the difference between those 

amounts and their costs of operation. In addition to any required narrative discussion 

of applicant plans to seek third-party reimbursement for delivery of health services 

and establishment of fee schedules to charge beneficiaries according to their ability 

to pay, the applicant may be required to show in the application budget the amounts 

expected to be collected from third-party payors (program income). More detailed 

discussion of program income is included in Part II. 

Submitting an Application 

Many OPDIV programs accept applications electronically through Grants.gov APPLY. 

Grants.gov provides a secure and reliable government-wide single portal for applying 

for Federal grants electronically, simplifying the grant application process and 

reducing paperwork. For OPDIV programs allowing submission of applications 

through Grants.gov, the OPDIV will post an application package at Grants.gov APPLY 

that includes the funding opportunity announcement, the required forms, and 

submission instructions. However, even if an OPDIV accepts applications 

electronically, an applicant may choose to submit its application in hard copy. 

Funding opportunity announcements also will indicate the date and time by which a 

competing application must be submitted in order to be considered as part of that 

competition, the address to which the application must be submitted (which may be 

a contractor), and, if hard copy, the number of copies. Generally, OPDIVs will require 

submission of an original and two copies of an application. 

All applications must include a DUNS number, which is obtained from Dun & 

Bradstreet (D&B) at 1-866-705-5711 or at 

http://ccr.dnb.com/ccr/pages/CCRSearch.jsp. To determine if an organization 

already has a DUNS number or to obtain a DUNS number, the organization should 

contact D&B. There is no charge to obtain a DUNS number. 

 I-25 
Before using Grants.gov APPLY, an applicant organization must register with Central 

Contractor Registration (http://www.ccr.gov/) and the credential provider. Central 

Contractor Registration can be accomplished online or by telephone (1-888-227-

2423). The DUNS number is required before initiating registration with Central 

Contractor Registration. Specific details about Central Contractor Registration and 

credential provider registration associated with the use of Grants.gov are available at 

http://www.grants.gov/GetStartedRegister?type=organization. Organizations are not 

required to register with Central Contractor Registration if they submit applications 

by any means other than through Grants.gov, e.g., in hard copy. 

For funding opportunity announcements with common deadline dates for application 

submission, to be considered timely, an application must be sent on or before the 

deadline date. The established receipt or deadline date may be waived only in 

extenuating circumstances such as extreme weather (e.g., floods or hurricanes), 

widespread disruptions of mail service, or disruptions of electronic or other services. 

The deadline is the same for applications submitted electronically. For applications 

submitted through Grants.gov, the OPDIV will determine whether an application was 

submitted before the deadline based on the time it is received and clocked in at the 

Grants.gov portal. Applications may be sent through the United States Postal Service 

or delivered by a courier delivery service. Some OPDIVs will not accept applications 

hand-carried by individuals. For hard-copy applications, if sent on time to the 

address specified in the funding opportunity announcement (with documented proof 

of mailing) but received after the deadline, an application can be accepted for review 

only if it is received in time for orderly processing. If the receipt date falls on a 

weekend or a Federal holiday, the deadline date is extended to the next business 

day. If an application is sent to any address other than that specified in the funding 

opportunity announcement, it may result in a delay in processing or the application 

not being reviewed. 

Executive Order 12372 and Public Health System Reporting 

Requirements 

Certain HHS program/activities are subject to the requirements of EO 12372, as 

amended, “Intergovernmental Review of Federal Programs,” and the HHS 

implementation at 45 CFR part 100, and to other intergovernmental cooperation 

provisions. These requirements allow State and local governments to provide input 

on applications submitted (or to be submitted) for funding consideration. If EO 

12372 might apply to a program or applicants or applications under the program, the 

following information will be included in the funding opportunity announcement: 

• Even if a program is covered by EO 12372, not all States participate in this 

process. To determine whether it must comply with a State process under 

EO 12372, an applicant should check the information maintained by OMB at 

its Web site (http://www.whitehouse.gov/omb/grants/spoc.html). If the State 

does not participate, no SPOC contact will be listed. Applications from 

federally recognized Indian tribal governments are not subject to EO 12372 

requirements, even under covered programs. 

• Before an award decision, the OPDIV must allow adequate time—60 days 

from the established deadline date for receipt of applications for a new or 

other competing application, or 30 days from the established deadline date 

 I-26 
for receipt of the application for a non-competing continuation application—for 

completion (or expiration) of the State process. 

The primary purpose of the Public Health System Reporting requirements is to 

provide State and/or local health agencies with information on proposed in-State 

grant activity by certain applicants applying for funding under health care delivery 

programs. When applicable, the applicant must prepare and submit a Public Health 

System Impact Statement. Applicants are required to submit the following 

information to the head of the appropriate State and local health agencies in the 

areas to be impacted no later than the application receipt due date: 

• A copy of the application face page 

• A summary of the project, not to exceed one page, which describes the 

population to be served and the services to be provided, and describes the 

coordination planned with the appropriate State and local health agencies 

(the application abstract may be substituted for the one-page Public Health 

System Impact Statement). 

Although these requirements are specific to health care delivery programs, they are 

related to the EO 12372 requirements. The linkage occurs when a State and/or local 

health official wants to review an application, in whole or in part, submitted under 

these programs. In that case, the official must contact the SPOC for a copy of the 

application. 

Use of Application Information 

Applicants are discouraged from submitting information considered proprietary 

unless it is deemed essential for proper evaluation of the application. However, if the 

application contains information that the applicant organization considers to be trade 

secrets, information that is commercial or financial, or information that is privileged 

or confidential, the pages containing that information should be identified as 

specified in the funding opportunity announcement or application instructions. 

When non-Federal reviewers are used, the funding opportunity announcement or 

application instructions will specify that applicants have the option of omitting 

specific salary rates or amounts for individuals specified in the application budget 

and, if required by the OPDIV, Social Security numbers for individuals. For hard-copy 

applications, this can be accomplished by including the information in the original, 

but omitting it from the application copies. The copies may include summary salary 

information. For electronic applications, the information must be supplied to the 

OPDIV as part of the submission. The funding opportunity announcement will specify 

if the applicant should indicate, in the application or in a separate form, whether it 

wants to use that option. If the detailed information is an integral part of the 

application, the OPDIV will ensure that the information is not shared with reviewers. 

The OPDIV will protect the information contained in an application from unauthorized 

disclosure, consistent with the need for objective review of the application and the 

requirements of the Freedom of Information Act and the Privacy Act. However, if a 

grant is awarded as a result of or in connection with an application, the Federal 

government has the right to use or disclose the information to the extent authorized 

by law. Post-award considerations concerning release of information and access to 

research data are addressed in Part II of this policy statement. 

 I-27 
Freedom of Information Act 

The Freedom of Information Act, 5 U.S.C. 552, provides individuals with a right to 

access certain records in the possession of the Federal government. The government 

may withhold information pursuant to the exemptions and exclusions contained in 

the act. The exact language of the exemptions can be found in the act. Additional 

guidance on the exemptions and how they apply to certain documents can be found 

in the HHS regulations implementing the FOIA (45 CFR part 5). (Also see the HHS 

Web site http://www.hhs.gov/foia/.) 

OPDIVs generally do not release trade secrets and commercial, financial, and 

otherwise intrinsically valuable items of information that are obtained from a person 

or organization and are privileged or confidential; information that, if released, would 

adversely affect the competitive position of the person or organization; and patent or 

other valuable commercial rights of the person or organization. 

OPDIVs generally will withhold the following types of records or information related 

to an application in response to a FOIA request: 

• Pending competing grant applications 

• Unfunded new and competing continuations and competing supplemental 

applications 

• Evaluative portions of site visit reports and objective review summary 

statements, including scores. 

If, after reviewing a FOIA request, an OPDIV has reason to believe that information 

in its records could reasonably be considered releasable, the appropriate OPDIV 

Freedom of Information office will notify the applicant (recipient), through the PI, 

before the information is released. The PI/PD will be given an opportunity to identify 

potentially patentable or commercially valuable information that the PI/PD believes 

should not be disclosed. After OPDIV consideration of the response, the PI/PD and 

applicant (recipient) will be informed if the OPDIV does not agree with the PI’s/PD’s 

position. If a document contains both disclosable and nondisclosable information, the 

nondisclosable information will be deleted and the balance of the document will be 

disclosed. This restriction does not limit the Federal government’s right to use the 

information if it is obtained without restriction from another source. 

The HHS regulations implementing FOIA provide that only designated Freedom of 

Information officers may deny requests for information. Requests for information, 

the release of which is believed to be exempt under FOIA, are referred to the OPDIV 

Freedom of Information officer along with written documentation of the rationale for 

nondisclosure. If the Freedom of Information officer determines that the requested 

information is exempt from release under FOIA, the requester may appeal that 

determination to the Deputy Assistant Secretary for Public Affairs (Media), HHS. 

Additional information on the FOIA process is available at OPDIV Web sites. 

Post-award considerations concerning release of information and access to research 

data are addressed in Part II of this policy statement. 

 I-28 
Privacy Act 

The Privacy Act of 1974, 5 U.S.C. 552a, and its implementing regulations (45 CFR 

part 5b) provide certain safeguards for information about individuals maintained in a 

system of records (i.e., information may be retrieved by the individual’s name or 

other identifying information). These safeguards include the rights of individuals to 

determine what information about them is maintained in Federal agencies’ files (hard 

copy or electronic) and how it is used; to have access to such records; and to 

correct, amend, or request deletion of information in their records that is inaccurate, 

irrelevant, or outdated. 

Records maintained by OPDIVs with respect to grant applications, grant awards, and 

the administration of grants may be subject to the provisions of the Privacy Act. For 

example, OPDIVs that maintain or access any such records by name of an individual, 

such as by the name of the PI/PD, are subject to the Privacy Act. 

Parties other than PIs/PDs may request the release of Privacy Act records. Such 

requests are processed in the same manner as FOIA requests. For example, 

information requested by co-investigators in grant applications is released to them 

only when required under FOIA because they have no right of access under the 

Privacy Act. When releasing information about an individual to a party other than 

that individual, OPDIVs will balance the individual’s right to privacy with the public’s 

right to know as provided by the FOIA. 

Records maintained by non-Federal parties ordinarily are not subject to the 

requirements of 45 CFR part 5b. 

Objective Review of Applications 

Applications under discretionary grant programs, whether received in response to a 

funding opportunity announcement, solicited from a single source, or received as 

unsolicited requests for funding, are subject to objective review. Objective review is 

an advisory review of discretionary grant applications conducted by a minimum of 

three unbiased reviewers with expertise in the programmatic area for which 

applications are submitted. 

The review is intended to provide advice to the individuals responsible for making 

award decisions. Objective review is essential to ensuring selection of applications 

that best meet the needs of the program consistent with published evaluation criteria 

and providing assurance to the public that the evaluation process is impartial and 

fair. 

Peer review is a form of objective review required by statute. It is an assessment of 

scientific or technical merit of applications by individuals with knowledge and 

expertise equivalent (peer) to that of the individuals whose applications of support 

they are reviewing. The statute may specify the types of reviewers or composition of 

review groups and include other requirements related to the approval of applications, 

e.g., review by a National Advisory Council or equivalent body that performs a 

second level of review for programmatic considerations that augments the results of 

the peer review process. 

Application review criteria must be published as part of the funding opportunity 

announcement. Typical review criteria may include the approach to the proposed 

 I-29 
project or program, whether to meet a health need or carry out an investigatorinitiated research project; the potential of the program or project to contribute to 

meeting the objectives or purpose of the supporting program; the method used to 

evaluate project or program results; resources of the applicant organization, e.g., 

facilities, and the capabilities of its staff, including the PI/PD; and reasonableness 

and appropriateness of the budget. Reviewers also will review proposed involvement 

of human subjects and vertebrate animals, as applicable, and assess compliance with 

specified public policy requirements, e.g., inclusion of women and minorities in 

research. IRB approval may be required before objective review of a new or 

competing continuation application unless the OPDIV has implemented just-in-time 

procedures. 

Applications received in response to the same funding opportunity announcement 

generally are scored individually and then ranked with other applications reviewed by 

the same review group in their order of relative programmatic, technical, or scientific 

merit. The highest ranked applications are those that receive priority consideration 

for award within available funding. Authorized program officials (“approving 

officials”) make final award decisions from among those applications receiving a 

favorable objective review and, where applicable, National Advisory Council 

recommendation. OPDIV approving officials also may apply other factors, e.g., 

geographical distribution, as specified in the funding opportunity announcement. The 

decision to fund an application will be communicated to the applicant by issuance of 

a NoA. The decision not to fund an application will be communicated by letter. 

Depending on OPDIV procedures, the letter may include a summary of the review 

(“summary statement”) and may be sent to the PI/PD and/or to the person who 

signed the application as the official authorized to obligate the applicant. A copy of a 

letter transmitting a summary statement also will be provided to the individual 

named as the PI/PD for the project covered by the application if that individual is not 

the individual that signed the application. 

If an application has received a favorable objective review but is not expected to be 

funded in the current cycle due to funding constraints, the application may be held 

for one or more additional cycles and compete with other applications submitted for 

that subsequent cycle as long as the subsequent cycle(s) requirements remain 

unchanged from those under which the application was originally submitted. If an 

application is unsuccessful, under programs that have annual review cycles or 

multiple reviews within a year, the applicant may submit a revised application for 

review in a future review cycle. Some OPDIVs limit the number of times an 

application may be revised and resubmitted (see Part IV for any OPDIV limitations). 

Disposition of Applications 

All incomplete applications, ineligible, or otherwise non-compliant applications, and 

applications determined to be non-responsive to funding opportunity announcement 

requirements will not be reviewed. An applicant may withdraw an application from 

consideration at any time before an award is issued. 

An applicant whose application receives a favorable review will be notified of 

additional information that it may be required to submit or other actions it or the 

OPDIV may or must take. The process leading to an award, including the business 

management review performed by the GMO, is described in the next section, 

“Business Management Reviews and Other Pre-Award Activities.” 

 I-30 
An unsuccessful applicant will be advised by letter (sent to the individual signing the 

application on behalf of the organization) that its application will not be held for 

further consideration or be funded. The decision not to award a grant, or to award a 

grant at a particular funding level, is discretionary and is not subject to appeal to any 

OPDIV or HHS official or board. 

Business Management Reviews and Other Pre-Award Activities 

Applications receiving a favorable objective review that an OPDIV is considering for 

funding are reviewed for other considerations. These include, as applicable, cost 

analysis of the project/program budget, assessment of the applicant’s management 

systems, ensuring continued applicant eligibility, and compliance with any public 

policy requirements, including those requiring just-in-time submissions. The 

applicant may be asked to submit additional information (such as an updated budget 

or “other support” information or verification of IACUC review) or to undertake 

certain activities (such as negotiation of an indirect cost rate) in anticipation of an 

award. However, even at this point in the process, such requests do not guarantee 

that an award will be made. Following review of all applicable information, the OPDIV 

approving and business management officials will determine whether an award can 

be made, if special conditions are required, and what level of funding is appropriate. 

Although these reviews and determinations occur before an awarding office makes a 

new or competing extension award, recipients must continue to comply with 

eligibility and public policy requirements and maintain adequate management 

systems throughout the period of support. 

Assurances of Compliance 

Civil Rights 

Before an awarding office may make an award to a domestic organization, the 

authorized organizational representative must assure, by means of the signature on 

the application, that the organization has on file with OCR an Assurance of 

Compliance with the statutes enforced by OCR. The assurance, Form HHS 690, is 

filed for the organization and is not required for each application. If the application 

has been recommended for funding and the applicant organization does not have an 

Assurance of Compliance on file with OCR, it will receive, from the awarding office, 

the required form and instructions for completion and submission. 

Domestic organizations that receive funding from recipients as subrecipients or 

contractors under grants rather than directly from HHS also are required to file an 

HHS 690. The recipient is responsible for determining whether those organizations 

have the required assurance on file and, if not, ensuring that it is filed with OCR. 

Human Subjects and Animal Welfare 

Under just-in-time procedures, following objective review, applicant organizations 

should proceed with IRB review for those applications that have not yet received IRB 

approval and which the OPDIV has indicated may be in a fundable range. 

If, at the time of award, a recipient does not have an applicable assurance approved 

by OHRP and certification of IRB review and approval, the awarding office will place a 

restriction on the award so that no human subjects research can be conducted or 

 I-31 
supported until the assurance and certification of IRB review and approval have been 

obtained and accepted. 

The PHS Policy on Humane Care and Use of Laboratory Animals (the PHS Policy) 

requires applicants proposing to use vertebrate animals in HHS-supported activities 

to file a written Animal Welfare Assurance with OLAW. An awarding office will not 

make an award for research involving live vertebrate animals unless the applicant 

organization and all performance sites are operating in accordance with an approved 

Animal Welfare Assurance and provide verification that the IACUC has reviewed and 

approved those sections of the application that involve use of vertebrate animals, in 

accordance with the requirements of the PHS policy. If an application is selected for 

award and the verification of IACUC review has not been submitted, the awarding 

office will contact the organization with instructions for negotiating an assurance or 

submitting the IACUC verification. 

Cost Analysis 

The GMO will ensure that a cost analysis is performed on any application that 

requires a detailed budget. Cost analysis involves obtaining cost breakdowns, 

validating cost data, evaluating specific elements of cost, and examining data to 

determine the necessity for, and the reasonableness and allowability of, the costs 

included in the application budget. The extent of cost analysis depends on the 

complexity of the project, prior experience with the applicant, and other factors. 

Information on the applicable cost principles and on allowable and unallowable costs 

is provided in Part II. 

Assessment of Financial and Other Management Systems 

In addition to considering the specific information provided in the application, the 

GMO determines the adequacy of the applicant’s financial and business management 

systems, including property management and procurement systems, that will 

support the expenditure of and accountability for grant funds if an award is made. 

Applicants/recipients are expected to have systems, policies, and procedures in place 

by which they manage grant funds and grant-supported activities. They may use 

their existing systems for this purpose as long as organizational policies are 

consistently applied regardless of the source of funds and systems meet the 

standards and requirements set forth in 45 CFR part 74 or 92, as applicable (see 

“Financial Management”). 

If an applicant has no prior experience with Federal grants or cost-reimbursement 

contracts, the GMO may review the applicant’s financial management and other 

management systems before award, or within a reasonable time after award, to 

determine their adequacy and acceptability. For an applicant with prior OPDIV or 

other Federal cost-reimbursement awards, the GMO may review recent audit reports 

and other available information to determine whether the applicant’s management 

systems meet the established standards. The GMO will advise the applicant if 

additional information is required. On the basis of the review results, the GMO will 

determine the need for any corrective action and may impose special conditions on 

the award. The OPDIV also will oversee the recipient’s systems as part of its routine 

post-award monitoring. 

 I-32 
The Notice of Award 

The NoA is the legal document issued to the receiving organization that indicates an 

award has been made and that funds may be requested from the designated HHS 

payment system or office. A NoA, showing the amount of Federal funds authorized 

for obligation and any future-year commitments, is issued for each budget period in 

the approved project period (see “Project Period and Budget Period” below). Until an 

awarding office has issued a NoA for the initial budget period, any costs incurred by 

the applicant for the project are incurred at its own risk. A revised NoA may be 

issued during a budget period to effect an action resulting in a change in the period 

or amount of support or other change in the terms and conditions of award. An 

awarding office generally will not issue a revised NoA to reflect a recipient’s postaward rebudgeting. 

The NoA sets forth pertinent information about the grant, including, but not limited 

to, the following: 

• Grant identification number (“grant number”) 

• Statutory authority for the award and any applicable program regulations 

• Name of recipient organization 

• Name of the PI/PD 

• Approved project period and budget period start and end dates 

• Amount of Federal funds authorized for obligation by the recipient 

• Amount of matching or cost sharing (if applicable) 

• Amount of anticipated future-year commitments (if applicable) 

• Names of the cognizant OPDIV/awarding office, PO, GMO, and GMS 

• Applicable terms and conditions of award, either by reference or inclusion. 

• The HHS-assigned EIN (based on the IRS EIN), which must be used to 

request payment. 

A recipient indicates acceptance of an award and its associated terms and conditions 

by drawing or requesting funds from the designated HHS payment system or office. 

For cooperative agreement awards, an awarding office may require the recipient to 

formally accept the award by signing and returning the NoA or separate document. 

When signature is required, the authorized organizational representative must be the 

signatory of the NoA. If a recipient cannot accept the award, including the legal 

obligation to perform in accordance with award terms and conditions, the 

organization should notify the GMO immediately upon receipt of the NoA. If 

resolution cannot be reached, the GMO will void the grant. The OPDIV’s 

determination of applicable terms and conditions of award or a GMO’s denial of a 

request to change the terms and conditions is discretionary and not subject to 

appeal. Once the award is accepted by the recipient, the contents of the NoA are 

 I-33 
binding on the recipient unless and until modified by a revised NoA signed by the 

GMO. 

Project Period and Budget Period 

For most grants, HHS uses the project period system of funding. Under this system, 

projects are programmatically approved for support in their entirety, but are funded 

in annual increments called budget periods. The total project period consists of the 

initial competitive segment, any additional competitive segments authorized by 

approval of a competing continuation application, and any non-competing 

extensions. A competitive segment generally will be no longer than 5 years 

(exclusive of non-competing extensions). A single award covering the entire period 

of support generally is used if the project is solely for construction (or major A&R of 

real property) or if the total planned period of support will be less than 18 months. 

The length of the project period (whether for one or more than one competitive 

segment) is determined by the OPDIV on the basis of the following: 

• Any statutory, regulatory, or administrative requirements 

• The length of time requested by the applicant 

• Any limitation on the length of the project period recommended by the 

objective or reviewers 

• The OPDIV’s programmatic determination of the frequency of objective review 

necessary for managing the project, program, or activity 

• The OPDIV’s funding principles as specified in the funding opportunity 

announcement. 

Most NoAs document approval of a project period that extends beyond the budget 

period for which funds are provided, indicating the OPDIV’s intention to provide 

continued financial support. The amounts shown for subsequent years represent 

projections of future funding levels based on the information available at the time of 

the initial award. Such projected levels of future support are contingent on 

satisfactory progress, the availability of funds, and the continued best interests of 

the Federal government. They are not guarantees that the project or program will be 

funded or will be funded at those levels, and they create no legal obligation to 

provide funding beyond the ending date of the current budget period as shown in the 

NoA. 

Recipients are required to submit a non-competing continuation application or annual 

progress report as a prerequisite to approval and funding of each subsequent budget 

period (non-competing continuation award) within an approved project period. A 

decision to fund the next budget period will be formalized by the issuance of a NoA 

indicating the new budget period and the amount of new funding. Part II explains 

this process in greater detail. 

Budget periods usually are 12 months long; however, shorter or longer budget 

periods may be established for programmatic or administrative reasons. The NoA will 

show the total approved budget for the applicable budget period, including direct 

costs and, if applicable, indirect costs as well as any required matching or cost 

 I-34 
sharing. SBIR and STTR awards also may include a fee; however, no other HHS 

awards may include profit or fee. 

The initial and each subsequent NoA that provides funding sets forth the amount 

awarded under that action, amounts previously awarded for that budget period, and, 

after the initial budget period, any authorized carryover (see Part II). The amount 

awarded also is shown generally with a categorical (line item) budget breakdown. 

The recipient has certain rebudgeting flexibility within the overall amount awarded as 

specified in Part II. However, the total amount awarded (direct and indirect costs and 

fee, where applicable) is the OPDIV’s maximum financial obligation to the recipient 

under that award; in other words, it is the ceiling on the amount payable to the 

recipient under that award. Once an award is made, the OPDIV is not obligated to 

make any supplemental or other award or to provide additional funding for indirect 

costs or other purposes. 

If an applicant/recipient waives reimbursement of the full indirect costs to which it is 

otherwise entitled based on its negotiated rate, the awarding office will either not 

award indirect costs or will award only partial indirect costs, as appropriate. In 

general, regardless of the type of recipient, the negotiated indirect cost rate(s) in 

effect at the beginning of the competitive segment will be used to determine the 

amount budgeted for indirect costs for each year of the competitive segment. If the 

rate agreement does not extend to the end of the project period, the last rate in 

effect will be used to establish the total cost commitment for any remaining future 

years. 

Under limited circumstances, the GMO may award indirect costs where none were 

previously awarded or may increase the amount previously awarded. If an award 

does not include an amount for indirect costs because the applicant or recipient has 

not established a rate or did not submit a timely rate proposal and the recipient 

subsequently establishes a rate, the GMO may amend the award to provide an 

appropriate amount for indirect costs if the amendment can be made using funds 

from the same Federal fiscal year in which the award was made. However, the 

amount will be limited to the indirect costs applicable to the period after the effective 

date of the rate agreement. This provision does not affect local governmental 

agencies that are not required to submit their indirect cost proposals to the Federal 

government. They may charge indirect costs to grants based on the rate 

computations they prepare and keep on file for subsequent Federal review. 

Other Terms and Conditions 

In addition to, or in lieu of, the standard terms and conditions of award specified in 

the HHS GPS, the OPDIV may use terms and conditions for program-specific or 

award-specific reasons. For example, if, on the basis of a recipient’s application or 

other available information, the GMO finds—at the time of award or at any time 

subsequent to award—that the recipient’s management systems and practices are 

not adequate to ensure the appropriate stewardship of grant funds or to achieve the 

objectives of the award, the GMO may impose special, more restrictive terms and 

conditions on the award in accordance with 42 CFR 52.9 and 45 CFR 74.14 or 92.12. 

For example, an OPDIV could require a recipient to obtain prior approval for 

expenditures that ordinarily do not require such approval or to provide more 

frequent reports. In addition to closer monitoring, the OPDIV may assist the recipient 

with taking any necessary corrective action. 

 I-35 
Payment 

HHS grant payments may be made by one of several advance payment methods, 

including SMARTLINK II/ACH, CASHLINE/ACH, or cash request, or by cash request 

on a reimbursement basis, as specified in the NoA and as described in this section. 

Payments under grants generally are made as advance payments. Except as 

indicated in this section, grant payments are made by the PMS, operated by HHS’s 

DPM, in accordance with Department of the Treasury and OMB requirements, as 

implemented by 45 CFR 74.22 and 92.21. These requirements are intended to 

minimize the time elapsing between the transfer of funds from the Federal 

government and disbursement by a recipient. Therefore, although the grant may be 

financed by advance payments, the intent is that recipients draw funds as needed. 

Federal funds advanced to the recipient should be fully disbursed (checks written, 

signed, and issued to the payees) by the close of business the next work day after 

receipt of the funds. The potential for excessive Federal cash on hand exists each 

time a recipient does not disburse Federal funds timely. The recipient is responsible 

for determining when the Federal funds have been deposited into its bank account 

for each drawdown, ensuring that the funds are fully disbursed by the close of 

business the next work day after they are received, and immediately returning 

undisbursed Federal cash on hand to PMS. An OPDIV may use reimbursement as the 

method of payment, in lieu of advance payment, if cash management requirements 

are not met. Advances made by recipients to subrecipients and contractors under 

grants must conform to substantially the same standards of timing and amount that 

govern advances to the recipient. 

Operational guidance for recipients is contained in the DHHS Manual for Recipients 

Financed under the Payment Management System (available through the HHS Web 

site at http://www.dpm.psc.gov/doc/hhsrecmanual.pdf). Inquiries regarding 

payments should be directed to DPM at the address shown in Part III. 

OPDIVs make payments under awards to foreign or international organizations, if 

those organizations do not have a U.S. bank account, and awards to agencies of the 

Federal government. 

SMARTLINK II/ACH 

The SMARTLINK II/ACH method of advance payment makes direct deposit of funds 

to a recipient’s bank account and requires recipients to have Internet access to 

submit a request for funds to PMS. SMARTLINK II/ACH provides funds the day 

following the request with direct deposit using the ACH process of the Federal 

Reserve Bank (Richmond, Virginia). 

CASHLINE/ACH 

The CASHLINE/ACH method of advance payment provides for direct deposit of funds 

to the recipient’s bank account using a touch-tone telephone to dial directly to a 

“voice-response” computer located at PMS. CASHLINE/ACH makes funds available 

the day following the request with direct deposit using the Federal Reserve Bank’s 

ACH process. 

 I-36 
Cash Request 

Recipients not eligible for an unrestricted advance of funds by SMARTLINK II/ACH or 

CASHLINE/ACH must submit a cash request as specified in the NoA. Cash requests 

usually are submitted monthly using SF 270, Request for Advance or 

Reimbursement. The cash request may be on either an advance or reimbursement 

basis, as specified by the awarding office. Cash requests are used when a recipient’s 

cash management must be closely monitored (for example, recipients whose 

financial management systems do not meet the standards specified in 45 CFR 74.21 

or 92.20) or under programs where reimbursement financing is appropriate. A 

recipient also may be converted from an unrestricted advance payment method to a 

cash request basis if, during post-award administration, the GMO determines that 

the recipient is not complying with the cash management requirements or other 

requirements of the award, including the submission of complete and timely reports. 

If the cash request is for an advance payment, the recipient may request funds 

monthly on the basis of expected disbursements during the succeeding month and 

the amount of Federal funds already on hand. A request for reimbursement may be 

submitted more often, if authorized. For timely receipt of cash, a recipient must 

submit the request through the awarding office early enough for it to be forwarded to 

PMS at least 2 weeks before the cash is needed. PMS makes payment electronically 

through the ACH process upon receipt of the approved payment request from the 

awarding office. 

Post-Award Administration 

The recipient, as the direct and primary recipient of HHS grant funds, is responsible 

for managing the day-to-day operations of grant-supported activities and is 

accountable to the OPDIV for the performance of the project, program, or activity; 

the appropriate expenditure of grant funds by all parties; and all other obligations of 

the recipient. Recipients may use their established controls and policies, as long as 

they are consistent with award requirements. HHS seeks to foster within recipient 

organizations an organizational culture that is committed to compliance with Federal 

and HHS grant regulations, policies, and procedures. Actions to achieve this result 

should include a clear delineation of the roles and responsibilities of the 

organization’s staff, both programmatic and administrative; written policies and 

procedures; training; management controls and other internal controls; performance 

assessment; administrative simplifications; and information sharing. 

In addition, to fulfill their role in regard to the stewardship of Federal funds, OPDIVs 

monitor their awards to identify potential problems and areas where technical 

assistance might be necessary. This active monitoring is accomplished through 

review of recipient-generated reports, including audit reports, and correspondence; 

site visits; and other information available to the OPDIV. The names and telephone 

numbers of the individuals responsible for monitoring the programmatic and business 

management aspects of a project or activity will be provided to the recipient at the 

time of award. 

Monitoring will continue for as long as the OPDIV retains a financial interest in the 

project, program, or activity as a result of property accountability, audit, and other 

requirements that may continue for a period of time after the grant is 

 I-37 
 I-38 

administratively closed out and the OPDIV is no longer providing active grant 

support. 

Post-award requirements are addressed in detail in Part II. 
Part II: Terms and Conditions of Award 

Overview of Terms and Conditions of Award 

General, Program-Specific, and Award-Specific Terms and 

Conditions 

The terms and conditions of award include general administrative and public policy 

requirements that apply to all recipients or certain classes of awards or activities; 

program-specific-requirements; and, as necessary, award-specific requirements. This 

part of the HHS GPS serves as the general administrative and public policy terms and 

conditions of HHS discretionary grant and cooperative agreement awards, as 

referenced in NoAs. It addresses the applicability of those terms and conditions 

based on the type of award, recipient, or grant-supported activity. 

The HHS GPS is consistent with the requirements of 45 CFR parts 74 and 92, only 

some of which are repeated or highlighted here, and is not intended to be allinclusive. All awards or a specified subset of awards also may be subject to 

additional requirements, such as those included in appropriations acts and Executive 

orders. Notice of requirements not specified in the HHS GPS generally will be 

provided in the NoA, but such notice is not required for the award to be subject to 

the requirements of pertinent statutes and regulations. 

In addition to all of the applicable administrative requirements of 45 CFR part 74 or 

92, as appropriate for the type of recipient, and other general terms and conditions, 

each award also is subject to the requirements of the authorizing program legislation 

and program regulations, if any. These requirements will be specified or incorporated 

by reference in the NoA. An individual award also may contain award-specific terms 

and conditions included in full text. For example, the GMO may include terms and 

conditions necessary to address concerns about a recipient’s management systems. 

For cooperative agreement awards, the NoA will specifically address the substantial 

programmatic involvement of Federal staff and any other special terms (e.g., 

ownership of data and research results, and use of equipment) appropriate for the 

cooperative agreement. 

Effect and Order of Precedence 

Any waivers of or deviations from these terms and conditions must be requested and 

approved in writing by the GMO. OPDIV determination of applicable terms and 

conditions of award or a GMO’s denial of a request to change the terms and 

conditions is discretionary and not subject to appeal. 

A recipient indicates acceptance of an award and its associated terms and conditions 

by requesting and accepting funds from PMS or the designated HHS payment office 

for that award. If a recipient cannot accept an award, including the legal obligation to 

perform in accordance with its provisions, it should notify the GMO immediately upon 

receipt of the NoA. If resolution cannot be reached, the GMO will void the grant. 

Once an award is accepted by a recipient, the contents of the NoA are binding on the 

recipient and the OPDIV unless and until modified by a revised NoA signed by the 

GMO. 

 II-1 
If there is a perceived conflict between or among statutory and regulatory 

requirements, the terms and conditions in this part of the HHS GPS, Part IV of the 

HHS GPS and award-specific terms and conditions, or if the recipient has questions 

concerning award terms and conditions, the recipient should request written 

clarification from the GMO. This may be done at any time; however, if the inclusion 

of the term or condition would cause the organization not to accept the award or to 

be unable to comply, the question should be raised before award acceptance. In the 

case of a conflict, statutes and regulations take precedence over requirements or 

restatements of statutory or regulatory requirements in the HHS GPS, and OPDIV or 

award-specific requirements take precedence over Part II of the HHS GPS. 

Flow-Down of Requirements under Subawards and Contracts 

under Grants 

The terms and conditions in the HHS GPS apply directly to the recipient of HHS 

funds. The recipient is accountable for the performance of the project, program, or 

activity; the appropriate expenditure of funds under the award by all parties; and all 

other obligations of the recipient, as cited in the NoA. In general, the requirements 

that apply to the recipient, including public policy requirements, also apply to 

subrecipients and contractors under grants, unless an exception is specified. 

Public Policy Requirements 

This section addresses public policy requirements applicable to some or all HHS 

applications and/or awards. These requirements are in addition to the pre-award 

requirements specified in Part I or supplement the coverage in Part I by indicating 

how a requirement applies following award. The term “public policy” indicates that 

the requirement is based on social, economic, or other objectives or considerations 

that may be attached to the expenditure of Federal funds by recipients, subrecipients 

(including consortium participants), or contractors under grants, in general, or may 

relate to the expenditure of Federal funds for specified activities, e.g., research. In 

addition to cross-cutting requirements based in statutes, regulations, or Executive 

orders that some or all Federal agencies must apply to their grant programs, HHS 

recipients also are subject to requirements that apply to the use of grant funds as 

contained in HHS annual appropriations acts. Some of those requirements are 

included here because they have been included in the appropriations acts for several 

years without change, but those requirements may be changed or other 

requirements may be added in the future. 

As indicated in Part I, by signing the application, the authorized organizational official 

certifies that the organization will comply with applicable public policies. Once a grant 

is awarded, the recipient is responsible for establishing and maintaining the 

necessary processes to monitor its compliance and that of its employees and, as 

appropriate, subrecipients and contractors under the grant with these requirements; 

taking appropriate action to meet the stated objectives; and informing the OPDIV of 

any problems or concerns. If a grant is awarded on the basis of false or 

misrepresented information, or if a recipient does not comply with these public policy 

requirements, the OPDIV or other cognizant office may take any necessary and 

appropriate action with respect to the recipient or the award. 

Exhibit 3, which includes public policy requirements cited in Part I and in this section, 

contains information to help the applicant/recipient determine what public policy 

 II-2 
requirements and objectives apply to its activities. The exhibit indicates, by 

exception, whether a requirement applies to less than all OPDIVs meeting the 

threshold requirement; for example, if a requirement applies to research awards, it 

applies to all OPDIVs awarding research grants unless otherwise specified. The table 

indicates—by “Y” for Yes or “NA” for Not Applicable—whether a given public policy 

requirement normally would apply to the recipient and under what conditions and 

whether it is required to be flowed down under subawards or contracts under grants 

for routine goods and services. However, even if the exhibit indicates that a 

requirement is not applicable, that public policy requirement potentially could be 

applicable in a specific situation, for example, if a contract under a grant involves 

research activity. Therefore, this exhibit should be used as general guidance only. 

The applicant/recipient should consult the funding opportunity announcement and 

the NoA (if applicable) as well as the statute, regulations, or other cited policies or 

documents for complete information and should contact the GMO if there is any 

question concerning the applicability of a particular public policy requirement or 

objective. 

Exhibit 3. Public Policy Requirements 

Requirement Applicability Recipient 

Subrecipient 

(including 

consortium 

participant) 

Contractor under 

grant (routine 

goods/services) 

Acknowledgment of 

Federal Funding 

All types of awards Y Y NA 

Activities Abroad All types of awards Y Y Y 

Age Discrimination 

Act of 1975 

All applications 

from and awards 

to domestic 

entities 

Y 

(NA to foreign 

and international 

organizations) 

Y 

(NA to foreign and 

international 

organizations) 

Y 

(NA to foreign and 

international 

organizations) 

Animal Welfare Applications and 

awards for 

activities involving 

warm-blooded 

animals 

Y Y Y 

Certificates of 

Confidentiality 

Research awards 

(includes research 

training in each 

case specified as 

“research”) 

Y Y Y 

Civil Rights Act of 

1964 (Title VI) 

All applications 

from and awards 

to domestic 

entities 

Y 

(NA to foreign 

and international 

organizations) 

Y 

(NA to foreign and 

international 

organizations) 

Y 

(NA to foreign and 

international 

organizations) 

Clean Air and Clean 

Water Act 

Construction 

grants 

Y Y Y 

Confidentiality of 

Patient/Client 

Records 

All research 

awards and 

awards to 

substance abuse 

programs 

Y Y Y 

 II-3 
Exhibit 3. Public Policy Requirements 

Requirement Applicability Recipient 

Subrecipient 

(including 

consortium 

participant) 

Contractor under 

grant (routine 

goods/services) 

Controlled 

Substances 

All types of awards Y Y Y 

Drug-Free Workplace All covered 

applications and 

awards 

Y NA NA 

Education 

Amendments of 1972 

(Title IX) 

All applications 

from and awards 

to domestic 

entities 

Y 

(NA to foreign 

and international 

organizations 

Y 

(NA to foreign and 

international 

organizations) 

Y 

(NA to foreign and 

international 

organizations) 

Elimination of 

Architectural Barriers 

to the Handicapped 

All awards 

involving 

construction or 

major alteration 

and renovation 

Y Y Y 

Financial Conflict of 

Interest 

All applications 

and awards for 

research except 

those for Phase I 

of the SBIR/STTR 

program and 

awards to Federal 

institutions/PHS 

OPDIVsa

Y 

(NA to Phase I of 

the SBIR/STTR 

programs and to 

Federal 

institutions) 

Y NA 

Flood Insurance Construction 

awards 

Y NA NA 

Hatch Act Awards to State or 

local governments 

Y Y NA 

Health Insurance 

Portability and 

Accountability Act 

(HIPAA) 

All awards to 

covered entities 

Y 

(if a covered 

entity) 

Y 

(if a covered 

entity) 

Y 

(if a covered entity) 

Historic Properties/ 

Archaeological Sites 

All awards that 

include major or 

minor A&R, 

construction, or 

any work that will 

result in physical 

changes to real 

property 

Y Y Y 

Human Embryonic 

Stem Cell Research 

Research awards Y Y Y 

Human Subjects Research 

applications and 

awards 

Y Y Y 

 II-4 
Exhibit 3. Public Policy Requirements 

Requirement Applicability Recipient 

Subrecipient 

(including 

consortium 

participant) 

Contractor under 

grant (routine 

goods/services) 

Investigational New 

Drug Applications/ 

Investigational Device 

Exceptions 

Research awards Y Y Y 

Limited English 

Proficiency 

All types of awards Y Y NA 

National 

Environmental Policy 

Act (including Public 

Disclosure) 

Applications and 

awards for 

construction and 

major alteration 

and renovation 

Y Y NA 

Pro-Children Act All awards 

performed in 

facilities where 

children are 

served 

Y Y Y 

Protection of 

Research Subjects’ 

Identity 

All research 

awards/PHS 

OPDIVs 

Y Y Y 

Protection of 

Wetlands 

Construction 

awards 

Y Y Y 

Public Health Security 

and Bioterrorism 

Preparedness and 

Response Act 

All types of awards Y Y Y 

Recombinant DNA 

Molecules and 

Human Gene 

Transfer Research 

Applications and 

awards for 

research 

Y Y Y 

Rehabilitation Act of 

1973 (Section 504) 

All applications 

from and awards 

to domestic 

organizations 

Y 

(NA to foreign 

and international 

organizations) 

Y 

(NA to foreign and 

international 

organizations) 

Y 

(NA to foreign and 

international 

organizations) 

Research Misconduct Applications and 

awards for 

research and 

research 

training/PHS 

OPDIVs

Y N NA 

Research on Human 

Fetal Tissue 

Research awards Y Y Y 

Research on 

Transplantation of 

Fetal Tissue 

Research awards Y Y Y 

 II-5 
Exhibit 3. Public Policy Requirements 

Requirement Applicability Recipient 

Subrecipient 

(including 

consortium 

participant) 

Contractor under 

grant (routine 

goods/services) 

Resource 

Conservation and 

Recovery Act 

All awards to 

States or agency 

of a political 

subdivision of a 

State (which for 

this purpose 

includes State and 

local institutions of 

higher education 

or hospitals) 

Y Y Y 

Restriction on 

Abortions 

All types of awards Y Y Y 

Restriction on 

Distribution of Sterile 

Needles 

All types of awards Y Y Y 

Safe Drinking Water 

Act 

Construction 

awards 

Y Y Y 

Seat Belt Use All types of awards Y NA NA 

Smoke-Free 

Workplace 

All awards Y NA NA 

Standards of Conduct All types of awards Y NA NA 

Uniform Relocation 

Assistance and Real 

Property Acquisition 

Policies Act 

All awards Y Y NA 

U.S. Flag Air Carriers All types of awards Y Y Y 

USA PATRIOT Act All types of awards Y Y Y 

a

 PHS OPDIVs awarding research grants include AHRQ, CDC, FDA, HRSA, OPHS, and NIH. 

 II-6 
Standards of Conduct for Recipient Employees 

HHS requires recipients to establish safeguards to prevent employees, consultants, 

members of governing bodies, and others who may be involved in grant-supported 

activities from using their positions for purposes that are, or give the appearance of 

being, motivated by a desire for private financial gain for themselves or others, such 

as those with whom they have family, business, or other ties. These safeguards must 

be reflected in written standards of conduct. Except as provided below, HHS does not 

require a recipient to establish separate standards of conduct if it maintains such 

standards for its non-grant-supported activities, as long as those standards are 

consistent with State and local laws and cover, at a minimum, expected conduct in 

regard to financial interests, gifts, gratuities and favors, nepotism, and such other 

areas for governmental organizations as political participation and bribery. 

The standards also must do the following: 

• Address the conditions under which outside activities, relationships, or 

financial interests are proper or improper. 

• Provide for advance notification of outside activities, relationships, or financial 

interests to a responsible organizational official. 

• Include a process for notification and review by the responsible official of 

potential or actual violations of the standards. 

• Specify the nature of penalties that the recipient may impose. These penalties 

would be in addition to any penalties that HHS or a cognizant Federal agency 

may impose for infractions that also violate the terms and conditions of 

award. 

Recipients are not required to submit its general standards of conduct to HHS for 

review or approval. However, a copy must be made available to each of the 

recipient’s officers; each employee and consultant working on the grant-supported 

program, project, or activity; each member of the governing board, if applicable; 

and, upon request, the OPDIV. The recipient is responsible for enforcing its standards 

of conduct, taking appropriate action on individual infractions, and, in the case of 

financial conflict of interest, informing the GMO if the infraction is related to a 

research award (see “Other Research-Related Requirements—Financial Conflict of 

Interest” for the specific regulatory requirements that apply to financial conflict of 

interest under research grants).

If a suspension or separation action is taken by a recipient against a PI/PD or other 

key personnel, the recipient must request prior approval of the proposed 

replacement. 

 II-7 
Hatch Act 

The Hatch Act restricts political activity of executive branch employees of the federal 

government and District of Columbia government employees (5 U.S.C. 7321–7328) 

and State or local officers or employees (5 U.S.C. 1501–1528). “State or local officer 

or employee” means an individual employed by a State or local agency whose 

principal employment is in connection with an activity that is financed in whole or in 

part by loans or grants made by the United States or a Federal agency. (Certain 

State educational or research institutions are excluded from this definition.) 

Age Discrimination Act of 1975 

The Age Discrimination Act of 1975, 42 U.S.C. 6101 et seq., prohibits discrimination 

on the basis of age in any program or activity receiving Federal financial assistance. 

The HHS implementing regulations are codified at 45 CFR part 91. 

Civil Rights Act of 1964 

Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d et seq., provides that no 

person in the United States will, on the grounds of race, color, or national origin, be 

excluded from participation in, be denied the benefits of, or be subjected to 

discrimination under any program or activity receiving Federal financial assistance. 

The HHS implementing regulations are codified at 45 CFR part 80. 

Education Amendments of 1972 

Title IX of the Education Amendments of 1972, 20 U.S.C. 1681, 1682, 1683, 1685, 

and 1686, provides that no person in the United States will, on the basis of sex, be 

excluded from participation in, be denied the benefits of, or be subjected to 

discrimination under any educational program or activity receiving Federal financial 

assistance. The HHS implementing regulations are codified at 45 CFR part 86. 

Rehabilitation Act of 1973 

Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. 794, as amended, provides 

that no otherwise qualified handicapped individual in the United States will, solely by 

reason of the handicap, be excluded from participation in, be denied the benefits of, 

or be subjected to discrimination under any program or activity receiving Federal 

financial assistance. These requirements pertain to the provision of benefits or 

services as well as to employment. The HHS implementing regulations are codified at 

45 CFR parts 84 and 85. 

 II-8 
Biological Agents and Toxins 

USA PATRIOT Act

The Uniting and Strengthening America by Providing Appropriate Tools Required to 

Intercept and Obstruct Terrorism Act (USA PATRIOT Act) amends 18 U.S.C. 175–

175c. Among other things, it prescribes criminal penalties for possession of any 

biological agent, toxin, or delivery system of a type or in a quantity that is not 

reasonably justified by a prophylactic, protective, bona fide research, or other 

peaceful purpose. The act also establishes restrictions on access to specified 

materials. “Restricted persons,” as defined by the act, may not possess, ship, 

transport, or receive any biological agent or toxin that is listed as a select agent (see 

“Public Health Security and Bioterrorism Preparedness and Response Act” in this 

subsection). 

Public Health Security and Bioterrorism Preparedness and Response Act 

The Public Health Security and Bioterrorism Preparedness and Response Act of 2002, 

42 U.S.C. 201 Note, is designed to provide protection against misuse of select agents 

and toxins, whether inadvertent or the result of terrorist acts against the U.S. 

homeland, or other criminal acts (see 42 U.S.C. 262a). The act was implemented, in 

part, through regulations published by CDC at 42 CFR part 73, Select Agents and 

Toxins. Copies of these regulations are available from the Import Permit Program 

and the Select Agent Program, respectively, CDC, 1600 Clifton Road, MS E-79, 

Atlanta, GA 30333; telephone: 404-498-2255. These regulations also are available at 

http://www.cdc.gov/od/ohs/biosfty/shipregs.htm. 

Research involving select agents and recombinant DNA molecules also is subject to 

the NIH Guidelines for Research Involving DNA Molecules (see “Guidelines for 

Research Involving DNA Molecules and Human Gene Transfer Research” in this 

section). 

Human Subjects 

HHS regulations for the protection of human subjects, in 45 CFR part 46, implement 

Section 491(a) of the PHS Act, 42 U.S.C. 289(a), and provide a systematic means, 

based on established, internationally recognized ethical principles, to safeguard the 

rights and welfare of individuals who participate as subjects in research activities 

supported or conducted by HHS. 

The Federal regulations require that each institution, domestic or foreign, engaged in 

human subjects research provide OHRP with a satisfactory assurance of compliance 

with the regulations, unless the research is exempt under 45 CFR 46.101(b). An 

institution becomes engaged in human subjects research when its employees or 

agents (1) intervene or interact with living individuals for research purposes, or (2) 

obtain individually identifiable private information for research purposes (45 CFR 

46.102(f)). For purposes of 45 CFR part 46, research means a systematic 

investigation, including research, development, testing, and evaluation, designed to 

develop or contribute to generalizable knowledge. Activities that meet this definition 

constitute research for purposes of this policy, whether or not they are conducted or 

supported under a program that is considered research for other purposes. For 

example, some demonstration and service programs may include research activities. 

 II-9 
The HHS regulations specify that departments and agencies cannot conduct or 

support research covered by this policy unless the institution has an assurance 

approved by OHRP, and only if the institution has certified to the OPDIV that the 

research has been reviewed and approved by the IRB provided for in the assurance 

and will be subject to continuing review by the IRB. Under no condition will research 

covered by Section 46.03 of the regulations be supported prior to receipt of the 

certification that the research has been reviewed and approved by the IRB (45 CFR 

46.103(b) and (f)). 

The regulations specify additional protections for research involving human fetuses, 

pregnant women, and neonates (Subpart B); prisoners (Subpart C); and children 

(Subpart D). The use of autopsy materials is governed by applicable State and local 

law and is not directly regulated by 45 CFR part 46. 

Office for Human Research Protections’ and Recipient Responsibilities 

Assurances and Other OHRP Responsibilities 

On behalf of the Secretary, HHS, OHRP negotiates assurances covering all of an 

institution’s federally supported research activities involving human subjects.11

Applicants proposing to involve human subjects in nonexempt research must file (or 

have previously filed) a written assurance (FWA) with OHRP setting forth the 

commitment of the institution to establish appropriate policies and procedures for the 

protection of human subjects. For institutions proposing nonexempt research 

involving human subjects and not currently holding an approved assurance, OHRP 

will negotiate an FWA. 

Each legally separate entity must file its own FWA even if the institution does not 

operate its own IRB and designates another IRB (registered with OHRP and agreeing 

to the designation) for that purpose. Affiliated institutions or organizations that will 

serve as additional performance sites for the grant-supported research also must file 

an FWA. 

OHRP also has responsibility for oversight of recipient compliance with the HHS 

human subjects regulations. In carrying out this responsibility, OHRP evaluates all 

written substantive allegations or indications of non-compliance with the HHS 

regulations it receives from any source. All compliance oversight evaluations are 

based on the HHS regulations and the institution’s assurance of compliance. Any 

corrective actions imposed as a result of compliance oversight evaluations are 

intended to remedy identified non-compliance and prevent recurrence. Because each 

case is different, OHRP tailors corrective actions to foster the best interests of human 

research subjects and, to the extent possible, of the institution, research community, 

and HHS. Most compliance oversight evaluations and resultant corrective actions are 

resolved at the OHRP level. However, OHRP may recommend actions to be taken by 

other HHS officials. 

 11 As of February 28, 2001, OHRP no longer accepts applications for Multiple 

Project Assurances (MPAs) or Single Project Assurances (SPAs) limited to HHSsupported research, to special categories of research, or to individual research 

projects. All MPAs have been superseded. Current SPAs will remain in effect through 

the expiration of their respective grant (or contract) award and any non-competing 

continuation award. 

 II-10 
Detailed information about FWA preparation and negotiation and about OHRP 

activities related to oversight and compliance, as well as copies of the human 

subjects regulations, may be obtained from OHRP at the address shown in Part III or 

from its home page at http://www.hhs.gov/ohrp. OHRP also has produced a 

publication, available through GPO,12 and an instructional videotape, the OHRP 

Assurance Training Module, which is available on the OHRP Web site. 

Institutional Review Board Certification and Other Recipient Responsibilities 

The recipient bears ultimate responsibility for protecting human subjects under the 

award, including human subjects at all sites, and for ensuring that an assurance 

approved by OHRP and certification of IRB review and approval have been obtained 

before human subjects research can be conducted at each collaborating site. HHS 

will not award a grant for nonexempt research in which human subjects are involved 

unless the applicant/recipient provides a certification to the OPDIV that the research 

has been approved by an appropriate IRB, consistent with 45 CFR part 46, within 12 

months before the budget period start date. 

It also is the recipient’s responsibility to comply with prior-approval requirements 

related to the addition of sites not included in the approved application. The list of 

organizations with approved assurances is available at the OHRP Web site 

(http://www.hhs.gov/ohrp). Recipients may not draw funds from the payment 

system, request funds from the paying office, or make obligations against Federal 

funds for research involving human subjects at any site engaged in nonexempt 

research for any period not covered by both an OHRP-approved assurance and IRB 

approval consistent with 45 CFR part 46. Costs associated with IRB review of human 

research protocols are not allowable as direct charges under grants unless such costs 

are not covered by the organization’s indirect cost rate. 

Regardless of when the IRB review occurs (before objective review or just-in-time as 

specified in Part I or before award of a non-competing continuation award), the IRB 

should ensure that the research described in the application is consistent with any 

corresponding protocols reviewed and approved by the IRB. As specified in 45 CFR 

46.111, the IRB review must include a determination that, for research covered by 

the regulations, the following conditions are met: 

• The procedures to be used will minimize risks to subjects. 

• Risks to subjects are reasonable in relation to expected benefits, if any, to 

subjects and the importance of the knowledge that may reasonably be 

expected to result. 

• Selection of subjects is equitable. 

• Informed consent is sought from each prospective subject or the subject’s 

legally authorized representative and is appropriately documented in 

accordance with, and to the extent required by, the regulation. 

 12 Protecting Human Research Subjects: Institutional Review Board Guidebook, 

1993, Stock No. 017-040-00525-3, may be ordered from the Superintendent of 

Documents, telephone: 202-512-1800. This guidebook is also available from OHRP’s 

website (http://www.hhs.gov/ohrp/irb/irb_guidebook.htm). 

 II-11 
• When appropriate, the research plan makes adequate provision for monitoring 

the data collected to ensure the safety of subjects, the protection of privacy, 

and the confidentiality of data. 

• When some or all of the subjects are likely to be vulnerable to coercion or 

undue influence, such as children, prisoners, pregnant women, people with 

acute or severe physical or mental illness, or people who are economically or 

educationally disadvantaged, appropriate additional safeguards are included 

in the study to protect the rights and welfare of these subjects. 

Protection of Research Subjects’ Identities 

HHS expects recipients and others involved in grant-supported research to take 

appropriate actions to protect the confidentiality of information about and the privacy 

of individuals participating in the research. Investigators, IRBs, and other 

appropriate entities should ensure that policies and procedures are in place to 

protect identifying information and must oversee compliance with those policies and 

procedures. 

Animal Welfare 

As specified in Part I of the HHS GPS, the PHS Policy on Humane Care and Use of 

Laboratory Animals requires applicants proposing to use vertebrate animals in HHSsupported activities to file a written Animal Welfare Assurance with OLAW. The PHS 

policy defines “animal” as “any live, vertebrate animal used or intended for use in 

research, research training, experimentation, biological testing, or related purposes.” 

The PHS policy implements and supplements the U.S. Government Principles for 

Utilization and Care of Vertebrate Animals used in Testing, Research, and Training. 

The PHS policy also requires the applicant to establish appropriate policies and 

procedures for the humane care and use of animals, based on the Guide for the Care 

and Use of Laboratory Animals, and to comply with the Animal Welfare Act, as 

amended, 7 U.S.C. 2131 et seq., and its implementing regulations. This includes 

appointing an IACUC with specified responsibilities. The PHS policy does not affect 

applicable State or local laws or regulations that impose more stringent standards for 

the care and use of laboratory animals. 

Verification of the IACUC review of proposed research involving animals may be filed 

at any time before award unless required earlier by the OPDIV. Regardless of when 

the review occurs, the IACUC should ensure that the research described in the 

application is consistent with any corresponding protocols reviewed and approved by 

the IACUC. When organizations collaborate and multiple recognized IACUCs may be 

involved, only one of those IACUCs is required to review the research project or 

evaluate a program facility. In such cases, organizations must define their respective 

responsibilities to ensure compliance with the policy. If both organizations have full 

Animal Welfare Assurances, they may exercise discretion in determining which 

IACUC will review the research protocol and under which organization’s program the 

research will be performed. An applicant/recipient without an animal care and use 

program or IACUC may enter into an inter-organizational agreement to use the 

IACUC of an organization with an assurance. Assured organizations also have the 

option, with OLAW approval, to amend their Animal Welfare Assurances to cover 

performance sites without such assurances. Foreign organizations proposing 

activities involving vertebrate animals are required to comply with the PHS policy or 

 II-12 
provide evidence that acceptable standards for the humane care and use of animals 

will be met. 

Information about preparing and submitting Animal Welfare Assurances and copies 

of the PHS policy and other relevant materials are available from OLAW (see Part III 

for contact information). 

Other Research-Related Requirements 

Research Misconduct 

The recipient is responsible for the actions of its employees and other research 

collaborators, including third parties, involved in the project. The recipient will 

inquire into and, if necessary, investigate and resolve promptly and fairly all 

instances of alleged or apparent research misconduct. 42 CFR part 93, “Public Health 

Service Policies on Research Misconduct,” 13 specifies recipient responsibilities for 

dealing with and reporting possible research misconduct. The regulation is available 

from ORI on its home page (http://www.ori.dhhs.gov) and in hard copy at the 

address shown in Part III. 

The recipient must carry out its responsibilities with extra care if a research 

misconduct inquiry has been initiated as specified in 42 CFR 93.307 or if the recipient 

or ORI has made a finding of research misconduct. The recipient must report 

promptly to ORI any incident of alleged or apparent research misconduct that it 

judges as warranting investigation and must advise ORI of any decision to initiate an 

investigation. The recipient also must notify ORI if it intends to close a case at the 

inquiry or investigation stage based on an admission of responsibility, settlement, or 

for any other reason. The regulations also require that the recipient submit an annual 

report. 

If a misconduct investigation has been initiated, the recipient must take any 

necessary steps, in addition to its normal and ongoing responsibilities under the 

grant, to protect the scientific integrity of the project, protect human subjects and 

animals, provide reports to ORI, and ensure the proper expenditure of funds and 

continuation of the project during the investigation, if appropriate. ORI staff 

members are available to help recipients with investigating and reporting on research 

misconduct, and POs are available to provide technical assistance and to work with 

recipients to protect funded projects from the adverse effects of research 

misconduct. 

If the recipient finds research misconduct by anyone working on an HHS grantsupported project, whether at its organization or at a third-party organization, the 

recipient must assess the effect of that finding on the ability to continue that project, 

as originally approved, and must promptly request OPDIV prior approval of any 

intended change of PI or other key personnel (see “Prior Approval Requirements—

OPDIV Prior Approval”). In addition, the awarding office may impose sanctions, such 

as withdrawal of approval of the PI/PD or other key personnel, disallowance of costs 

associated with the invalid or unreliable research, withholding a non-competing 

 13 For this purpose and financial conflict of interest in the next subsection, PHS 

includes the following OPDIVs with research programs: NIH, CDC, FDA, HRSA, OPHS, 

and AHRQ. 

 II-13 
continuation award, suspension or termination, in whole or in part, of the current 

award, or debarment. 

If research misconduct has affected data validity or reliability, ORI or the OPDIV may 

require the recipient and its employee/collaborator authors to submit a correction or 

retraction of the data to a journal, publish the corrected data, or both. If the 

recipient does not comply with this requirement, the OPDIV may invoke its rights, 

under 45 CFR part 74 or 92, to access the data (including copyrightable material 

developed under the award), have the data reviewed, and submit the correction. 

The recipient must promptly report issues involving potential civil or criminal fraud, 

such as false claims or misappropriation of Federal funds, to the HHS OIG (see Part 

III). 

Financial Conflict of Interest 

Recipients and investigators must comply with the requirements of 42 CFR part 50, 

Subpart F, “Responsibility of Applicants for Promoting Objectivity in Research for 

Which PHS Funding Is Sought.” That subpart promotes objectivity in research by 

establishing standards to ensure that the design, conduct, and reporting of research 

funded under PHS grants or cooperative agreements will not be biased by any 

conflicting financial interest of an investigator. These requirements do not apply to 

Phase I of the SBIR/STTR programs. 

Under those requirements the organization must do the following: 

• Have a written and enforced administrative process to identify and manage, 

reduce, or eliminate conflicting financial interests with respect to research 

projects for which PHS funding is sought 

• Before spending any PHS funds awarded under a new award, inform the GMO 

of the existence of any conflicting financial interests it identified of the type 

covered by 42 CFR 50.605 and assure that the interest been managed, 

reduced, or eliminated in accordance with the regulations 

• Continue to make similar reports on subsequently identified conflicts within 60 

days of identifying them 

• Make additional information available to the OPDIV, upon request, as to how 

it handled conflicting interests in accordance with the regulations. 

As described in the regulations, examples of how financial conflicts of interest might 

be addressed include the following: 

• Public disclosure of significant financial interests 

• Monitoring of research by independent reviewers 

• Modification of the research plan 

• Disqualification from participation in all or a portion of the research funded by 

PHS 

• Divestiture of significant financial interests 

 II-14 
• Severance of relationships that create actual or potential conflicts. 

Recipients also must ensure that subawards in the form of consortium agreements 

address whether the consortium participant’s employees will be subject to the 

financial conflict of interest requirements of the consortium participant or to those of 

the recipient. 

Some IRBs also consider investigator financial conflict of interest in their 

deliberations, although they are not required to do so. If an IRB considers the impact 

of potential financial (or other) conflicts of interest on the research and the 

protection of human subjects, it should refer to the organization’s policies and 

procedures for identifying and monitoring conflicts of interest. 

Following are some strategies used by IRBs: 

• Make IRB members aware of the organization’s conflict of interest policies and 

procedures 

• Include a statement in the informed consent form that all investigators 

comply with the organizational guidelines 

• Ask investigators to complete a short questionnaire about whether they—or 

any person responsible for the design, conduct, or reporting of research—

have an economic interest in or act as an officer or a director of any outside 

entity whose financial interest could reasonably appear to be affected by the 

research 

• Instruct IRB members during their orientation on how to identify and respond 

to a perceived financial, academic, or other conflict of interest. 

Suggestions for recipients to consider when implementing the requirements of this 

regulation are available in an NIH publication, Financial Conflict of Interest–

Objectivity in Research: Institutional Policy Review, available on the NIH Web site at 

http://grants.nih.gov/grants/policy/coi/nih_review.htm. 

Recombinant DNA and Human Gene Transfer Research 

The NIH Guidelines for Research Involving Recombinant DNA Molecules (NIH 

Guidelines) (April 2002 or latest revision) apply to (1) all research projects that 

involve recombinant DNA and are conducted at or sponsored by an organization that 

receives support for recombinant DNA research, or (2) research projects involving 

testing in humans of materials containing recombinant DNA developed with HHS 

funds, if the organization that developed the materials sponsors or participates in 

those projects. The NIH guidelines are available at 

http://www4.od.nih.gov/oba/rac/guidelines/guidelines.html. As defined by the NIH 

guidelines, recombinant DNA molecules are either (1) molecules that are constructed 

outside of living cells by joining natural or synthetic DNA segments to DNA molecules 

that can replicate in a living cell or (2) molecules that result from the replication of 

those described in (1). 

The NIH guidelines apply to both basic and clinical research studies. Recombinant 

DNA research involving select agents also is subject to pertinent CDC and USDA 

 II-15 
regulations.14 Specific guidance for the conduct of human gene transfer studies 

appears in Appendix M of the NIH guidelines. Failure to comply with these 

requirements may result in suspension or termination of an award for recombinant 

DNA research at the organization, or a requirement for OPDIV prior approval of any 

or all recombinant DNA projects at the organization. The recipient should carefully 

review the NIH guidelines in their entirety to ensure compliance with all of the 

requirements for projects involving recombinant DNA techniques. 

Human Embryonic Stem Cell Research and Cloning 

HHS funds may not be used to support human embryo research under any 

extramural award instrument. HHS funds may not be used for the creation of a 

human embryo for research purposes or for research in which a human embryo is 

destroyed, discarded, or knowingly subjected to risk of injury or death greater than 

that allowed for research on fetuses in utero under 45 CFR 46.204 and 46.207 and 

Subsection 498(b) of the PHS Act 42 U.S.C. 289g(b). The term “human embryo” 

includes any organism not protected as a human subject under 45 CFR part 46, as of 

the date of enactment of the governing appropriations act, that is derived by 

fertilization, parthenogenesis, cloning, or any other means from one or more human 

gametes or human diploid cells. 

In addition to the statutory restrictions on human fetal research under Subsection 

498((b) of the PHS Act, HHS is prohibited, by a March 4, 1997, Presidential 

memorandum, from using Federal funds for cloning human beings. 

Research on Human Fetal Tissue 

Human fetal tissue is defined as tissue or cells obtained from a dead human embryo 

or fetus after a spontaneous or induced abortion or stillbirth. This definition does not 

include established human fetal cell lines. Research involving the transplantation of 

human fetal tissue must be conducted in accordance with applicable State and local 

laws and with the following guidance. 

The scientific and ethical challenges associated with research utilizing human fetal 

tissue make it imperative that researchers and their organizations be fully aware of 

and in compliance with the Federal requirements, particularly Section 498B of the 

PHS Act, 42 U.S.C. 289g-2. The statute specifically prohibits any person from 

knowingly acquiring, receiving, or transferring any human fetal tissue for valuable 

consideration. The term “valuable consideration” is a concept similar to profit and 

does not include reasonable payment for costs associated with the collection, 

processing, preservation, storage, quality control, or transportation of these tissues. 

Violation of this statute carries criminal penalties that apply to both those that supply 

and those that acquire human fetal tissue. 

 14 See 42 CFR part 73, Select Agents and Toxins; and 7 CFR part 331 and 9 CFR 

part 121, Possession, Use, and Transfer of Biological Agents and Toxins.

 II-16 
Sections 498A and 498B of the PHS Act, 42 U.S.C. 289g-1 and 289g-2, contain 

additional legal requirements for research on the transplantation of human fetal 

tissue for therapeutic purposes conducted or supported by PHS. Under Section 498A, 

the recipient must adhere to the following provisions: 

• The woman who donates the fetal tissue must sign a statement declaring that 

the donation is being made 

h for therapeutic transplantation research, 

h without any restriction regarding the identity of individuals who may 

receive the transplantation, and 

h without the donor knowing the identity of the individual receiving the 

transplantation. 

• The attending physician must sign a statement that he/she has 

h obtained the tissue in accordance with the donor’s signed statement and 

h fully disclosed to the donor his or her intent, if any, to use the tissue in 

research and any known medical risks to the donor or risks to her privacy 

associated with the donation that are in addition to risks associated with 

the woman’s medical care. 

In the case of tissue obtained pursuant to an induced abortion, the physician’s 

statement also must state that he/she 

h obtained the woman’s consent for the abortion before requesting or 

obtaining consent for the tissue to be used; 

h did not alter the timing, method, or procedures used to terminate the 

pregnancy solely for the purpose of obtaining the tissue for research; and 

h performed the abortion in accordance with applicable State and local laws. 

• The PI must sign a statement certifying that he/she is aware that the tissue is 

human fetal tissue obtained in a spontaneous or induced abortion, or 

pursuant to a stillbirth, and that the tissue was donated for research 

purposes. The PI also must certify that this information has been shared with 

others who have responsibilities regarding the research and, before eliciting 

informed consent from the transplantation recipient, will obtain written 

acknowledgment that the patient is aware of the aforementioned information. 

• The PI must certify in writing that he/she has had no part in any decisions as 

to the timing, method, or procedures used to terminate the pregnancy. 

The recipient must certify that the physician’s statement, the PI’s statement, and the 

acknowledgment of the transplantation recipient must be available for audit by the 

HHS Secretary or designee. 

Information for organizations conducting research on human fetal tissue, including 

information on the governing Federal statutes, Sections 498A and 498B of the PHS 

 II-17 
Act, 42 U.S.C. 289g-1 and 298g-2, is available on the NIH Web site at 

http://grants.nih.gov/grants/guide/notice-files/not93-235.html. 

Transplantation of Human Fetal Tissue 

If research on the transplantation of human fetal tissue is conducted under the 

grant-supported project, the recipient must make available for audit by the HHS 

Secretary or designee, the physician statements and informed consents required by 

Subsections 498A(b)(2) and (c) of the PHS Act, 42 U.S.C. 289g-1(b)(2) and (c) or 

must ensure HHS access to those records, if maintained by an entity other than the 

recipient. This requirement is in addition to the requirements concerning human 

subjects in research. 

In addition, FDA issued a letter on November 30, 2000, indicating that it has 

jurisdiction over fetal cells and tissues intended for use in humans. FDA requests that 

investigators contact it to determine whether any planned or ongoing clinical 

research would require submission of an IND application. Additional information and 

FDA contact information is available at http://www.fda.gov/cber/ltr/fetal113000.htm. 

Certificates of Confidentiality 

Section 301(d) of the PHS Act, 42 U.S.C. 241, provides that the Secretary may 

authorize people engaged in biomedical, behavioral, clinical, or other research 

activities to protect the privacy of research subjects by withholding the names and 

other identifying characteristics of those subjects from individuals not engaged in the 

research. Individuals that have authorization may not be compelled to disclose 

subjects’ identities in any Federal, State, or local civil, criminal, administrative, 

legislative or other proceeding. CoCs may be granted for studies collecting 

information that, if disclosed, could have adverse consequences for subjects or 

damage their financial standing, employability, insurability, or reputation. By 

protecting researchers from being compelled to disclose information that would 

identify research subjects, CoCs contribute to achieving research objectives and 

promote participation in studies by helping to ensure confidentiality and privacy to 

participants. Information on CoCs is available on the NIH Web site at the CoC Kiosk 

at http://grants.nih.gov/grants/policy/coc/index.htm. Requests for CoCs should be 

submitted to the GMO, and, subject to OPDIV review and approval, a certificate may 

be issued pursuant to Section 301(d). 

Investigational New Drug Applications/Investigational Device Exceptions 

To be eligible for funding, all clinical research involving INDs, drugs approved for a 

different indication, or experimental combinations of drugs must meet FDA IND 

regulations, FDA human subjects’ protection requirements, and HHS human subjects’ 

requirements. As provided in the FDA regulations, an IND or IDE also may apply to 

biologics or devices. The FDA regulations are published in 21 CFR parts 50 and 312. 

The official sponsor of the IND/IDE, whether a Federal agency, a recipient, or a third 

party, is legally responsible for meeting the FDA requirements. If the IND/IDE 

sponsor is a third party, such as a pharmaceutical company or research organization 

under contract to a recipient or to a pharmaceutical company, the legal responsibility 

for monitoring the clinical trial and reporting to FDA rests with the sponsor rather 

than the recipient. This generally will be the case for larger, multi-site clinical trials. 

If the recipient is the IND/IDE holder, commonly referred to as an “investigator-

 II-18 
initiated IND/IDE,” the recipient or the investigator serves as the sponsor and 

assumes the legal responsibility. In any case, the recipient is ultimately responsible 

for ensuring compliance with the requirements for protection of human subjects, 

including compliance with FDA’s requirements. 

Following the filing of an IND, FDA has a 30-day period in which to review it. FDA 

may allow the IND to proceed or may defer approval of the IND until changes it 

deems acceptable are made. FDA also may order a clinical trial to be suspended or 

terminated, at any time, based on information it receives about that clinical trial. 

When HHS funds all, or part of, a clinical study involving an IND or an IDE, the 

OPDIV must be aware of any significant communications with FDA concerning the 

study. The recipient must report certain types of FDA communications to the OPDIV 

within 72 hours of receiving a copy of or upon being informed of the FDA 

communication (through the PI or another person acting on behalf of the recipient), 

whichever occurs first. This notification requirement applies to any of the following 

communications from FDA with the sponsor of the IND or IDE: 

• Warning letters (whether sent to the recipient or to the commercial sponsor) 

• Notice of Initiation of Disqualification Proceedings and Notice of Opportunity 

to Explain 

• Notice of Opportunity for Hearing 

• Notice of Disqualification 

• Consent agreements 

• Clinical hold letters that pertain to breaches of good manufacturing practices, 

good clinical practices, or other major issue requiring significant changes in 

the protocol. 

The notification should be made in writing, but also may be done by telephone if a 

written notice would delay the notification. It should include a statement of the 

action taken or contemplated and the assistance needed to resolve the situation. 

These requirements apply to the recipient even if the recipient or the funded PI is the 

sponsor. Failure to comply with this requirement may result in HHS imposing a 

corrective and/or enforcement action. FDA communications are considered grantrelated records for purposes of retention and access. 

Controlled Substances 

Grantees are prohibited from knowingly using appropriated funds to support 

activities that promote the legalization of any drug or other substance included in 

Schedule I of the schedule of controlled substances established by section 202 of the 

Controlled Substances Act, 21 U.S.C. 812. This limitation does not apply if the 

recipient notifies the GMO that there is significant medical evidence of a therapeutic 

advantage to the use of such drug or other substance or that federally sponsored 

clinical trials are being conducted to determine therapeutic advantage. 

If controlled substances are proposed to be administered as part of a research 

protocol or if research is to be conducted on the drugs themselves, 

 II-19 
applicants/recipients must ensure that the DEA requirements, including registration, 

inspection, and certification, as applicable, are met. Regional DEA offices can supply 

forms and information concerning the type of registration required for a particular 

substance for research use. The main registration office in Washington, DC, may be 

reached at 800-882-9539. Information also is available from the National Institute 

on Drug Abuse at 301-443-6300. 

Construction-Related Requirements 

In addition to those requirements specified in “Requirements Related to 

Construction, Modernization, and Other Designated Activities,” the following public 

policy requirements apply to grants that involve construction or A&R. 

Flood Insurance 

The Flood Disaster Protection Act of 1973, as amended, 42 U.S.C. 4001 et seq., 

provides that no Federal financial assistance to acquire, modernize, or construct 

property may be provided in identified flood-prone communities in the United States, 

unless the community participates in the National Flood Insurance Program and flood 

insurance is purchased within 1 year of the identification. The flood insurance 

purchase requirement applies to both public and private applicants for HHS support. 

Lists of flood-prone areas that are eligible for flood insurance are published in the 

Federal Register by FEMA. 

Architectural Barriers 

The Architectural Barriers Act of 1968, 42 U.S.C. 4151 et seq., as amended, the 

Federal Property Management Regulations (see 41 CFR 102-76), and the Uniform 

Federal Accessibility Standards issued by GSA (see 36 CFR 1191, Appendixes C and 

D) set forth requirements to make facilities accessible to, and usable by, the 

physically handicapped and include minimum design standards. All new facilities 

designed or constructed with HHS grant support must comply with these 

requirements. These minimum standards must be included in the specifications for 

any HHS-funded new construction unless the recipient proposes to substitute 

standards that meet or exceed these standards. Where HHS assistance is provided 

for alteration or renovation (including modernization and expansion) of existing 

facilities, the altered facility (or part of the facility) must comply, including use of the 

minimum standards in the specifications. The recipient is responsible for conducting 

inspections to ensure compliance with these standards by any contractor performing 

construction services under the grant. 

Clean Air and Clean Water Act 

42 U.S.C. 7606 and EO 11738 provide for the protection and enhancement of the 

quality of the nation’s air resources to promote public health and welfare and for 

restoring and maintaining the chemical, physical, and biological integrity of the 

nation’s waters. 

Safe Drinking Water Act 

42 U.S.C. 300h-3 provides for the protection of underground sources of drinking 

water that have an aquifer, which is the sole source of drinking water. Specifically, 

 II-20 
no grant may be entered into for any project that the EPA Administrator determines 

may contaminate such aquifer. 

Health, Safety, and Related Requirements 

Restriction on Funding Abortions 

HHS funds may not be spent for an abortion. 

Restriction on Distribution of Sterile Needles/Needle Exchange 

Funds appropriated for HHS may not be used to carry out any program of 

distributing sterile needles or syringes for the hypodermic injection of any illegal 

drug. 

Standards for Privacy of Individually Identifiable Health Information 

The “Standards for Privacy of Individually Identifiable Health Information” (the 

Privacy Rule) implement the Health Insurance Portability and Accountability Act 

(HIPAA) of 1996, 42 U.S.C. 1320d et seq., which governs the protection of 

individually identifiable health information. The Privacy Rule is administered and 

enforced by HHS’s OCR and is codified at 45 CFR parts 160 and 164. Not all HHS 

recipients are subject to the Privacy Rule. The Privacy Rule applies only to “covered 

entities,” as defined by the rule, which include health plans and most health-care 

providers. 

The OCR Web site (http://www.hhs.gov/ocr/hipaa) provides information on the 

Privacy Rule, including the complete text of the regulation and a set of decision tools 

for determining whether a particular entity is subject to the rule. An educational 

booklet, Protecting Health Information in Research: Understanding the HIPAA Privacy 

Rule, is available through OCR’s Web site and at 

http://privacyruleandresearch.nih.gov/. That Web site also includes other 

educational materials approved by OCR and the HHS Office of the General Counsel. 

 Confidentiality of Patient/Client Records 

Section 543 of the PHS Act, 42 U.S.C. 290dd-2, requires that records of substance 

abuse patients be kept confidential except under specified circumstances and 

purposes. The covered records are those that include the identity, diagnosis, 

prognosis, or treatment of any patient maintained in connection with any program or 

activity relating to substance abuse education, prevention, training, treatment, 

rehabilitation, or research that is conducted, regulated, or directly or indirectly 

assisted by any department or agency of the United States. This requirement is 

implemented in 42 CFR part 2. 

Drug-Free Workplace 

The Drug-Free Workplace Act of 1988, 42 U.S.C. 701 et seq., requires that all 

organizations receiving grants from any Federal agency agree to maintain a drugfree workplace. The recipient must notify the awarding office if an employee of the 

recipient is convicted of violating a criminal drug statute. Failure to comply with 

these requirements may be cause for debarment. HHS implementing regulations are 

 II-21 
set forth in 45 CFR part 82, “Governmentwide Requirements for Drug-Free 

Workplace (Financial Assistance).” 

Pro-Children Act 

The Pro-Children Act of 1994, 20 U.S.C. 7183, imposes restrictions on smoking in 

facilities where federally funded children’s services are provided. HHS grants are 

subject to these requirements only if they meet the Act’s specified coverage. The Act 

specifies that smoking is prohibited in any indoor facility (owned, leased, or 

contracted for) used for the routine or regular provision of kindergarten, elementary, 

or secondary education or library services to children under the age of 18. In 

addition, smoking is prohibited in any indoor facility or portion of a facility (owned, 

leased, or contracted for) used for the routine or regular provision of federally 

funded health care, day care, or early childhood development, including Head Start 

services to children under the age of 18. The statutory prohibition also applies if such 

facilities are constructed, operated, or maintained with Federal funds. The statute 

does not apply to children’s services provided in private residences, facilities funded 

solely by Medicare or Medicaid funds, portions of facilities used for inpatient drug or 

alcohol treatment, or facilities where WIC coupons are redeemed. Failure to comply 

with the provisions of the law may result in the imposition of a civil monetary penalty 

of up to $1,000 per violation and/or the imposition of an administrative compliance 

order on the responsible entity. Any questions concerning the applicability of these 

provisions to an HHS grant should be directed to the GMO. 

Smoke-Free Workplace 

HHS strongly encourages recipients to provide smoke-free workplaces and to 

promote the nonuse of tobacco products. HHS defines the term “workplace” to mean 

office space (including private offices and other workspace), conference or meeting 

rooms, corridors, stairways, lobbies, rest rooms, cafeterias, and other public spaces. 

Health and Safety 

Recipients are responsible for meeting Federal, State, and local health and safety 

standards and for establishing and implementing necessary measures to minimize 

their employees’ risk of injury or illness in activities related to HHS grants. In 

addition to applicable Federal, State, and local laws and regulations, the following 

regulations must be followed when developing and implementing health and safety 

operating procedures and practices for both personnel and facilities: 

• 29 CFR 1910.1030, Bloodborne pathogens; 29 CFR 1910.1450, Occupational 

exposure to hazardous chemicals in laboratories; and other applicable 

occupational health and safety standards issued by the Occupational Health 

and Safety Administration and included in 29 CFR part 1910. These 

regulations are available at http://www.osha.gov/comp-links.html. 

• Nuclear Regulatory Commission Standards and Regulations, pursuant to the 

Energy Reorganization Act of 1974 (42 U.S.C. 5801 et seq.). Copies may be 

obtained from the U.S. Nuclear Regulatory Commission, Washington, DC 

20555-0001. 

Recipients are not required to submit documented assurance of their compliance with 

or implementation of these requirements. However, if requested by the OPDIV, 

 II-22 
recipients should be able to provide evidence that applicable Federal, State, and local 

health and safety standards have been considered and have been put into practice. 

Acknowledgment of Federal Funding 

As required by HHS appropriations acts, all HHS recipients must acknowledge Federal 

funding when issuing statements, press releases, requests for proposals, bid 

invitations, and other documents describing projects or programs funded in whole or 

in part with Federal funds. Recipients are required to state (1) the percentage and 

dollar amounts of the total program or project costs financed with Federal funds and 

(2) the percentage and dollar amount of the total costs financed by nongovernmental 

sources. 

Activities Abroad 

HHS recipients must ensure that project activities carried on outside the United 

States are coordinated as necessary with appropriate government authorities and 

that appropriate licenses, permits, or approvals are obtained. 

Limited English Proficiency 

Recipients of Federal financial assistance must take reasonable steps to ensure that 

people with limited English proficiency have meaningful access to health and social 

services and that there is effective communication between the service provider and 

individuals with limited English proficiency. To clarify existing legal requirements, 

HHS published “Guidance to Federal Financial Assistance Recipients Regarding Title 

VI Prohibition Against National Origin Discrimination Affecting Limited English 

Proficient Persons.” This guidance, which is available at 

http://www.hhs.gov/ocr/lep/revisedlep.html, provides a description of the factors 

that recipients should consider in determining and fulfilling their responsibilities to 

individuals with limited English proficiency under Title VI of the Civil Rights Act of 

1964. 

Resource Conservation and Recovery Act 

Under RCRA (42 U.S.C. 6901 et seq.), any State agency or agency of a political 

subdivision of a State using appropriated Federal funds must comply with 42 U.S.C. 

6962. This includes State and local institutions of higher education or hospitals that 

receive direct HHS awards. Section 6962 requires that preference be given in 

procurement programs to the purchase of specific products containing recycled 

materials identified in guidelines developed by EPA (40 CFR parts 247–254). 

Seat Belts 

Pursuant to EO 13043 (April 16, 1997), Increasing the Use of Seat Belts in the 

United States, HHS recipients are encouraged to adopt and enforce on-the-job seat 

belt policies and programs for their employees when operating vehicles, whether 

organizationally owned or rented or personally owned. 

 II-23 
Cost Considerations 

General 

This section addresses the general principles underlying the allowability of costs, 

differentiates direct costs from indirect costs, and highlights a number of specific 

costs and categories of cost. It is not intended to be all-inclusive and should be used 

as a supplement to the applicable cost principles. 

The Cost Principles 

Cost principles establish general standards for the allowability of costs, provide 

detailed guidance on the cost accounting treatment of costs as direct or indirect 

costs, and set forth allowability principles for selected items of cost. Applicability of a 

particular set of cost principles depends on the type of organization making the 

expenditure. For example, a non-profit organization receiving a subaward from a 

State recipient would be subject to the cost principles for non-profit organizations, 

while the State would be subject to the cost principles for States, local governments, 

and Indian tribal governments. 

The cost principles are set forth in the following documents and are incorporated by 

reference in 45 CFR 74.27 and 92.22: 

• OMB Circular A-21—Cost Principles for Educational Institutions (2 CFR part 

220) 

• OMB Circular A-87—Cost Principles for State, Local, and Indian Tribal 

Governments15 (2 CFR part 225) 

• OMB Circular A-122—Cost Principles for Non-Profit Institutions16 (2 CFR part 

230) 

• 45 CFR part 74, Appendix E—Principles for Determining Costs Applicable to 

Research and Development under Grants and Contracts with Hospitals 

• 48 CFR subpart 31.2 (Federal Acquisition Regulation)—Contract Cost 

Principles and Procedures—Contracts with Commercial Organizations 

 15 Additional information on cost allocation plans and indirect cost rates is found 

in HHS’s A Guide for State, Local and Indian Tribal Governments: Cost Principles and 

Procedures for Developing Cost Allocation Plans and Indirect Cost Rates for 

Agreements with the Federal Government – Implementation Guide for Office of 

Management and Budget Circular A-87 (ASMB C-10), which is available on the 

Internet at http://www.hhs.gov/grantsnet/state, and Review Guide for State and 

Local Governments State/Local-Wide Central Service Cost Allocation Plans and 

Indirect Cost Rates, which is available at http://rates.psc.gov/. 16 Non-profit organizations that are specifically listed in Attachment C to OMB Circular A-122 are 

subject to the Federal cost principles applicable to commercial organizations (48 CFR subpart 31.2) rather 

than to the cost principles for non-profit organizations.

 II-24 
Recipients can use their own accounting systems, policies, and procedures to 

implement the cost principle requirements as long as the standards prescribed in 45 

CFR 74.21 or 92.20 for financial management systems are met (see “Financial 

Management”). 

The cost principles address four tests in determining the allowability of costs. The 

tests are as follows: 

• Reasonableness (including necessity). A cost is reasonable if, in its nature or 

amount, it does not exceed that which would be incurred by a prudent person 

under the circumstances prevailing at the time the decision was made to incur 

the cost. The cost principles elaborate on this concept and address 

considerations such as whether the cost is of a type generally necessary for 

the organization’s operations or the grant’s performance, whether the 

recipient complied with its established organizational policies in incurring the 

cost or charge, and whether the individuals responsible for the expenditure 

acted with due prudence in carrying out their responsibilities to the Federal 

government and the public at large as well as to the organization. 

• Allocability. A cost is allocable to a specific grant, function, department, or 

other component, known as a cost objective, if the goods or services involved 

are chargeable or assignable to that cost objective in accordance with the 

relative benefits received or other equitable relationship. A cost is allocable to 

a grant if it is incurred solely in order to advance work under the grant; it 

benefits both the grant and other work of the organization, including other 

grant-supported projects or programs; or it is necessary to the overall 

operation of the organization and is deemed to be assignable, at least in part, 

to the grant. 

• Consistency. Recipients must be consistent in assigning costs to cost 

objectives. They must be treated consistently for all work of the organization 

under similar circumstances, regardless of the source of funding, so as to 

avoid duplicate charges. 

• Conformance. This test of allowability—conformance with limitations and 

exclusions contained in the terms and conditions of award, including those in 

the cost principles—may vary by the type of activity, the type of recipient, 

and other characteristics of individual awards. “Allowable Costs and Activities” 

below provides information common to most HHS grants and, where 

appropriate, specifies some of the distinctions if there is a different treatment 

based on the type of grant or recipient. 

These four tests apply regardless of whether the particular category of costs is one 

specified in the cost principles or one governed by other terms and conditions of an 

award. These tests also apply regardless of treatment as a direct cost or an indirect 

cost. The fact that a proposed cost is awarded as requested by an applicant does not 

indicate a determination of allowability. 

Direct Costs and Indirect Costs 

Direct costs are costs that can be identified specifically with a particular award, 

project or program, service, or other organizational activity or that can be directly 

assigned to such an activity with a high degree of accuracy. Direct costs include, but 

 II-25 
are not limited to, salaries, travel, equipment, and supplies directly benefiting the 

grant-supported project or program. Indirect costs (also known as “facilities and 

administrative costs”) are costs incurred for common or joint objectives that cannot 

be identified specifically with a particular project, program, or organizational activity. 

Facilities operation and maintenance costs, depreciation, and administrative 

expenses are examples of costs that usually are treated as indirect costs. The 

organization is responsible for presenting costs consistently and must not include 

costs associated with its indirect rate as direct costs. 

Reimbursement of Indirect Costs 

HHS considers activities conducted by recipients that result in indirect charges a 

necessary and appropriate part of HHS grants. OPDIVs reimburse their share of 

those costs either as a fixed amount or through use of a rate. The amount may be 

specified in statute, regulations, or policy or be determined based on a rate 

negotiated by DCA, DFAS in the Office of Acquisition Management and Policy, NIH 

(responsible for negotiating indirect cost rates for for-profit entities receiving awards 

from HHS), or other cognizant Federal agency and reflected in a formal rate 

agreement. For certain governmental organizations, amounts claimed are based on 

documentation retained by the governmental organization. State and local 

governmental organizations also may be eligible for reimbursement of costs 

associated with provision of central services as provided in OMB Circular A-87.17 If 

an applicant is advised by the GMO of the need to establish a rate prior to issuance 

of a NoA, the GMO will indicate the responsible office to be contacted. 

 

If reimbursement of indirect costs is allowable under an award, HHS will not 

reimburse those costs unless the recipient has established an indirect cost rate 

covering the applicable activities and period of time unless indirect costs are 

reimbursed at a fixed rate (e.g., HHS indirect cost reimbursement for training grants 

to other than governmental recipients) or the applicant is not required to submit a 

proposal to the Federal government as specified in OMB Circular A-87. The awarding 

office uses the applicable indirect cost rate covering the award budget period (or part 

thereof) in calculating the amount to be shown or to be included on the NoA. If, on 

the basis of statute, regulation, or policy, allowable indirect cost reimbursement is 

restricted to an amount less than full indirect cost reimbursement, the difference 

between those two amounts may be used to satisfy a recipient’s matching or costsharing requirement (see “Matching or Cost Sharing”). 

Indirect cost proposals must be prepared in accordance with the applicable cost 

principles and guidance provided by the cognizant office or agency. Further 

information concerning the establishment of indirect cost rates and the 

reimbursement of indirect costs may be obtained from DCA or DFAS (see Part III). 

DCA should be consulted to determine the need to submit a Disclosure Statement 

(DS-2) pursuant to the requirements of OMB Circular A-21. 

If the GMO determines that a recipient does not have a currently effective indirect 

cost rate, the award may not include an amount for indirect costs unless the 

organization has never established an indirect cost rate (usually a new recipient) and 

17 OMB Circular A-87 also addresses public assistance cost allocation plans; 

however, the types of programs eligible for such costs are not covered by this HHS 

GPS. 

 II-26 
intends to establish one. In such cases, the award shall include a provisional amount 

equaling one-half of the amount of indirect costs requested by the applicant, up to a 

maximum of 10 percent of direct salaries and wages (exclusive of fringe benefits). If 

the recipient fails to provide a timely proposal, indirect costs paid in anticipation of 

establishment of a rate will be disallowed. 

There are several other limited circumstances under which the GMO may award 

indirect costs if none were previously awarded or may increase the amount 

previously awarded. If an award does not include an amount for indirect costs 

because the recipient did not submit a timely indirect cost proposal and the recipient 

subsequently establishes a rate, the GMO may amend the award to provide an 

appropriate amount for indirect costs if the amendment can be made using funds 

from the same Federal fiscal year in which the award was made. However, the 

amount will be limited to the indirect costs applicable to the period after the effective 

date of the rate agreement. This provision does not affect those local governmental 

agencies that are not required to submit their indirect cost proposals to the Federal 

government. They may charge indirect costs to HHS grants based on the rate 

computations they prepare and keep on file for subsequent Federal review. 

Rebudgeting within the direct cost category may affect the amount of eligible indirect 

cost reimbursement, depending on the direct cost base on which indirect costs are 

calculated (for example, salaries and wages). The recipient is expected to 

accommodate such changes within the ceiling amount of the award. If permissible 

direct cost rebudgeting or unobligated balances of Federal funds result in the need 

for a lesser amount of indirect costs than awarded or a higher permanent rate results 

in a need for additional indirect costs beyond those awarded, recipients may 

rebudget between direct and indirect costs (in either direction) to accommodate such 

an increase or decrease without OPDIV prior approval unless it would constitute a 

change in the scope of the project (see “Prior-Approval Requirements—OPDIV Prior 

Approval”). 

Generally, award amounts will not be adjusted based on a negotiated indirect cost 

rate different from that used at the time of the award (whether competitive segment 

or budget period). 

If funds are available, a GMO may, but is not obligated to, amend an award to 

provide additional funds for indirect costs, but only under the following 

circumstances: 

• An error was made in computing the award. This includes situations in which 

a higher rate than the rate used in the grant award is negotiated and the date 

of the rate agreement for the higher rate is on or before 1 calendar month 

prior to the beginning date of the grant budget period. 

• The awarding office restores funds previously recaptured as part of a 

recipient’s unobligated balance. 

• The recipient is eligible for additional indirect costs associated with additional 

direct costs awarded, e.g., a supplemental award. 

For all recipients other than those subject to OMB Circular A-21, the negotiated rate 

in effect at the beginning of each budget period will be used as the basis for 

determining indirect costs for that budget period. For recipients subject to OMB 

 II-27 
Circular A-21, the rate in effect at the beginning of a competitive segment will be 

used to determine indirect cost funding levels for the entire segment. If the rate 

agreement in effect at the outset of the competitive segment does not cover the 

entire competitive segment, then the rate in effect for the last year of the negotiated 

agreement will be used to determine indirect cost funding for the duration of the 

competitive segment. For all recipients, if the rate in effect at the beginning of the 

competitive segment or budget period, as applicable, was provisional and is 

superseded by a permanent rate, whether higher or lower, the latter rate will be 

used to determine indirect cost reimbursement. The award will not be adjusted 

downward, based on a lower permanent indirect cost rate than a provisional rate 

used in calculating the award, unless the indirect cost proposal that served as the 

basis for the negotiation included unallowable costs. The OPDIV also is not required 

to provide any additional funding to accommodate this situation but may do so if an 

error was made in computing the award as indicated above. 

The recipient is responsible for establishing indirect cost rates for its subrecipients if 

those subrecipients do not have a current, applicable rate negotiated by a cognizant 

Federal agency. 

Applicable Credits 

The term “applicable credits” refers to those receipt or negative expenditure types of 

transactions that operate to offset or reduce direct or indirect cost items. Typical 

examples are purchase discounts, rebates or allowances, recoveries or indemnities 

on losses, and adjustments for overpayments or erroneous charges. Additional 

information concerning applicable credits is included in the cost principles. 

Applicable credits to direct charges made to HHS grants must be treated as an 

adjustment on the recipient’s FSR, whether those credits accrue during or after the 

period of grant support. The awarding office will notify the recipient of any additional 

actions that may be necessary. 

Allowable Costs and Activities 

The governing cost principles address selected items of cost, some of which are 

mentioned in this subsection for emphasis. This subsection is not intended to be allinclusive. The cost principles should be consulted for the complete explanation of the 

allowability or unallowability of costs they address. The allowability of costs under 

individual OPDIV awards also may be governed by requirements specified in the 

program legislation, regulations, or the specific terms and conditions of the award, 

which will take precedence over the general discussion provided here (see “Overview 

of Terms and Conditions of Award—Effect and Order of Precedence”). Recipients that 

have questions concerning the allowability of costs should contact the GMO. 

If a cost is allowable, it is allocable as either a direct cost or an indirect cost, 

depending on the recipient’s accounting system. For some costs addressed in this 

subsection, the text specifies whether the cost is usually a direct cost or an indirect 

cost. 

Unless otherwise indicated in the NoA, an award based on an application that 

includes specific information concerning any direct costs or activities that require 

OPDIV prior approval constitutes the prior approval for those costs or activities. The 

recipient is not required to obtain any additional approval for those costs/activities. If 

 II-28 
a cost or activity requiring OPDIV prior approval is not included or fully described in 

the approved application, the recipient must obtain post-award prior approval as 

described in “Prior Approval Requirements—OPDIV Prior-Approval”). 

Subrecipients and contractors under grants are subject to the requirements of the 

cost principles otherwise applicable to their type of organization and to any 

requirements placed on them by the recipient to be able to comply with the terms 

and conditions of the award. 

The cost principles do not address profit or fee. HHS policy allows the payment of fee 

on SBIR/STTR grants, but HHS will not provide profit or fee to any other type of 

recipient under any other grant program. A fee may not be paid by a recipient to a 

subrecipient/consortium participant, including a for-profit organization. However, a 

fee (profit) may be paid to a contractor providing routine goods or services under a 

grant in accordance with normal commercial practice. 

Exhibit 4 describes selected cost items. 

 II-29 
Exhibit 4. Selected Items of Cost 

Item Description 

Advertising Allowable only for recruitment of staff or trainees, procurement of goods and services, disposal of 

scrap or surplus materials, and other specific purpose necessary to meet the requirements of the 

grant-supported activity. 

Alcoholic 

Beverages 

Unallowable as an entertainment expense. Allowable if within the scope of an approved project. 

Alteration and 

Renovation 

A&R costs are allowable unless the program legislation, implementing regulations, or other terms 

and conditions of the award specifically exclude such activity. See “Prior Approval Requirements—

OPDIV Prior-Approval” for A&R costs requiring GMO prior approval. A&R costs that do not exceed 

the prior approval thresholds specified in that section (or in Part IV, as applicable) generally are 

considered “minor A&R” and those exceeding that amount generally are considered “major A&R.” 

Major A&R is allowable only if the authorizing statute specifically permits that type of activity, whether 

characterized as modernization, remodeling, or A&R (see “Construction” in this exhibit). 

A&R must be consistent with the following criteria and documentation requirements: 

¡ The building has a useful life consistent with program purposes and is architecturally and 

structurally suitable for conversion to the type of space required. 

¡ The A&R is essential to the purpose of the grant-supported project or program. 

¡ The space involved will be occupied by the project or program. 

¡ The space is suitable for human occupancy before A&R work is started except where the purpose 

of the A&R is to make the space suitable for some purpose other than human occupancy, such as 

storage. 

¡ For minor A&R, if the space is rented, evidence is provided that the terms of the lease are 

compatible with the A&R proposed and cover the duration of the project period. 

¡ If the A&R will affect a site listed in (or eligible for inclusion in) the National Register of Historic 

Places, the requirements specified in “Preservation of Cultural and Historic Resources” have been 

followed. 

Routine maintenance and repair of the organization’s physical plant or its equipment, which is 

allowable and is ordinarily treated as an indirect cost, is not considered A&R. 

Work necessary to obtain an initial occupancy permit for the intended use is not an allowable A&R 

cost. Certain allowable costs of installing equipment, such as the temporary removal and 

replacement of wall sections and door frames to place equipment in its permanent location, or the 

costs of connecting utility lines, replacing finishes and furnishings, and installing any accessory 

devices required for the equipment’s proper and safe utilization, may be considered either equipment 

costs or A&R costs, depending on the recipient’s accounting system. 

A&R costs are not allowable under grants in support of scientific meetings (conference grants). 

Animals Allowable for the acquisition, care, and use of animals for use in research and research-related 

activities, contingent upon compliance with the applicable requirements of the PHS Policy on 

Humane Care and Use of Laboratory Animals. If the recipient operates an animal resource facility, 

charges for use of the facility should be determined in accordance with the Cost Analysis and Rate 

Setting Manual for Animal Resource Facilities (May 2000), available from NIH’s National Center for 

Research Resources (NCRR) (http://www.ncrr.nih.gov/newspub/CARS.pdf) or from NCRR’s Office of 

Science Policy and Public Liaison (e-mail: info@ncrr.nih.gov). 

 II-30 
Exhibit 4. Selected Items of Cost 

Item Description 

Audiovisual 

Activities 

Allowable for the production of an audiovisual. “Audiovisual” means any product containing visual 

imagery, sound, or both, such as motion pictures, films, videotapes, live or recorded radio or 

television programs or public service announcements, slide shows, filmstrips, audio recordings, 

multimedia presentations, or exhibits where visual imagery, sound, or both are an integral part. 

“Production” refers to the steps and techniques used to create a finished audiovisual product, 

including, but not limited to, design, layout, scriptwriting, filming or taping, fabrication, sound 

recording, and editing. 

A recipient with in-house production capability must determine whether it would be more efficient and 

economical to use that capability or to contract for the production of an audiovisual. 

If an audiovisual intended for members of the general public (i.e., people who are not researchers, 

health professions, or service delivery personnel or who are not directly involved in project activities 

as employees, trainees, or participants, such as clients, volunteers or patients) is produced under an 

HHS grant-supported project or program, the recipient must submit two prints or tapes of the finished 

product along with its annual or final progress report. The costs of such prints or tapes are allowable 

costs. 

Audiovisuals produced under a grant-supported project or program must bear an acknowledgment 

and disclaimer, such as the following: 

The production of this [type of audiovisual (motion picture, television program, etc.)] was supported 

by Grant [number of grant] from [name of OPDIV]. Its contents are solely the responsibility of [name 

of recipient] and do not necessarily represent the official views of [name of OPDIV]. 

Audit Costs Allowable (as specified in Section 230 of OMB Circular A-133). The charges may be treated as a 

direct cost when the audit’s scope is limited to a single HHS grant-supported project or program, as 

specified in 45 CFR 74.26(d), or when it includes more than one project but the costs can be 

specifically identified with, and allocated to, each project on a proportional basis, and this practice is 

followed consistently by the recipient. Otherwise, charges for audits should be treated as indirect 

costs. In addition, a pass-through entity may charge an HHS award for the cost of a limited scope 

audit to monitor a subrecipient provided the subrecipient is not required to have a single audit and 

the other conditions of Section 230(b) (2) of OMB Circular A-133 are met. 

Bad Debts Unallowable. 

Bid and 

Proposal Costs 

Allowable as an indirect cost. See 45 CFR 74.27(b)(1) for policy for non-profit organizations covered 

by OMB Circular A-122. 

Bonding Allowable. See 45 CFR 74.21, 74.48(c) and 92.36 for policies and requirements concerning bonding.

Books and 

Journals 

Allowable. If an organization has a library, books and journals generally should be provided as part of 

normal library services and treated as indirect costs. 

Capital 

expenditures 

for land or 

buildings 

See “Land or Building Acquisition” in this exhibit. 

Child-Care 

Costs 

Allowable if within the scope of an approved project or program or as incidental costs of a project or 

program if incurred to enable individuals to participate as subjects in research projects or to receive 

health services. Such costs also may be allowable as a fringe benefit for individuals working on a 

grant-supported project (see “Fringe Benefits” in this exhibit). 

Communications Allowable. Such costs include local and long-distance telephone calls, telegrams, express mail, 

postage, messenger, and electronic or computer transmittal services and usually are treated as 

indirect costs. 

Compliance 

with Historic 

Preservation 

Requirements 

Allowable. May include hiring special consultants to research and document the historic value of 

proposed performance sites and costs associated with preparation and presentation of required 

materials to inform the public and others. 

 II-31 
Exhibit 4. Selected Items of Cost 

Item Description 

Construction/ 

Modernization 

Allowable only when program legislation specifically authorizes new construction, modernization, or 

other activities considered major A&R, and the OPDIV specifically authorizes such costs in the NoA. 

When authorized, construction activities may include construction of a new facility or projects in an 

existing building that are considered to be construction, such as relocation of exterior walls, roofs, 

and floors; attachment of fire escapes; or completion of unfinished shell space to make it suitable for 

human occupancy. 

Consultant 

Services 

Allowable. A consultant is an individual retained to provide professional advice or services for a fee 

but usually not as an employee of the requiring organization. The term “consultant” also includes a 

firm that provides paid professional advice or services. Recipients must have written policies 

governing their use of consultants that are consistently applied regardless of the source of support. 

Such policies should include the conditions for paying consulting fees. The general circumstances of 

allowability of these costs, which may include fees and travel and subsistence costs, are addressed 

in the applicable cost principles under “professional services costs.” 

In unusual situations, a person may be both a consultant and an employee of the same party, 

receiving compensation for some services as a consultant and for other work as a salaried employee 

as long as those separate services are not related to the same project and are not charged to the 

same project. For example, consulting fees that are paid by an educational institution to a salaried 

faculty member as extra compensation above that individual’s base salary are allowable, provided 

the consultation is across departmental lines or involves a separate or remote operation and the 

work performed by the consultant is in addition to his or her regular departmental workload. 

For employee consulting costs to be allowable under grant-supported projects (including subawards 

or contracts under the grant), recipients, subrecipients, and contractors must establish written 

guidelines permitting such payments regardless of the source of funding and indicating the 

conditions under which the payment of consulting fees to employees is proper. Unless subject to 

OMB Circular A-21, the recipient, subrecipient, or contractor also must document that it would be 

inappropriate or infeasible to compensate the individual for those services through payment of 

additional salary. Under no circumstances can an individual be paid as a consultant and an 

employee under the same HHS grant. 

Authorization for consulting fees paid to individuals serving as both employees and consultants of the 

same party must be provided in writing, on a case-by-case basis, by the head of the recipient, 

subrecipient, or contractor organization incurring the costs, or his/her designee. If the designee is 

personally involved in the project, the authorization may be given only by the head of the 

organization. This authorization must include a determination that the required conditions are present 

and that there is no apparent or actual conflict of interest. 

Recipients, subrecipients, and contractors under grants are encouraged to obtain written reports 

from consultants unless such a report is not feasible given the nature of the consultation or would not 

be useful. Documentation maintained by the receiving organization should include the name of the 

consulting firm or individual consultant; the nature of the services rendered and their relevance to the 

grant-supported activities, if not otherwise apparent from the nature of the services; the period of 

service; the basis for calculating the fee paid (e.g., rate per day or hour worked or rate per unit of 

service rendered); and the amount paid. This information may be included in the consultant’s invoice, 

in the report, or in another document. 

 II-32 
Exhibit 4. Selected Items of Cost 

Item Description 

Consumer/ 

Provider Board 

Participation 

Allowable in accordance with applicable program regulations. When not specifically authorized by 

program regulations, only the following costs are allowable with OPDIV prior approval: 

¡ Reasonable and actual out-of-pocket costs incurred solely as a result of attending a scheduled 

meeting, including transportation, meals, babysitting fees, and lost wages. 

¡ The reasonable costs of necessary meals furnished by the recipient to consumer or provider 

participants during scheduled meetings if not reimbursed to participants as per diem or otherwise. 

Where programmatic regulations permit such payments but establish a maximum annual income for 

eligibility for reimbursement of consumer/provider board members for wages lost by reason of their 

participation in board activities, the determination of eligibility will be made on the basis of gross 

rather than net income. 

Members of consumer/provider boards are not considered employees or consultants of the recipient. 

Therefore, they may not be compensated for their services other than as above, nor are they eligible 

for associated fringe benefits. Although not eligible for individual insurance coverage, board 

members may be covered by an organizational insurance policy while acting in their official 

capacities as board members. 

Contingency 

Funds 

Contributions set aside for events whose occurrence cannot be foretold with certainty as to time, 

intensity, or assurance of their happening are unallowable under nonconstruction grants. 

Contingency funds do not include pension funds, self-insurance funds, and normal accruals for 

severance and post-retirement health costs (also see “Reserve Funds” in this exhibit). Construction 

grants may include a contingency fund in initial construction contract cost estimates to provide for 

unanticipated charges. These funds will be limited to 5 percent of construction and equipment costs 

before bids or proposals are received and must be reduced to 2 percent after a construction contract 

has been awarded. 

Customs and 

Import Duties 

Allowable under grants to domestic organizations when performance will take place entirely within 

the United States, its possessions, or its territories, or when foreign involvement in the project is 

incidental to the overall grant-supported project. Charges may include consular fees, customs 

surtaxes, value-added taxes, and other related charges. (Also see “Requirements for Specific Types 

of Recipients” of this part for the allowability of these costs.) 

Depreciation 

or Use 

Allowances 

Allowable. Such costs usually are treated as indirect costs. Depreciation or use charges on 

equipment or buildings acquired under a federally supported project are not allowable. 

Donor Costs Allowable for payment to volunteers or research subjects who contribute blood, urine samples, and 

other body fluids or tissues that are specifically project related. 

Drugs Allowable if within the scope of an approved project. Project funds may not be used to purchase 

drugs classified by FDA as “ineffective” or “possibly effective” except in approved clinical research 

projects or in cases where there is no alternative other than therapy with “possibly effective” drugs. 

Recipient acquisition practices for drugs used in outpatient treatment must meet Federal 

requirements regarding cost-effectiveness and reasonableness as found in 42 CFR part 40, Subpart 

E, and OMB Circulars A-122 and A-87. 

Dues or 

Membership 

Fees 

Allowable as an indirect cost for organizational membership in business, professional, or technical 

organizations or societies. Payment of dues or membership fees for an individual’s membership in a 

professional or technical organization is allowable as a fringe benefit or an employee development 

cost, if paid according to an established organizational policy consistently applied regardless of the 

source of funds. 

Entertainment 

Costs 

Unallowable. This includes the cost of amusements, social activities, and related incidental costs. 

 II-33 
Exhibit 4. Selected Items of Cost 

Item Description 

Equipment Allowable for purchase of new, used, or replacement equipment as a direct cost or as part of indirect 

costs, depending on the intended use of the equipment. OPDIV prior approval may be required as 

specified in “Prior-Approval Requirements.” Funds provided under a conference grant may not be 

used to purchase equipment. 

For policies governing the classification, use, management, and disposition of equipment, see 

“Property Management.” For policies governing the allowability of costs for rental of equipment, see 

“Rental or Lease of Facilities and Equipment” in this exhibit. 

Federal (U.S. 

Government) 

Employees 

Only four types of costs—consultant fees, outpatient or subject costs, salary or fringe benefits, and 

travel costs—can be charged to HHS grants on behalf of Federal employees, and only under the 

conditions specified. Recipients should advise any Federal employees with whom these types of 

arrangements may be made to consult with their employing agency concerning their ability to meet 

the required conditions. 

Regardless of whether costs will be charged to the grant, special requirements apply when a Federal 

employee will be involved in an HHS grant-supported activity in any capacity other than as an 

employee working on a grant to a Federal institution, an outpatient, or a study subject. The 

requirements of that section do not apply to individuals that are classified as special government 

employees because of service on advisory groups or as a result of a formal consulting arrangement 

with a Federal agency. (See the HHS Standards of Conduct at 45 CFR part 73, Subpart J for 

additional guidance.) See “Requirements for Specific Types of Recipients—Grants to Federal 

Institutions and Allowable Costs and Payments to (or on Behalf of) Federal Employees under Grants”

for the allowability of payments made to, or on behalf of, Federal employees under HHS grants. 

Fines and 

Penalties 

Unallowable except when resulting from violations of, or failure of the organization to comply with, 

Federal, State, or local laws and regulations and incurred as a result of compliance with specific 

provisions of an award, or when such payments are authorized in advance in writing by the GMO. 

Fringe Benefits Allowable as part of overall employee compensation in proportion to the amount of time or effort an 

employee devotes to the grant-supported project or program, provided such costs are incurred under 

formally established and consistently applied policies of the organization (see “Salaries and Wages” 

in this exhibit). 

Tuition or tuition remission for regular employees is allowable as a fringe benefit. For organizations 

subject to OMB Circular A-21, tuition benefits for family members other than the employee are 

unallowable. For policies applicable to tuition remission for students working on grant-supported 

research projects, see “Salaries and Wages” in this exhibit. 

Fundraising 

Costs 

Unallowable. 

Hazardous 

Waste 

Disposal 

Allowable. Usually treated as an indirect cost. 

Honoraria Unallowable when the primary intent is to confer distinction on, or to symbolize respect, esteem, or 

admiration for, the recipient of the honorarium. A payment for services rendered, such as a speaker’s 

fee under a conference grant, is allowable. 

Hospitalization See “Research Patient Care” in this exhibit. 

Incentive 

Costs 

Incentive payments to volunteers or patients participating in a grant-supported project or program are 

allowable. Incentive payments to individuals to motivate them to take advantage of grant-supported 

health care or other services are allowable if within the scope of an approved project. See “Salaries 

and Wages” in this exhibit for incentive payments to employees. 

Indemnification Allowable to the extent expressly provided in the award for indemnification against liabilities to third 

parties and any other loss or damage not compensated by insurance or otherwise. The Federal 

government is obligated to indemnify the institution only to the extent expressly provided for in the 

NoA. 

 II-34 
Exhibit 4. Selected Items of Cost 

Item Description 

Independent 

Research and 

Development 

Costs 

Unallowable, including their proportionate share of indirect costs. 

Insurance Allowable. Insurance usually is treated as an indirect cost. In certain situations, however, where 

special insurance is required as a condition of the grant because of risks peculiar to the project, e.g., 

provision of health services, the premium may be charged as a direct cost if doing so is consistent 

with organizational policy. If so, the insurance should be treated as a direct cost and assigned to 

individual grants based on the manner in which the insurer allocates the risk to the population 

covered by the insurance. Medical liability (malpractice) insurance is an allowable cost of research 

programs at educational institutions only if the research involves human subjects. 

The cost of insuring equipment, whether purchased with grant funds or furnished as federally owned 

property, normally should be included in indirect costs but may be allowable as a direct cost if this 

manner of charging is the normal organizational policy. 

Interest Allowable as an indirect cost for certain assets as specified in the applicable cost principles. 

Unallowable for hospitals. 

Invention, 

Patent, or 

Licensing 

Costs 

Unallowable as a direct cost unless specifically authorized in the NoA. May be allowable as indirect 

costs provided they are authorized under applicable cost principles and are included in the 

negotiation of indirect cost rates. Such costs include licensing or option fees, attorney’s fees for 

preparing or submitting patent applications, and fees paid to the U.S. Patent and Trademark Office 

for patent application, patent maintenance, or recordation of patent-related information. 

Land or 

Building 

Acquisition 

Not allowable unless acquisition or construction is specifically authorized by program legislation and 

provided for in the NoA. Under those programs that have authority to permit recipients to acquire 

facilities, considerations such as the type of program being supported and the Federal interest in 

purchased property will be taken into account by the awarding office in determining whether property 

should be leased or purchased. For real property acquired with grant support, the cost of title 

insurance may be charged to the grant in proportion to the Federal share of the acquisition cost. 

Filing fees incurred with the recordation in appropriate official records of the applicable jurisdiction of 

the Federal interest in the real property also may be charged to the grant. Use allowance or 

depreciation on buildings that were not acquired under a Federal project are allowable, usually as an 

indirect cost. 

Leave Allowable for employees as a fringe benefit (see “Fringe Benefits” in this exhibit). See program 

guidance or Part IV for policy on leave for fellows and trainees. 

Legal Services Allowable. Generally treated as an indirect cost but, subject to the limitations described in the 

applicable cost principles, may be treated as a direct cost for legal services provided by individuals 

who are not employees of the recipient. Before a recipient incurs legal costs that are extraordinary or 

unusual, the recipient should make an advance agreement regarding the appropriateness and 

reasonableness of such costs with the GMO. Legal costs incurred in defending or prosecuting 

claims, whether equitable or monetary, including administrative grant appeals, are unallowable 

charges, except as provided in the applicable cost principles. 

Library 

Services 

General library support is not allowable as a direct cost but may be included in a recipient’s indirect 

cost pool. These services are allowable as a direct cost when specifically required for the conduct of 

the project and when identifiable as an integral part of the grant-supported activity (e.g., in those 

programs designed to develop and support such services). 

Lobbying Generally unallowable, including costs of lobbying activities to influence the introduction, enactment, 

or modification of legislation by the U.S. Congress or a State legislature. Under certain 

circumstances, as provided in the applicable cost principles, costs associated with activities that 

might otherwise be considered “lobbying” that are directly related to the performance of a grant may 

be allowable. The recipient should obtain an advance understanding with the GMO if it intends to 

engage in these activities. 

 II-35 
Exhibit 4. Selected Items of Cost 

Item Description 

Meals Generally unallowable except for the following: 

¡ Subjects and patients under study 

¡ Where specifically approved as part of the project or program activity, e.g., in programs providing 

children’s services 

¡ When an organization customarily provides meals to employees working beyond the normal 

workday, as a part of a formal compensation arrangement 

¡ As part of a per diem or subsistence allowance provided in conjunction with allowable travel 

¡ Under a conference grant, when meals are a necessary and integral part of a conference, 

provided that meal costs are not duplicated in participants’ per diem or subsistence allowances. 

Guest meals are not allowable. (See “Consumer/Provider Board Participation” in this exhibit 

regarding the allowability of the cost of meals for consumer and provider board participants in grantsupported activities.) 

Moving See “Recruitment Costs,” “Relocation Costs,” and “Transportation of Property” in this exhibit. 

NEPA Analysis Costs associated with evaluation of the environmental effects of a proposed activity and producing 

the Environmental Impact Statement (EIS) are allowable. 

Overtime See “Salaries and Wages” in this exhibit. 

Pension Plan 

Costs 

Allowable. For institutions of higher education and non-profit organizations, the following applies: 

¡ Such costs must be incurred according to the established policies of the organization consistently 

applied regardless of the source of funds. 

¡ The organization’s policies must meet the test of reasonableness. 

¡ The methods of cost allocation must be equitable for all activities. 

¡ The amount assigned to each fiscal year must be determined in accordance with generally 

accepted accounting principles. 

¡ The cost assigned to a given fiscal year must be paid or funded for all plan participants within 6 

months after the end of that fiscal year. 

State, local, or Indian tribal governments or hospitals may use the “pay-as-you-go” cost method 

(i.e., when pension benefits are paid by the recipient directly to, or on behalf of, retired employees or 

their beneficiaries) in lieu of the method described above. Under this method, the benefits may be 

charged in the recipient’s fiscal year in which the payments are made to, or on behalf of, retired 

employees or their beneficiaries, provided that the recipient follows a consistent policy of treating 

such payments as expenses in the year of payment. 

See the applicable cost principles for additional information on the allowability of costs associated 

with pension plans. 

 II-36 
Exhibit 4. Selected Items of Cost 

Item Description 

Pre-Award 

(PreAgreement) 

Costs 

Allowable. Where authorized by the OPDIV as an expanded authority (see Part IV of the HHS GPS), 

a recipient may, at its own risk and without OPDIV prior approval, incur obligations and expenditures 

to cover costs up to (and including) 90 days before the beginning date of the initial budget period of a 

new or competing continuation award if such costs 

¡ are necessary to conduct the project or program, and 

¡ would be allowable under the grant, if awarded. 

However, even if authorized as an expanded authority, if a specific expenditure would otherwise 

require prior approval, the cost or activity must meet the same tests of allowability as if incurred after 

award. 

If not authorized as part of expanded authorities, the applicant/recipient must seek OPDIV prior 

approval before incurring pre-award costs. OPDIV prior approval is required for any costs to be 

incurred more than 90 days before the beginning date of the initial budget period of a new or 

competing continuation award. 

Recipients may incur pre-award costs before the beginning date of a non-competing continuation 

award without regard to the time parameters stated above and without prior approval. The incurrence 

of pre-award costs in anticipation of a competing or non-competing award imposes no obligation on 

the OPDIV either to make the award or to increase the amount of the approved budget if an award is 

made for less than the amount anticipated and is inadequate to cover the pre-award costs incurred. 

Recipients are expected to be fully aware that pre-award costs result in borrowing against future 

support and that such borrowing must not impair the recipient’s ability to accomplish the project or 

program objectives in the approved time frame or in any way adversely affect the conduct of the 

project or program. 

Public 

Relations 

Costs 

Allowable only for costs specifically required by the award or for costs of communicating with the 

public and the press about specific activities or accomplishments under the grant-supported activity 

or other appropriate matters of public concern. Such costs may be treated as direct costs but should 

be treated as indirect costs if they benefit more than one sponsored agreement or if they benefit the 

grant and other work of the organization. 

Publications Allowable. Page charges for publication in professional journals are allowable if the published paper 

reports work supported by the grant and the charges are levied impartially on all papers published by 

the journal, whether or not by government-sponsored authors. The costs of reprints and publishing in 

other media, such as books, monographs, and pamphlets, also are allowable. 

Publications and journal articles produced under an HHS grant-supported activity must bear an 

acknowledgment and disclaimer, as appropriate, as provided in “Intellectual Property—Publications.”

Recruitment 

Costs 

Allowable subject to the conditions and restrictions contained in the applicable cost principles. These 

costs may include help-wanted advertising costs, costs of travel by applicants for interviews for 

prospective employment, and travel costs of employees while engaged in recruiting personnel. Grant 

funds may not be used for a prospective trainee’s travel costs to or from the recipient organization for 

the purpose of recruitment. However, other costs incurred in connection with recruitment under 

training programs, such as advertising, may be allocated to a grant-supported project according to 

the provisions of the applicable cost principles (also see “Travel” and “Relocation Costs” in this 

exhibit). 

Registration 

Fees 

Allowable for attendance at conferences, symposiums, or seminars if necessary to accomplish 

project or program objectives. 

 II-37 
Exhibit 4. Selected Items of Cost 

Item Description 

Relocation 

Costs 

Allowable—in other than change of grantee organization situations—when such costs are incurred 

incidental to a permanent change of duty assignment (for an indefinite period or for a stated period of 

no less than 12 months) for an existing employee working on a grant-supported project, or when a 

new employee is recruited for work on the project, provided that the move is for the recipient’s benefit 

rather than the individual’s and that payment is made according to established organizational policies 

consistently applied regardless of the source of funds. Relocation costs may include the cost of 

transporting the employee and his or her family, dependents, and household goods to the new 

location and certain expenses associated with the sale of the former home. If relocation costs have 

been incurred in connection with the recruitment of a new employee, whether as a direct cost or an 

indirect cost, and the employee resigns for reasons within his or her control within 12 months after 

hire, the recipient must credit the grant account for the full cost of the relocation charged to the grant.

When there is a change in the grantee organization, the personal relocation expenses of the PI/PD 

and others moving to the new recipient are not allowable charges. 

Rental or 

Lease of 

Facilities and 

Equipment 

Allowable subject to the limitations below. Rental costs are allowable to the extent that the rates are 

reasonable at the time of the decision to lease in light of such factors as rental costs of comparable 

property, if any; market conditions in the area; the type, life expectancy, condition, and value of the 

property leased; and available alternatives. Because of the complexity involved in determining the 

allowable amount under certain types of leases, recipients are encouraged to consult the GMO 

before entering into leases that will result in direct charges to an award. In general, the rental costs 

for facilities and equipment applicable to each budget period should be charged to that period. 

However, see “Property Management” for an exception to this general rule. 

Rental costs under leases that create a material equity in the leased property, as defined in the 

applicable cost principles, are allowable only up to the amount that would be allowed had the 

recipient purchased the property on the date the lease agreement was executed. This would include 

depreciation or use allowances, maintenance, taxes, and insurance, but would exclude unallowable 

costs. 

When a recipient transfers property to a third party through sale, lease, or otherwise and then leases 

the property back from that third party, the lease costs that may be charged to an HHS grant 

generally may not exceed the amount that would be allowed if the recipient continued to own the 

property. 

Rental costs under “less-than-arms-length” leases are allowable only up to the amount that would be 

allowed under the applicable cost principles had title to the property been vested in the recipient. A 

less-than-arms-length lease is one in which one party to the lease agreement is able to control or 

substantially influence the actions of the other. Such leases include, but are not limited to, those 

between divisions of an organization; between organizations under common control through common 

officers, directors, or members; and between an organization and its directors, trustees, officers, or 

key employees (or the families of these individuals), directly or through corporations, trusts, or similar 

arrangements in which they hold a controlling interest. 

Research 

Patient Care 

The costs of routine and ancillary services provided by hospitals to individuals, including patients and 

volunteers, participating in research programs are allowable if included in the NoA or approved as a 

post-award change as specified in “Prior-Approval Requirements—OPDIV Prior Approval.” 

“Routine services” include the regular room services, minor medical and surgical supplies, and the 

use of equipment and facilities for which a separate charge is not customarily made. “Ancillary 

services” are those special services for which charges customarily are made in addition to routine 

services, e.g., x-ray, operating room, laboratory, pharmacy, blood bank, and pathology. See 

“Research Patient Care Costs” for policy concerning reimbursement of these costs. 

The following otherwise allowable costs are not classified as research patient care costs: items of 

personal expense reimbursement, such as patient travel; consulting physician fees; and any other 

direct payments to individuals, including inpatients, outpatients, subjects, volunteers, and donors. 

Reserve Funds Contributions to a reserve fund for self-insurance are allowable as specified in the governing cost 

principles (also see “Contingency Funds” in this exhibit). 

 II-38 
Exhibit 4. Selected Items of Cost 

Item Description 

Sabbatical 

Leave Costs 

Sabbatical leave costs may be included in a fringe benefit rate or in the organization’s indirect cost 

rate. Costs of leave of absence by employees for performance of graduate work or sabbatical study, 

travel, or research are allowable as a direct charge provided the organization has a uniform policy on 

sabbatical leave for people engaged in research and the salary is proportional to the service 

rendered. Where sabbatical leave is included in fringe benefits for which a cost is determined for 

assessment as a direct charge, the aggregate amount of such assessments applicable to all work of 

the organization during the base period must be reasonable in relation to the organization’s actual 

practice under its sabbatical leave policy. Sabbatical leave paid by an individual’s employer, in 

combination with other compensation (e.g., partial salary from an HHS grant), may not exceed 

100 percent of that individual’s regular salary from his or her organization. 

Salaries and 

Wages 

Allowable. Compensation for personal services covers all amounts, including fringe benefits, paid 

currently or accrued by the organization for employee services rendered to the grant-supported 

project or program. Compensation costs are allowable to the extent that they are reasonable, 

conform to the established policy of the organization consistently applied regardless of the source of 

funds, and reflect no more than the percentage of time actually devoted to the OPDIV-funded project 

or program. Where restricted by language in the HHS appropriations act, OPDIVs will not reimburse 

recipients for the direct salaries of individuals at a rate in excess of the level specified. Direct salary 

is exclusive of fringe benefits and indirect costs. If there is a salary limitation, it does not apply to 

consultant payments or to contracts for routine goods and services, but it does apply to subrecipients 

(including consortium participants). Specific considerations are addressed below. 

Payroll 

Distribution 

Salary and wage amounts charged to grant-supported projects or programs for personal services 

must be based on an adequate payroll distribution system that documents such distribution in 

accordance with generally accepted practices of like organizations. Standards for payroll distribution 

systems are contained in the applicable cost principles (other than those for for-profit organizations). 

Briefly summarized, acceptable systems are as follows: 

Hospitals

¡ Monthly after-the-fact reports of the distribution of time or effort for professional staff members. 

¡ Time and attendance and payroll distribution records for non-professional employees. 

Non-profit organizations

¡ Monthly after-the-fact reports, including a signed certification, by the employee, or by a 

responsible supervisory official having first-hand knowledge of the work performed, that the 

distribution of activity represents a reasonable estimate of the actual work performed by the 

employee during the period covered by the report. Each report must account for the total activity 

required to fulfill the employee’s obligations to the organization as well as the total activity for 

which he or she is compensated. 

¡ For non-professional employees, additional supporting reports, indicating the total number of 

hours worked each day, must be maintained in conformance with DoL regulations implementing 

the Fair Labor Standards Act (29 CFR part 516). 

¡ The distribution of salaries and wages must be supported by personnel activity reports as 

described above, except when a substitute system has been approved, in writing, by the Federal 

cognizant agency designated under OMB Circular A-122. 

State, local, and Indian tribal governments 

¡ Time and attendance or equivalent records for all employees. 

¡ Time distribution records for employees whose compensation is chargeable to more than one 

grant or other cost objective. 

 II-39 
Exhibit 4. Selected Items of Cost 

Item Description 

Educational institutions

¡ A plan confirmation system for professorial and other professional staff members that is based on 

budgeted, planned, or assigned work activity and that is updated to reflect any significant changes 

in work distribution. This system must be incorporated into the organization’s official records and 

must identify activity applicable to each sponsored agreement and to each category needed to 

identify indirect costs and the functions to which they are allocable. At least annually, the 

employee, PI/PD, or responsible officials will verify, by suitable means, that the work was 

performed and that the salaries and wages charged to sponsored agreements, whether as direct 

charges or in other categories of cost, are reasonable in relation to the work performed. 

¡ A system, supported by after-the-fact activity reports, that reflects the distribution of covered 

employees’ activity allocable to each grant and includes identification and recording of significant 

changes in work activity when initial charges were based on estimates. The system also must 

specify each category of activity needed to identify indirect costs and the functions to which they 

are allocable. For professorial and other professional staff members, the activity reports will be 

prepared each academic term, but at least every 6 months. For other employees, unless the 

OPDIV agrees to alternate arrangements, the reports will be prepared at least monthly and will 

coincide with one or more pay periods. 

¡ A multiple confirmation records system, for professorial and other professional staff members, that 

is supported by records certifying costs separately for direct costs and indirect costs, with reports 

prepared each academic term, but at least every 6 months, that confirm the activities as allocable 

to direct or indirect costs. 

¡ By mutual agreement, any other method meeting the criteria specified in Section J.10 of OMB 

Circular A-21. 

For-profit organizations

HHS requires for-profit organizations to conform with industry standards to support salary and wage 

charges to HHS 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 authorized organizational representative no less frequently than every pay period. 

Overtime 

Premiums 

Premiums for overtime generally are allowable; however, such payments are not allowable for faculty 

members at institutions of higher education. If overtime premiums are allowable, the categories or 

classifications of employees eligible to receive overtime premiums should be determined according 

to the formal policies of the organization consistently applied regardless of the source of funds. 

Bonuses/ 

Incentive 

Payments 

Allowable for employees as part of a total compensation package, provided such payments are 

reasonable and are made according to a formal policy of the recipient that is consistently applied 

regardless of the source of funds. 

Payments 

for Dual 

Appointments 

For investigators with university and clinical practice plan appointments, compensation from both 

sources may be considered the base salary if the following criteria are met: 

¡ Clinical practice compensation must be guaranteed by the university. 

¡ Clinical practice effort must be shown on the university appointment form and must be paid 

through the university. 

¡ Clinical practice effort must be included and accounted for on the university’s effort report. 

 II-40 
Exhibit 4. Selected Items of Cost 

Item Description 

Compensation 

of Students 

Tuition remission and other forms of compensation paid as, or in lieu of, wages to students (including 

fellows and trainees) under research grants are allowable, provided the following conditions are met: 

¡ The individual is performing activities necessary to the grant. 

¡ Tuition remission and other forms of compensation are consistently provided, in accordance with 

established institutional policy, to students performing similar activities conducted in nonsponsored as well as in sponsored activities. 

¡ During the academic period, the student is enrolled in an advanced degree program at a recipient 

or affiliated institution and the activities of the student in relation to the federally sponsored 

research project are related to the degree program. 

¡ The tuition or other payments are reasonable compensation for the work performed and are 

conditioned explicitly upon the performance of necessary work. 

¡ It is the institution’s practice to similarly compensate students in non-sponsored as well as 

sponsored activities. 

Charges for tuition remission and other forms of compensation paid to students as, or in lieu of, 

salaries and wages are subject to the reporting requirements in Section J.10 of OMB Circular A-21, 

or an equivalent method for documenting the individual’s effort on the research project. Tuition 

remission may be charged on an average rate basis. 

Payments made for educational assistance (e.g., scholarships, fellowships, and student aid costs) 

are allowable only when the purpose of the grant is to provide training to selected participants and 

the charge is approved by the OPDIV. These costs are unallowable charges to research grant funds 

even when they would appear to benefit the research project. 

Service 

Charges 

Allowable. The costs to a user of organizational services and central facilities owned by the recipient, 

such as central laboratory and computer services, are allowable and must be based on 

organizational fee schedules consistently applied regardless of the source of funds. 

Severance Pay Allowable only to the extent that such payments are required by law, are included in an employeremployee agreement, are part of an established policy effectively constituting an implied agreement 

on the part of the organization, or meet the circumstances of the particular employment. The amount 

of severance pay to be provided should be determined according to established organizational policy 

consistently applied regardless of the source of funds and should be reasonable, taking into 

consideration the practice of similar types of organizations and the extent of the organization’s 

dependence on Federal funds. The applicable cost principles should be consulted regarding the 

different treatment of severance pay in regular and mass termination situations. 

Stipends Allowable as cost-of-living allowances for trainees and fellows if permitted by a program’s statute 

authorizing or implementing regulations. The specific amounts may be established by policy. 

Generally, these payments are made according to a pre-established schedule based on the 

individual’s experience and level of training. (See “Traineeships, Fellowships, and Similar Awards 

Made to Organizations on Behalf of Individuals—Allowable Costs.”) A stipend is not a fee-for-service 

payment and is not subject to the cost accounting requirements of the cost principles. Stipends are 

not allowable under research grants even when they appear to benefit the research project. 

Subawards/ 

Contracts 

under Grants 

Allowable to carry out a portion of the programmatic effort or for the acquisition of routine goods or 

services under the grant. Such arrangements may be in the form of consortium agreements or 

commercial contracts and may require OPDIV approval (see “Prior-Approval Requirements”). 

Supplies Allowable. 

Taxes Allowable. Such costs include taxes that an organization is required to pay as they relate to 

employment, services, travel, rental, or purchasing for a project. Recipients must avail themselves of 

any tax exemptions for which activities supported by Federal funds may qualify. State sales and use 

taxes for materials and equipment are allowable only when the State does not grant a refund or 

exemption on such taxes. 

 II-41 
Exhibit 4. Selected Items of Cost 

Item Description 

Termination or 

Suspension 

Costs 

Unallowable except as follows. If a grant is terminated or suspended, the recipient may not incur new 

obligations after the effective date of the termination or suspension and must cancel as many 

outstanding obligations as possible. The awarding office will allow full credit to the recipient for the 

Federal share of otherwise allowable costs if the obligations were properly incurred before 

suspension or termination—and not in anticipation of it—and, in the case of termination, are not 

cancelable. The GMO may authorize other costs in, or subsequent to, the notice of termination or 

suspension. See 45 CFR 74.62(c) and 92.43. 

Toys and 

Nursery Items 

Allowable for the purchase of items such as toys and games to allow patients to participate in 

research protocols or, if age appropriate, in programs or projects serving children. 

Trailers and 

Modular Units 

Allowable only if considered equipment as provided below. A “trailer” is defined as a portable vehicle 

built on a chassis that is designed to be hauled from one site to another by a separate means of 

propulsion and that serves, wherever parked, as a dwelling or place of business. A “modular unit” is 

a prefabricated portable unit designed to be moved to a site and assembled on a foundation to serve 

as a dwelling or a place of business. The determination of whether costs to acquire trailers or 

modular units are allowable charges to HHS grant-supported projects depends on whether such 

units are classified as real property or equipment. The classification will depend on whether the 

recipient’s intended use of the property is permanent or temporary. 

A trailer or modular unit is considered real property when the unit and its installation are designed or 

planned to be installed permanently at a given location so as to seem fixed to the land as a 

permanent structure or appurtenance thereto. Units classified as real property may not be charged to 

an HHS grant-supported project unless authorizing legislation permits construction or acquisition of 

real property and the specific purchase is approved by the OPDIV. 

A trailer or modular unit is considered equipment when the unit and its installation are designed or 

planned to be used at any given location for a limited time only. Units classified as equipment may be 

charged to HHS grant-supported projects only if the terms and conditions of the award do not prohibit 

the purchase of equipment and OPDIV prior approval is obtained, as appropriate. 

A trailer or modular unit properly classified as real property or as equipment at the time of acquisition 

retains that classification for the life of the item, thereby determining the appropriate accountability 

requirements under 45 CFR 74.32 or 74.34 or 92.31 or 92.32, as applicable. 

Trainee Costs Allowable if permitted by statute, regulation, or program policy, as defined in the authorizing 

document, and included in the NoA. 

Transportation 

of Property 

Allowable for freight, express, cartage, postage, and other transportation services relating to goods 

either purchased, in process, or delivered, including instances when equipment or other property is 

moved from one recipient to another. In a change-of-grantee situation, the cost of transportation may 

be charged to the grant at either the original or the new organization, depending on the 

circumstances and the availability of funds in the appropriate active grant account. 

Travel Allowable as a direct cost where such travel will provide direct benefit to the project or program. 

Employees Consistent with the organization’s established travel policy, costs for employees working on the 

grant-supported project or program may include associated per diem or subsistence allowances and 

other travel-related expenses, such as mileage allowances if travel is by personal automobile. 

Domestic travel is travel performed within the recipient’s own country. For U.S. and Canadian 

recipients, it includes travel within and between any of the 50 States of the United States and its 

possessions and territories and also travel between the United States and Canada and within 

Canada. 

 II-42 
Exhibit 4. Selected Items of Cost 

Item Description 

Foreign travel is defined as any travel outside of Canada and the United States and its territories and 

possessions. However, for an organization located outside Canada and the United States and its 

territories and possessions, foreign travel means travel outside that country. 

In all cases, travel costs are limited to those allowed by formal organizational policy; in the case of air 

travel, the lowest reasonable commercial airfares must be used. For-profit recipients’ allowable travel 

costs may not exceed those established by the FTR, issued by GSA, including the maximum per 

diem and subsistence rates prescribed in those regulations. This information is available at 

http://www.gsa.gov. If a recipient organization has no formal travel policy, those regulations will be 

used to determine the amount that may be charged for travel costs. 

Recipients are strongly encouraged to take advantage of discount fares for airline travel through 

advance purchase of tickets if travel schedules can be planned in advance (such as for national 

meetings and other scheduled events). 

Recipients must comply with the requirement that U.S. flag air carriers be used by domestic 

recipients to the maximum extent possible when commercial air transportation is the means of travel 

between the United States and a foreign country or between foreign countries. This requirement 

must not be influenced by factors of cost, convenience, or personal travel preference. The cost of 

travel under a ticket issued by a U.S. flag air carrier that leases space on a foreign air carrier under a 

code-sharing agreement is allowable if the purchase is in accordance with GSA regulations on U.S. 

flag air carriers and code shares (see http://www.gsa.gov/gsa/cm_attachments/GSA_DOCUMENT/ 

110304_FTR_R2QA53_0Z5RDZ-i34K-pR.pdf). (A code-sharing agreement is an arrangement 

between a U.S. flag carrier and a foreign air carrier in which the U.S. flag carrier provides passenger 

service on the foreign air carrier’s regularly scheduled commercial flights.) 

Patients or 

Service 

Beneficiaries

If patient care, including research patient care, or other direct health or social services are approved 

activities of the grant-supported project or program, the costs of transporting individuals participating 

in the program or project to the site where services are being provided, including costs of public 

transportation, are allowable. The purchase of motor vehicles for this purpose also may be allowable. 

Cost Transfers 

Cost transfers by recipients between grants, whether as a means to compensate for 

cost overruns or for other reasons, generally are unallowable; however, cost 

transfers by recipients (or subrecipients or cost-type contractors) may sometimes be 

necessary to correct bookkeeping or clerical errors. Recipients (and subrecipients 

and contractors) should have systems in place to detect such errors within a 

reasonable time frame. Untimely discovery of errors could be an indication of poor 

internal controls. 

Permissible cost transfers should be made promptly after the error occurs but no 

later than 90 days following occurrence unless a longer period is approved in 

advance by the GMO. The transfer must be supported by documentation, pursuant to 

45 CFR 74.53 or 92.42, that fully explains how the error occurred and a certification 

of the correctness of the new charge by a responsible official of the recipient, 

subrecipient, or contractor. An explanation merely stating that the transfer was 

made “to correct error” or “to transfer to correct project” is not sufficient. This 

information need not be submitted to the GMO but is subject to audit. If the transfer 

affects a previously submitted FSR, a revised FSR must be submitted. 

Frequent errors in recording costs may indicate the need for accounting system 

improvements, enhanced internal controls, or both. If such errors occur, 

 II-43 
organizations are encouraged to evaluate the need for improvements and to make 

whatever improvements are deemed necessary to prevent reoccurrence. An 

awarding office also may require a recipient to take corrective action by imposing 

additional terms and conditions on an award. 

Cost Overruns and Rate of Expenditure 

Transfers of costs from one project to another or from one competitive segment to 

the next solely to cover cost overruns are not allowable. The GMO monitors 

expenditure rates under individual awards during each budget period and within the 

overall project period. Although HHS allows its recipients certain flexibilities with 

respect to rebudgeting, HHS expects the rate and types of expenditures to be 

consistent with the approved project/program and budget and may question or 

restrict expenditures that appear inconsistent with these expectations. In addition, 

recipients are expected to monitor their fund drawdowns and amounts reported on 

financial reports (e.g., PMS 272) to ensure that they do not exceed the amount 

authorized on the NoA. 

The GMO may review recipient cash drawdowns to determine whether they indicate 

any pattern of accelerated or delayed expenditures. Expenditure patterns are of 

particular concern because they may indicate a deficiency in the recipient’s financial 

management system or internal controls. Accelerated or delayed expenditures may 

result in an inability to complete the approved project or program within the 

approved budget and period of performance. In these situations, the GMO may seek 

additional information from the recipient and may make any necessary and 

appropriate adjustments. 

Allocation of Costs 

When salaries or other activities are supported by two or more sources, issues arise 

as to how the direct costs should be allocated among the sources of support. In 

general, a cost that benefits two or more projects or activities in proportions that can 

be determined without undue effort or cost should be allocated to the projects on the 

basis of the proportional benefit. 

A cost that benefits two or more projects or activities in proportions that cannot be 

determined because of the interrelationship of the work involved may be allocated or 

transferred to the benefiting projects on any reasonable basis as long as the costs 

charged are allowable, allocable, and reasonable under the applicable cost principles 

and the recipient’s financial management system includes adequate internal controls. 

Costs may be assigned entirely to one project, with written prior approval from the 

GMO, under the following conditions only: 

• The projects are scientifically and technically related. 

• The projects are under the direction of the same PI/PD. 

• The projects have been funded by the same OPDIV or OPDIV component. 

• There is no change in the scope of the individual grants involved. 

• The relating of costs will not be detrimental to the conduct of work approved 

under each individual award. 

 II-44 
• The relatedness will not be used to circumvent the terms and conditions of an 

individual award. 

Services Provided by Affiliated Organizations 

A number of universities and other organizations have established closely affiliated, 

but separately incorporated, organizations to facilitate the administration of research 

and other programs supported by Federal funds. Such legally independent entities 

are often referred to as “foundations,” although this term does not necessarily 

appear in the name of the organization. Typically, the parent organization provides 

considerable support services, in the form of administration, facilities, equipment, 

accounting, and other services, to its foundation, and the latter, acting in its own 

right as a recipient, includes the cost of these services in its indirect cost proposal. 

Costs incurred by an affiliated, but separate, legal entity in support of a recipient 

foundation (foundation) are allowable for reimbursement under HHS grants only if at 

least one of the following conditions is met: 

• The foundation is charged for, and is legally obligated to pay for, the services 

provided by the parent organization. 

• The affiliated organization is subject to State or local law that prescribes how 

Federal reimbursement for the costs of the parent organization’s services will 

be expended and requires that a State or local official acting in his or her 

official capacity approves such expenditures. 

• There is a valid written agreement between the affiliated organizations 

whereby the parent organization agrees that the foundation may retain 

Federal reimbursement of parent organization costs. The parent organization 

may either direct how the funds will be used or permit the foundation that 

discretion. 

If none of the above conditions is met, the costs of the services provided by the 

parent organization to the foundation are not allowable for reimbursement under an 

HHS grant. However, the services may be acceptable for cost-sharing (matching) 

purposes. 

Matching or Cost Sharing 

All required matching or cost sharing, whether required by statute or regulation, will 

be shown as part of the total approved budget in the NoA and becomes an award 

requirement enforceable through the NoA. The costs that the recipient incurs in 

fulfilling its matching or cost-sharing requirement are subject to the same 

requirements, including the cost principles, that are applicable to the use of Federal 

funds, including prior approval requirements and other rules for allowability 

described in 45 CFR 74.23 and 45 CFR 92.24. Third-party in-kind contributions must 

meet the requirements specified 45 CFR 74.23 and 45 CFR 92.24. 

If a recipient does not meet the specified level of matching or cost sharing as 

reflected in the NoA, an OPDIV may take one or more of the following actions: 

• Make a downward adjustment in the Federal award amount 

 II-45 
• Take an enforcement action affecting the current or future awards to that 

recipient (see “Enforcement Actions”) 

• If the amount in the NoA exceeds the statutory (or implementing regulatory 

requirement) for matching, where justified, reduce the matching to no less 

than the statutory or regulatory requirement 

• If the amount in the NoA exceeds a regulatory cost-sharing requirement, 

where justified and authorized by the regulation, reduce the cost sharing to 

no less than the regulatory requirement. 

If a recipient provides matching or cost sharing that exceeds that required by the 

NoA, the excess amount is not subject to the requirements of 45 CFR part 74 or 92 

unless the amount is used to offset otherwise unallowable matching or cost-sharing 

amounts. 

When satisfying a matching or cost-sharing requirement by not claiming the full 

indirect cost reimbursement to which the recipient is otherwise entitled, the recipient 

should reduce its charge to the grant to reflect the amount claimed. The amount of 

the reduction qualifies as matching or cost sharing. The recipient should include an 

explanation in the “Remarks” section of the Financial Status Report (see “Reporting—

Financial Reporting”). 

Valuation of Donated Goods and Services 

Donated Supplies, Equipment, Space, or Land 

Donated supplies may include such items as expendable property, office supplies 

(unless treated as an indirect cost), laboratory supplies, or workshop and classroom 

supplies. The value assigned to donated supplies must be reasonable and cannot 

exceed the fair market value of the supplies at the time of donation. 

The value of donated equipment cannot exceed the fair market value of equipment 

of the same age and condition at the time of donation. The value of loaned 

equipment cannot exceed its fair rental value. If any part of the donated property 

was acquired with Federal funds, only the non-Federal share of the property may be 

counted as matching or cost sharing. 

If a third party donates equipment, buildings, or land and title passes to a recipient 

or subrecipient, the treatment of the donated property depends upon the purpose of 

the grant or subgrant as follows: 

• If the purpose of the grant or subgrant is to assist the recipient with the 

acquisition of property, the market value of that property at the time of 

donation may be counted as matching. 

• If the purpose of the grant or subgrant is other than to assist with the 

acquisition of property, the following applies: 

h With GMO approval, the market value at the time of donation of the 

donated equipment or buildings and the fair rental rate of the donated 

land may be counted as matching or cost sharing. In the case of a 

subgrant, the terms of the grant award may require that the approval be 

 II-46 
obtained both from the GMO and from the recipient. In either case, 

approval may be given only if purchase of the equipment or rental of the 

land would be allowable as a direct cost. 

h If any part of the donated property was acquired with Federal funds, only 

the non-Federal share of the property may be counted as matching or cost 

sharing. 

h Unless GMO approval is obtained, no amount may be counted for donated 

land and only depreciation or use allowances may be counted for donated 

equipment and buildings. The depreciation or use allowances for such 

property are not treated as third party in-kind contributions. Instead, they 

are treated as costs incurred by the recipient or subrecipient. The 

allowances are computed and allocated (usually as indirect costs) in 

accordance with the cost principles in the same way as depreciation or use 

allowances for purchased equipment and buildings. The amount of 

depreciation or use allowances for donated equipment and buildings is 

based on the property’s market value at the time it was donated. 

• If a recipient or subrecipient donates real property for a construction or 

facilities acquisition project, the current market value of that property may be 

counted as matching or cost sharing. If any part of the donated property was 

acquired with Federal funds, only the non-Federal share of the property may 

be counted as matching or cost sharing. 

The value of donated space cannot exceed the fair rental value of comparable space 

as established by an independent appraisal of comparable space and facilities in a 

privately-owned building in the same locality. 

The awarding office may require that the market value of land or buildings or the fair 

rental rate of land or of space in a building be established by an independent 

property appraiser or by a GSA representative and certified by a responsible official 

of the recipient, subrecipient, or contractor. 

Volunteer Services 

Rates for donated services used to satisfy a matching or cost-sharing requirement 

must be consistent with those paid for similar work in the organization. In those 

instances in which the required skills are not found in the recipient’s organization, 

rates must be consistent with those paid for similar work in the labor market in 

which the recipient would compete for the kind of services involved. When an 

employer other than the recipient furnishes the services of an employee, the services 

must be valued at the employee’s regular rate of pay. Only the amount representing 

an amount consistent with the function performed are allowable, e.g., if a doctor 

serves as a receptionist, only the amount that would be allowable for a receptionist is 

allowable as a contribution to the grant. Fringe benefits consistent with those that 

would be paid by the employing organization that are reasonable, allowable, and 

allocable may be included in the valuation. 

 II-47 
Using Program Income to Meet a Matching or Cost-Sharing 

Requirement 

Costs financed by program income may not count toward satisfying a matching or 

cost-sharing requirement unless they are expressly permitted by the NoA (see 

“Financial Management—Program Income”). 

Documentation 

The basis for determining the valuation of personal services, materials, equipment, 

buildings, and land must be verifiable from the records of the recipient, subrecipient, 

or contractor under the grant. Volunteer services, to the extent feasible, should be 

supported by the same level of documentation used by the recipient for its own 

employees, including time and attendance records. 

Prior-Approval Requirements 

HHS anticipates that the recipient may need to modify its award budget or other 

aspects of its approved application during performance to accomplish the award’s 

programmatic objectives. In general, recipients are allowed a certain degree of 

latitude to rebudget within and between budget categories to meet unanticipated 

needs and to make other types of post-award changes. In some cases, OPDIV prior 

written approval may be required. When OPDIV prior approval is required, the 

requirement applies whether the costs/activities are proposed in the application or in 

a separate request following award. If an application includes general language 

about a cost or activity that requires OPDIV prior approval, approval of the 

application does not necessarily mean that the prior-approval requirement has been 

satisfied. The recipient is still required to obtain any applicable OPDIV prior approval 

when specific details are known. 

This section addresses the post-award prior-approval requirements related to making 

certain direct cost budget modifications or undertaking specified activities. Other 

post-award changes may be made without OPDIV prior approval as long as they are 

within the limits established by HHS (see “Expanded Authorities” in this section) or 

may be subject to different procedures as specified in other parts of the HHS GPS 

(e.g., as specified in “Property Management—Nonexempt Property,” the OPDIV must 

approve any proposal to convey, transfer, assign, mortgage, lease, or in any other 

manner encumber the property while the recipient remains accountable to the OPDIV 

for the use of the property). Also, prior approval of costs considered indirect costs is 

governed by the procedures of the cognizant agency rather than those of the OPDIV. 

The post-award changes that are considered changes to budgets or program plans 

and require OPDIV approval and the changes that may be made under the recipient’s 

authority are outlined below. If OPDIV approval is required, it must be requested of, 

and obtained from, the GMO in advance of the change or obligation of funds as 

specified in “Requesting OPDIV Prior Approval” in this section. 

OPDIV Prior Approval 

OPDIV prior-approval requirements are summarized in Exhibit 5, which is provided 

for guidance only. For the post-award prior-approval requirements specified in the 

exhibit, approval is required whether or not the change has a budgetary impact 

 II-48 
except as indicated (e.g., if provided as an expanded authority). The circumstances 

under which prior approval is required also are summarized in the exhibit. 

Supplementary policy or procedural information related to certain of these categories 

follows the exhibit. Recipients also should see Part IV of this HHS GPS for OPDIVspecific prior-approval requirements that apply to specific types of grants and types 

of recipients. Any questions about the need for prior approval for an activity or cost 

under a specific OPDIV award should be directed to the GMO. 

Exhibit 5. Summary of Actions Requiring OPDIV Prior Approval 

OPDIV prior 

approval is 

required for Under the following circumstances 

A&R Rebudgeting into A&R costs in a single budget period that would exceed the lesser 

of $150,000 (or amount specified by the OPDIV in Part IV of the HHS GPS) or 25 

percent of the total approved budget (direct and indirect costs) for a budget period 

(also see “Allowable Costs and Activities”). 

Any single A&R project exceeding $150,000 (or amount specified by the OPDIV in 

Part IV of the HHS GPS). 

Aggregate costs that would exceed the lesser of $150,000 (or amount specified by 

the OPDIV in Part IV of the HHS GPS) or 25 percent of the total costs reasonably 

expected to be awarded by the awarding office for a project period (or competitive 

segment under programs that entertain competing continuation applications). 

Carryover of 

unobligated 

balances 

If not provided as an expanded authority. Also see “Carryover of Unobligated 

Balances” below for potential OPDIV actions if provided as an expanded authority.

Change of 

grantee 

organization 

All instances. Recipients must notify the awarding office of other changes in 

organizational status. See “Change of Grantee Organization” below. 

Change in scope All instances. See “Change in Scope” below for a discussion of the post-award 

changes that may indicate a change in scope: transfer of substantive 

programmatic work to a third party; significant rebudgeting; incurrence of research 

patient care costs; purchase of a unit of general- or special-purpose equipment 

exceeding $25,000. 

Changes in status 

of PI, PD, or other 

key personnel 

named in the NoA 

For PIs/PDs, replacement; absence for any continuous period of 3 months or 

more; reduction of time devoted to project by 25 percent or more from level in 

approved application. 

For other key personnel, substitution for named personnel. 

See “Change in Status, including Absence, of PI/PD and Other Key Personnel” 

below. 

Construction, 

land, or building 

acquisition 

All instances when purchase proposed; any proposal to convey, transfer, assign, 

mortgage, lease, or in any other manner encumber real property acquired with 

OPDIV grant funds. 

Cost principles 

prior-approval 

requirements 

All instances unless provided as an expanded authority (not available for 

construction, land, or building acquisition or indemnification of third parties). 

Deviation from 

award terms and 

conditions 

All instances. Includes undertaking any activities disapproved or restricted as a 

condition of the award. 

 II-49 
Exhibit 5. Summary of Actions Requiring OPDIV Prior Approval 

OPDIV prior 

approval is 

required for Under the following circumstances 

Foreign 

component added 

to a grant to a 

domestic 

organization 

All instances. 

Indemnification of 

third parties 

All instances. 

Need for 

additional OPDIV 

funding 

All instances whether or not additional time is needed, including extension of a 

final budget period of a project period with additional funds. See “Need for 

Additional OPDIV Funding” below. 

No-cost extension All instances unless authority to approve a one-time extension of up to 12 months 

without a change in scope is provided as an expanded authority. See “Need for 

Additional Time to Complete Project- or Program-Related Activities (‘No-Cost 

Extension’)” below. 

Pre-award costs All instances before the effective date of the initial budget period of a new or 

competing continuation award unless the authority to approve pre-award costs up 

to (and including) 90 days before the beginning date is provided as an expanded 

authority. In either case, the costs are incurred at the applicant’s/recipient’s own 

risk. 

Research patient 

care costs 

For States, local governments, and tribal governments, all instances. 

For institutions of higher education, non-profit organizations, and commercial 

organizations, any instance in which such costs were not part of the approved 

budget shown in the NoA or a recipient wants to rebudget out of the approved 

research patient care category. 

Retention of 

research grant 

funds when 

career award 

made 

All instances. 

Transfer of 

amounts for 

training 

allowances 

(stipends, tuition, 

and fees) to other 

budget categories 

All instances unless provided as an expanded authority to States, local 

governments, or tribal governments. (The training allowance does not include 

trainee travel, which HHS does not consider to be a trainee cost, and other 

training-related expenses.) 

Transfer of funds 

between 

construction and 

nonconstruction 

work 

All instances. 

Transfer of 

substantive 

programmatic 

work 

All instances if the recipient is a governmental entity or, for recipients subject to 45 

CFR part 74, the grant is a construction grant; otherwise considered an indicator of 

change in scope. See “Transfer of Substantive Programmatic Work” below. 

 II-50 
Carryover of Unobligated Balances 

Recipients should be aware of the difference between unliquidated obligations and 

unobligated balances. Unliquidated obligations are commitments of the recipient and 

are considered to be obligations and, therefore, should not be reported as 

unobligated balances. 

To ensure the timely use of unobligated balances, recipients must use the “firstin/first-out” principle for recognizing and recording obligations and expenditures of 

those funds. Upon receipt of the annual FSR, the GMO will compare the total of any 

unobligated balance shown and the funds awarded for the current budget period with 

the OPDIV share of the approved budget for the current budget period. If the funds 

available exceed the OPDIV share of the approved budget for the current budget 

period, the GMO may select one of the following options: 

• In response to a written request from the recipient, revise the current NoA to 

authorize the recipient to spend the excess funds for additional approved 

purposes (approval is intended to cover only prospective costs, not costs 

already incurred by the recipient) 

• Offset the current award or a subsequent award by an amount representing 

some or all of the excess 

• For awards subject to expanded authorities, restrict the recipient’s authority 

to automatically carry over unobligated balances in the future, use the 

balance to reduce or offset OPDIV funding for a subsequent budget period, or 

use a combination of these actions. 

Change of Grantee Organization 

OPDIV prior approval is required for the transfer of the legal and administrative 

responsibility for a grant-supported project or program from one legal entity to 

another before the expiration of the approved project period (competitive segment 

for grants where there may a competing continuation for the same project). For 

other changes in organizational status, e.g., a name change, the recipient must 

notify the awarding office as specified in “Changes in Organizational Status.” 

A change of grantee organization may be accomplished under most OPDIV grants, 

including construction grants, if any of the following conditions are met and the 

OPDIV determines that the purpose and scope of the approved grant will not change 

and the transfer is consistent with Federal appropriations law requirements: 

• The grant to be transferred has been terminated at the original organization 

in accordance with 45 CFR 74.61 or 92.43. 

• A non-competing continuation award that is within an approved project period 

has been withheld for a reason other than project performance, e.g., the 

recipient’s management of the grant or non-compliance with award terms and 

conditions. 

• The original recipient has agreed to relinquish responsibility for an active 

project before the expiration of the approved project period. This includes any 

proposed change of grantee as a result of a PI on a research project 

 II-51 
transferring from one organization to another organization. The project under 

the same PI may be supported at a new organization for a period up to the 

remainder of the previously approved project period in an amount not to 

exceed that previously recommended for direct costs (plus applicable indirect 

costs) for the remainder of the approved project period. 

A request for a change of grantee organization (change of grantee) must be 

submitted to the GMO before the anticipated start date at the new organization and 

preferably several months in advance. Failure to provide timely notification may 

result in disapproval of the request or a delay in processing. As part of the request, 

the original organization must submit PHS 3734, “Official Statement Relinquishing 

Interests and Rights in a Public Health Service Research Grant,” or equivalent form 

as specified by the OPDIV, and, if the request involves a research grant, a “Final 

Invention Statement and Certification.” The request also must include an application 

from the proposed recipient organization. (The relinquishing organization must 

submit a final FSR to the awarding office no later than 90 days after the end of HHS 

support.) 

The application from the proposed recipient should include the following, as 

applicable: 

• Face page 

• Budget pages (current and future years) 

• Updated biographical sketches for the PI/PD and existing key personnel and 

biographical sketches for any proposed new key personnel 

• Statement indicating whether the overall plans/aims or objectives have 

changed from the original submission, and, if so, how 

• For research grants 

h Updated “other support” pages, if necessary 

h Resources page 

h Checklist page 

h Certification of IRB/IACUC approval, if applicable 

• Detailed list of any equipment purchased with grant funds being transferred 

to the new organization (inclusion of this list in the transfer application from 

the new organization indicates its acceptance of title to that equipment). 

The OPDIV may request additional information necessary to accomplish its review of 

the request. Acceptance of a relinquishing statement by the OPDIV does not 

guarantee approval of a transfer application for the continued funding of a project. 

A change of grantee request normally will be permitted only when all of the 

permanent benefits attributable to the original grant can be transferred, including 

equipment purchased in whole or in part with grant funds. In reviewing a request to 

transfer a grant, an OPDIV will consider whether there is a continued need for the 

 II-52 
grant-supported project or program and whether there will be any a change in scope 

of the previously approved project. A change of grantee may be made without 

objective review, provided the PI/PD plans no change in scope and the facilities and 

resources at the new organization will allow for successful performance of the project 

or program. If the change involves a change in scope, the request may not be 

processed as a change of grantee, will require objective review, and may be subject 

to a different process, e.g., treated as an exception to competition. A change of 

grantee that involves the transfer of a grant to or between foreign organizations or 

international organizations also may require special OPDIV approval, e.g., approval 

by an Advisory Council or Board. If these conditions or other programmatic or 

administrative requirements are not met, the OPDIV may require objective review or 

may disapprove the request and, if appropriate, terminate the award. 

The OPDIV will accomplish a change of grantee organization by issuing a revised NoA 

to the original recipient reflecting the revised budget and project period end dates, 

deletion of any future-year support, and deobligation of remaining funds, if 

applicable. (A deobligation of funds will be based on the estimated grant 

expenditures through the relinquishment date, as determined from the relinquishing 

statement.) Concurrently, the new recipient will receive a NoA reflecting the balance 

reported on the relinquishing statement or, if the change of grantee organization 

occurs on the anniversary date of the project, the NoA to the new recipient will 

reflect the previously committed direct cost level plus applicable indirect costs. This 

amount is subject to change as a result of the closeout of the original grant and may 

be adjusted downward. If a change of grantee involves the transfer of equipment 

purchased with grant funds, the transfer may be accomplished as part of the original 

recipient’s relinquishment of the grant or HHS may transfer title to equipment to the 

new organization using its right to transfer title (see “Property Management”). 

Change in Scope 

In general, the PI/PD may make changes in the methodology, approach, or other 

aspects of the project/program objectives. However, the recipient must obtain prior 

approval from the GMO for a proposed change in scope. A change in scope occurs 

when the recipient proposes to change (or changes) the objectives, aims, or 

purposes identified in the approved application, such as shifting the research 

emphasis from one disease area to another, changing the service area, applying a 

new technology (e.g., changing assays from those approved to a different type of 

assay), changing the approved design under a construction grant, eliminating a 

primary care delivery site, or making budget changes that cause a project to change 

substantially from that which was approved. Also see the indicators specified below. 

The recipient must make the initial determination of whether a proposed change 

would be considered a change in scope and should consult with the GMO as 

necessary. 

In addition to explicit changes in the objectives, aims, or purposes identified in the 

approved grant application, post-award changes that are clear indicators of a change 

in scope or that are likely to be considered a change in scope include, but are not 

limited to, the following: 

• Any change from the approved use of animals or human subjects. 

• Transfer of the performance of substantive programmatic work to a third 

party through a subaward, contract, or any other means, if the authority for 

 II-53 
such activities is not included in the approved application. If the third party is 

a foreign component, this type of action always requires OPDIV prior 

approval. 

• Significant rebudgeting, whether or not the particular expenditures require 

prior approval. Significant rebudgeting occurs when, under a grant with a 

Federal share exceeding $100,000, cumulative transfers among direct cost 

budget categories for the current budget period exceed 25 percent of the total 

approved budget (which includes direct and indirect costs, whether 

chargeable to Federal funds or required matching or cost sharing) for that 

budget period or $250,000, whichever is less. 

• Incurrence of research patient care costs if costs in that category were not 

previously approved by the OPDIV or if a recipient wants to rebudget funds 

out of the research patient care category. 

• Purchase of a unit of general-purpose or special-purpose equipment 

exceeding $25,000. 

Change in Status, including Absence, of Principal Investigator/Project 

Director and Other Key Personnel 

The recipient is required to notify the GMO in writing if the PI/PD or key personnel 

specifically named in the NoA will withdraw from the project entirely, be absent from 

the project during any continuous period of 3 months or more, or reduce time 

devoted to the project by 25 percent or more from the level that was approved at 

the time of award (for example, a proposed change from 40 percent effort to 30 

percent or less effort). The OPDIV must approve any alternate arrangement 

proposed by the recipient, including any replacement of the PI/PD or key personnel 

named in the NoA. 

The request for approval of a substitute PI/PD/key person should include a 

justification for the change, the biographical sketch of the individual proposed, other 

sources of support (if applicable), and any budget changes resulting from the 

proposed change. If the arrangements proposed by the recipient, including the 

qualifications of any proposed replacement, are not acceptable to the OPDIV, the 

grant may be suspended or terminated. If the recipient wants to terminate the 

project because it cannot make suitable alternate arrangements, it must notify the 

GMO, in writing, of its wish to terminate, and the GMO will forward closeout 

instructions. 

The requirement to obtain OPDIV prior approval for a change in status pertains only 

to the PI/PD and those key personnel the OPDIV names in the NoA regardless of 

whether the applicant organization designates others as key personnel for its own 

purposes. 

Need for Additional OPDIV Funding 

A request for additional funding for a current budget period to meet increased costs 

that are within the scope of the approved application, but that were unforeseen when 

the new or competing continuation application (or progress report for non-competing 

continuation support) was submitted, is a non-competing supplemental application. 

Such requests must be submitted, in writing, directly to the GMO and are not 

 II-54 
required to compete with other applications for funding. Other recipient-initiated 

requests for supplemental funding during a current budget period are considered to 

change the scope of the approved project or program and are required to compete 

for funding with other applications. 

A request for a non-competing extension of the final budget period of a project 

period with a minimal amount of additional funds should be submitted to the GMO, in 

writing, at least 30 days before the project period is scheduled to expire. Such 

requests usually are for a period of up to 12 months, based on a need to provide 

continuity of project or program activities while a competing continuation application 

is being reviewed or to permit orderly phase-out of activities for which there will be 

no further HHS support. The request must specify the proposed revised ending date 

and must include justification for both the extension and the additional funds 

requested. 

Need for Additional Time to Complete Project- or Program-Related Activities 

(“No-Cost Extension”) 

Unless provided as an expanded authority, OPDIV prior approval is required for any 

extension of up to 12 months. All extensions that would exceed 12 months, whether 

as part of an initial request or a subsequent request that would result in an 

aggregate period of that duration, require special justification. The OPDIV will not 

approve any extension request if the primary purpose of the proposed extension is to 

permit the use of unobligated balances of funds. All terms and conditions of the 

award apply during the extended period. 

Significant Rebudgeting 

The base used for determining significant rebudgeting excludes carryover balances 

but includes any amounts awarded as competing or non-competing supplements. For 

example, the significant rebudgeting threshold has been reached if, under a grant in 

which the Federal share for a budget period is $100,000, the total approved budget 

is $300,000 and cumulative changes within that budget period exceed $75,000. 

Once the significant rebudgeting threshold is reached, the recipient must request and 

receive OPDIV prior approval for the changes that cause the recipient to exceed the 

threshold. 

The OPDIV will determine if there has been a change in scope and do one of the 

following: 

• Modify the award, as appropriate, to reflect an approved change in scope 

• Advise the recipient that the change is not approved and specify the 

consequences of having rebudgeted to that extent without prior approval 

• Advise the recipient that each subsequent budget change in that budget 

period—regardless of type or dollar value—requires OPDIV prior approval. 

The calculation generally begins anew with each subsequent budget period unless 

the OPDIV has concerns with the overall extent of the recipient’s rebudgeting and, 

on the basis of a high-risk designation, uses an alternate condition in an award. 

 II-55 
Transfer of Substantive Programmatic Work 

The transfer of substantive programmatic work does not include contracting for 

routine goods or services used in or in support of a grant. Subgranting is allowable 

only if authorized by statute or regulation and specified in the NoA. Unless the 

program is intended as a pass-through program (i.e., one in which the recipient’s 

role is to select subrecipients that are expected to provide the services that are the 

purpose of the grant, coordinate and oversee their activities, and provide the 

administrative support needed to meet OPDIV requirements), the recipient is 

expected to perform a substantive role in the project or program. In the case of a 

pass-through program, prior approval for the transfer of substantive programmatic 

work generally is not required. In all other cases, prior approval is required to ensure 

that the recipient is not acting as a conduit to another party (that may not be eligible 

to receive OPDIV funding directly) and remains eligible for the award. 

When prior approval is required, the request must include the following information: 

• A description of the activities or functions involved 

• A justification for their performance by a third party 

• A breakdown of and justification for the estimated costs, including the manner 

in which indirect costs, if any, will be reimbursed 

• The method to be used to select the subaward and the type of 

contract/agreement expected to be awarded 

• The kinds of entities to be solicited (if selection has already taken place, 

identification of the organization and the reasons for selection). 

Requesting OPDIV Prior Approval 

All requests for OPDIV prior approval other than a request for carryover of an 

unobligated balance must be made in writing (which includes submission by e-mail) 

to the GMO no later than 30 days before the proposed change. Requests for 

carryover of unobligated balances should be initiated once the actual unobligated 

balance is known (generally during the period allowed for preparation and 

submission of the FSR). Requests for carryover of unobligated balances must include 

only prospective costs and activities, i.e., ones that will be incurred or undertaken 

following OPDIV review and approval of the request. Prior-approval requests must be 

signed by both the PI/PD and the authorized organizational representative. Failure to 

make a timely request and obtain required OPDIV prior approval from the GMO may 

result in the disallowance of costs, termination of the award, or other enforcement 

action within the OPDIV’s authority. 

All requests must include the name of the recipient; the name of the initiating PI/PD; 

the PI/PD’s telephone number, fax number, and e-mail address; and comparable 

identifying information for the authorized organization official. E-mail requests must 

be clearly identified as prior-approval requests, must reflect the complete grant 

number in the subject line, and should be sent by or through the authorized 

organizational representative to the GMO that signed the NoA. If the entire message 

of the request cannot be included in the body of the e-mail, the request should be 

submitted to the GMO in hard copy. 

 II-56 
The OPDIV will review the request and the GMO will provide a response to the 

authorized organizational representative, with a copy to the PI/PD, indicating the 

final disposition of the request. Only responses provided by the GMO are to be 

considered valid. Recipients that proceed on the basis of actions by unauthorized 

officials do so at their own risk, and HHS is not bound by such responses. 

Whenever a recipient contemplates rebudgeting or other post-award changes and is 

uncertain about the need for prior approval, the recipient is strongly encouraged to 

consult, in advance, with the GMO. 

Under a subaward or contract under a grant, the prior-approval authority usually is 

the recipient. However, the recipient may not approve any action or cost that is 

inconsistent with the purpose or terms and conditions of the HHS grant. If an action 

by a subrecipient or contractor will result in a change in the project/program scope 

or budget requiring OPDIV approval, the recipient must obtain that approval from the 

OPDIV before giving its approval to the subrecipient or contractor. 

Expanded Authorities 

OPDIVs may waive certain direct cost-related and other prior-approval requirements 

and provide authority for the recipient to undertake these activities and expenditures 

without the need for OPDIV prior approval. These operating authorities are termed 

“expanded authorities.” Exhibit 6 presents a summary of the expanded authorities 

that may be provided by an OPDIV. Procedures for implementing several of these 

authorities follow the exhibit. The recipient should consult Part IV for detailed 

applicability of expanded authorities to specific award instruments and types of 

recipients. 

Certain grants or recipients are not eligible for expanded authorities, including those 

that require closer monitoring or technical assistance. In addition, one or more of 

these authorities may be overridden by a special term or condition of the award. The 

NoA will indicate the applicability of expanded authorities by reference to the HHS 

GPS and the OPDIV supplement in Part IV, or through specific terms and conditions 

of the award. Therefore, recipients must review the NoA to determine whether and 

to what extent they are permitted to use expanded authorities. 

When using expanded authorities, recipients must ensure that they exercise proper 

stewardship over Federal funds and that costs charged to awards are allowable, 

allocable, reasonable, necessary, and consistently applied regardless of the source of 

funds. HHS may disallow the costs if it determines, through audit or otherwise, that 

the costs do not meet the tests of allowability, including allocability, reasonableness, 

necessity, and consistency. 

Several expanded authorities have specific deadlines for submission of reports or for 

timely notification to the awarding office. Recipients should be aware that a 

consistent pattern of failure to adhere to those deadlines for reporting or notification 

will be grounds for excluding that recipient from expanded authorities. 

 II-57 
Exhibit 6. Summary of Expanded Authorities 

May exercise as expanded authority Except 

Carryover of unobligated balances from one budget 

period to the next successive budget period 

If the NoA indicates otherwise 

Cost-related prior approvals for direct cost items, 

including research patient care costs and equipment 

If the scope would change 

Extension of final budget period of a project period 

without additional funds 

If the recipient already has given itself one extension of 

up to 12 months 

Pre-award costs up to (and including) 90 days before 

the beginning date of the initial budget period of a new 

or competing continuation award 

If the NoA indicates otherwise 

Transfer of performance of substantive programmatic 

work to a third party (by subaward or a contract under 

the grant) 

If the transfer would be to a foreign component or it 

would result in a change in scope 

Carryover of Unobligated Balances 

Under expanded authorities, OPDIV prior approval is not required to carry forward an 

unobligated balance from one budget period to the subsequent budget period. 

However, if the GMO determines that some or all of the unobligated funds are not 

necessary to complete the project or perform the program activity, the GMO may 

restrict the recipient’s authority to automatically carry over unobligated balances in 

the future, use the balance to reduce or offset OPDIV funding for a subsequent 

budget period, or use a combination of these actions. The GMO’s decision about the 

disposition of the reported unobligated balance will be reflected in the NoA. 

Extension of Final Budget Period of a Previously Approved Project Period 

The recipient may extend the final budget period of a previously approved project 

period one time for a period of up to 12 months beyond the original expiration date 

shown in the NoA if 

• no additional funds are required to be obligated by the awarding office; and 

• the originally approved scope will not change; and 

• any one of the following applies: 

h additional time beyond the established expiration date is required to 

ensure adequate completion of the originally approved project or program, 

or 

h continuity of grant support is required while a competing continuation 

application is under review, or 

h the extension is necessary to permit an orderly phase-out of a project or 

program that will not receive continued support. 

The fact that funds remain at the expiration of the grant is not, in itself, sufficient 

justification for an extension without additional funds. 

 II-58 
The recipient must notify the awarding office, in writing, of the extension 10 days 

before the expiration date of the project period. Upon notification, the awarding 

office will revise the project period ending date and provide an acknowledgment to 

the recipient. All terms and conditions of the award apply during the extended period 

and, by extending the final budget period of the project period, the recipient agrees 

to update all required certifications and assurances, including those pertaining to 

human subjects and animal welfare, in accordance with applicable regulations and 

policies. A recipient may not extend a project period previously extended by the 

awarding office. Any additional project period extension beyond the one-time 

extension of up to 12 months requires OPDIV prior approval. 

Financial Management 

Financial Management System 

Recipients are required to meet the standards and requirements for financial 

management systems set forth or referenced in 45 CFR 74.21 or 92.20, as 

applicable. The adequacy of the financial management system is integral to the 

ability of the recipient to account for the expenditure of grant funds. These standards 

are intended to ensure that Federal funds are handled in a responsible manner that 

includes adequate internal controls, cash management consistent with Department of 

the Treasury requirements (see “HHS Grants Process—Payment”). 

States may expend and account for funds in accordance with State laws and 

procedures that apply to the expenditure of and the accounting for the State’s own 

funds as long as those procedures are sufficient to permit preparation of required 

reports and tracing of expenditures to a level adequate to establish that award funds 

have not been used in violation of any applicable statutory restrictions or 

prohibitions. 

All other types of recipients must use financial systems that enable the recipient to 

do the following: 

• Provide accurate, current, and complete financial information about Federal 

awards and, for subawards, reasonable procedures for ensuring that 

subrecipients provide financial reports in sufficient time to allow preparation 

of OPDIV-required reports. 

• Maintain records that adequately identify the sources of funds for federally 

assisted activities and the purposes for which the award was used, including 

authorizations, obligations, unobligated balances, assets, liabilities, outlays or 

expenditures, and any program income. Accounting records must be 

supported by source documentation such as canceled checks, paid bills, 

payrolls, and time and attendance records. 

• Maintain effective control over and accountability for all cash, real and 

personal property, and other assets under the award; adequately safeguard 

those assets; and ensure that they are used only for authorized purposes. 

• Compare actual expenditures or outlays with the approved budget for the 

award. 

 II-59 
• Determine the allowability of costs in accordance with the applicable Federal 

cost principles, program regulations, and other requirements cited in the NoA. 

This includes the ability to readily identify unobligated balances, accelerated 

or delayed expenditures, and cost transfers. 

• Minimize the time elapsing between any advance payment under this award 

and the disbursement of the funds for direct program costs and the 

proportionate share of any allowable indirect or facilities and administrative 

costs, and ensure that the timing and amount of any payments to 

subrecipients conform to this standard. 

Recipients must notify the GMO when financial management problems are 

discovered. Deficiencies in a recipient’s financial management system, whether 

reported by the recipient or identified by the OPDIV, may result in the imposition of 

special award conditions, use of the reimbursement payment method, or other 

increased monitoring by the awarding office. 

Program Income 

Accountability and Alternatives for Use 

Program income is gross income—earned by a recipient, subrecipient, or a contractor 

under a grant—directly generated by the grant-supported activity or earned as a 

result of the award. Program income includes, but is not limited to, income from fees 

for services performed; charges for the use or rental of real property, equipment, or 

supplies acquired under the grant; the sale of commodities or items fabricated under 

an award; charges for research resources; and license fees and royalties on patents 

and copyrights. 

The requirements for accountability for the various types of income under HHS 

grants are specified in this section. However, the NoA governs the disposition of 

royalties and other income earned from a copyrighted work, patents, patent 

applications, trademarks, or inventions. Generally such income is not subject to the 

requirements of this section. 

Accountability refers to whether the OPDIV specifies how the income is to be used 

and whether the income needs to be reported to the OPDIV and for what length of 

time. Program income earned during the project period must be reported by the 

recipient as discussed in this section. 

Each NoA will indicate the alternative for disposition of program income. For nonresearch grants, if no alternative is specified, the program income must be used 

under the deductive alternative. The default alternative for research grants (except 

for awards to commercial organizations under programs other than the Small 

Business Innovation Research and Small Business Technology Transfer programs) is 

the addition alternative as provided in 45 CFR 74.24(d). Regardless of the alternative 

applied, program income may be used only for allowable costs in accordance with 

the applicable cost principles and the terms and conditions of the award. Subawards 

and contracts under grants are subject to the terms of the subaward or contract with 

regard to any income generated, but the terms specified by the recipient must be 

consistent with the requirements of the NoA. 

 II-60 
Program income earned during the period of grant support—other than income 

earned as a result of copyrights, patents, or inventions (see “Intellectual Property—

Rights in Data”) or as a result of the sale of real property, equipment, or supplies 

(“Property Management”)—must be retained by the recipient and, as specified in the 

NoA, may be used in one or a combination of the ways indicated in Exhibit 7. Unless 

otherwise specified in the terms and conditions of the award, recipients are not 

accountable for program income earned after the period of grant support. 

Exhibit 7. Use of Program Income Alternatives 

Alternative Use of program income 

Additive Added to funds committed to the project or program and used to further eligible project 

or program objectives 

Deductive Deducted from total allowable costs of the project or program to determine the net 

allowable costs on which the Federal share of costs will be based 

Combination Uses all program income up to (and including) $25,000 as specified under the additive 

alternative and any amount of program income exceeding $25,000 under the deductive 

alternative 

Matching Used to satisfy all or part of the non-Federal share of a project or program 

Exhibit 8 summarizes the accountability requirements related to the timing of 

earning and use of program income. 

Exhibit 8. Summary of Accountability Requirements for Program Income 

If program income is earned... and that income is ... then the recipient is... 

During the project period Received and expended during the 

project period 

Required to use program income 

as provided in the NoA 

During the project period Received and expended after the 

project period 

Required to adjust the final FSR 

to reflect receipt and use of the 

income as directed by the GMO 

During the project period Received during the project period 

but expended after the project 

period because (1) earned during 

the final budget period of the 

project period or (2) with GMO 

approval 

(1) Required to use income as 

provided in the NoA and adjust 

final FSR accordingly (if earned 

during the final budget period of 

the project period) or (2) use the 

income under addition alternative 

and report as specified by the 

GMO 

After the project period Received and expended after the 

project period 

Not accountable for that program 

income unless specifically 

provided in the NoA 

 II-61 
Reporting of Program Income 

The amount of program income earned and the amount expended must be reported 

on the FSR (SF 269—Long Form). Any costs associated with the generation of the 

gross amount of program income that are not charged to the grant should be 

deducted from the gross program income earned, and the net program income 

should be the amount reported. Program income subject to the additive alternative 

must be reported on lines 10r and 10s, as appropriate, of the FSR; program income 

subject to the deductive alternative must be reported on lines 10c and 10q of the 

FSR; and program income subject to the matching alternative must be reported on 

lines 10g and 10q of the FSR. 

Income earned from the sale of equipment must be reported on the FSR for the 

period in which the proceeds are received in accordance with the reporting 

requirements for the program income alternative specified. Amounts due the OPDIV 

for unused supplies must be reflected as a credit to the grant on line 10c of the FSR. 

Reporting requirements for accountable income accrued after grant support ends will 

be specified in the NoA. 

Interest Earned on Advances of Grant Funds 

The Treasury and OMB policies also establish requirements for recipients to account 

for interest earned on advances of grant funds and provide for use of the 

reimbursement method if cash management requirements are not met. Except as 

provided in 45 CFR 74.22(k), any HHS recipient subject to the requirements of 

45 CFR part 74 that receives advance payments must maintain those advances in an 

interest-bearing account. 

Interest earned on advances of Federal funds must be handled as follows: 

• Nongovernmental recipients. Any interest earned by nongovernmental 

recipients on advances of Federal funds under all Federal grant awards and 

subawards that, in the aggregate, exceeds $250 per year (based on the 

recipient’s or subrecipient’s fiscal year) must be remitted annually to PMS (as 

the government-wide agent for collection). Recipients with electronic funds 

transfer (EFT) capability should use an electronic medium to remit interest. 

• Governmental recipients other than States. Except as provided in 45 CFR 

92.21(i), any interest earned by local governments or Indian tribal 

governments on advances of Federal funds under all Federal grant awards 

and subawards that, in the aggregate, exceeds $100 per year (based on the 

recipient’s or subrecipient’s fiscal year) must be remitted promptly, and at 

least quarterly, to PMS. 

• State governments. State governments operating under Treasury-State 

agreements are subject to the payment and receipt of interest as specified in 

their agreements. All other State recipients are expected to follow sound 

financial management practices that minimize the potential for excessive 

Federal cash on hand and to comply with the cash management requirements 

of 45 CFR 92.20 and 21. 

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Property Management 

Generally, recipients may use their own property management policies and 

procedures for property purchased, constructed, or fabricated as a direct cost using 

HHS grant funds, provided they observe the requirements in 45 CFR 74.31 through 

74.37 or 92.31 through 92.34, as applicable. State governments may use and 

manage equipment acquired under a grant in accordance with State laws and 

procedures as specified in 45 CFR 92.32. Unless otherwise indicated, the following 

requirements for use and management of equipment and supplies do not apply to 

State governments. See “Intellectual Property” for requirements related to that type 

of property. 

These property management requirements do not apply to equipment for which only 

depreciation or use allowances are charged or to equipment acquired primarily for 

sale or rental rather than for use. When acquiring replacement equipment, the 

recipient may use the equipment to be replaced as a trade-in or may sell the 

equipment and use the proceeds to offset the costs of the replacement equipment 

subject to the approval of the OPDIV. 

The dollar threshold for determining the applicability of several of the requirements 

in 45 CFR part 74 or 92 is based on the unit acquisition cost of an item of equipment. 

As defined in 45 CFR 74.2, the cost of an item of equipment includes necessary 

modifications and attachments that make it usable for the purpose for which it was 

acquired or fabricated. When such accessories or attachments are acquired 

separately and serve to replace, enhance, supplement, or otherwise modify the 

equipment’s capacity and when they individually meet the definition of equipment, 

required OPDIV prior approval for equipment must be observed for each item (see 

“Prior-Approval Requirements”). However, the aggregate acquisition cost of a piece 

of equipment will be used to determine the applicable provisions of 45 CFR 74.34 or 

92.32. Fixed equipment that is part of a construction grant also is subject to these 

requirements. If property is fabricated from individual component parts, each 

component must itself be classified as equipment if it meets the definition of 

equipment. In this case, the aggregate acquisition cost of the resulting piece of 

equipment will determine the appropriate accountability requirements in 45 CFR 

74.34 or 92.32. 

In general, title to equipment and supplies acquired by a recipient or subrecipient 

with HHS funds vests in the recipient or subrecipient upon acquisition, subject to the 

property management requirements of 45 CFR 74.31, 74.34, 74.35, and 74.37 or of 

45 CFR 92.32 and 92.33. 

Recipients (and subrecipients, as applicable) are required to be prudent in the 

acquisition of property under a grant-supported project. It is the recipient’s 

responsibility to conduct a prior review of each proposed property acquisition to 

ensure that the property is needed and that the need cannot be met with property 

already in the possession of the organization. If prior approval is required for the 

acquisition, the recipient must ensure that appropriate approval is obtained in 

advance of the acquisition. The recipient also must follow appropriate procurement 

procedures in acquiring property as specified in “Procurement Management.” 

Recipients of HHS grants other than Federal institutions cannot be authorized to use 

Federal supply sources except that States may acquire hardware and software from 

 II-63 
Federal Supply Schedules consistent with the terms and conditions of those 

schedules. 

Recipients of HHS grants must not use equipment acquired with grant funds to 

provide services for a fee to compete unfairly with private companies that provide 

equivalent services, unless the NoA provides otherwise. 

Exempt Property 

Under the Federal Grant and Cooperative Agreement Act, 31 U.S.C. 6306, HHS may 

permit non-profit institutions of higher education and non-profit organizations whose 

primary purpose is the conduct of scientific research to obtain title to equipment and 

supplies acquired under grants for support of basic or applied scientific research 

without further obligation to the Federal government. However, an OPDIV has the 

right to require transfer of title to equipment with an acquisition cost of $5,000 or 

more to the Federal government or to an eligible third party named by the OPDIV 

under the conditions specified in 45 CFR 74.34(h). An OPDIV may exercise this right 

within 120 days of the completion or termination of an award or within 120 days of 

receipt of an inventory, as provided in 45 CFR 74.34(h)(2), whichever is later. 

Nonexempt Property 

All other equipment and supplies acquired under all other HHS grant-supported 

projects by any other type of non-State recipient are subject to the full range of 

acquisition, use, management, and disposition requirements of 45 CFR 74.34 and 

74.35 or of 45 CFR 92.32 and 92.33. Property acquired or used under an HHS grantsupported project, including any federally owned property, also is subject to the 

requirements for internal control specified in 45 CFR 74.21 or 92.20. Pursuant to 45 

CFR 74.37, for recipients subject to those regulations, equipment (and intangible 

property and debt instruments) acquired with, or improved with, HHS funds may not 

be encumbered without OPDIV approval. 

Equipment Management System 

The recipient’s management system for equipment must meet the requirements of 

45 CFR 74.34(f) or 92.32, which include the following: 

• Records that adequately identify (according to the criteria specified in the 

regulations) items of equipment owned or held by the recipient and state the 

current location of each item 

• A physical inventory of the equipment, at least once every 2 years, to verify 

that the items in the records exist and either are usable and needed or are 

surplus (a statistical sampling basis is acceptable) 

• Control procedures and safeguards to prevent loss, damage, and theft 

• Adequate maintenance procedures to keep the equipment in good condition 

• Proper sales procedures when the recipient is authorized to sell the 

equipment. 

 II-64 
For items of equipment having a unit acquisition cost of $5,000 or more, an OPDIV 

has the right to require transfer title to the equipment to the Federal government or 

to an eligible third party named by the OPDIV under the conditions specified in 45 

CFR 74.34(h) and 92.32, respectively. This right applies to nonexempt property 

acquired by all types of recipients, including State governments and Federal 

institutions, under all types of grants under the stipulated conditions. 

Sale of Equipment and Supplies 

For equipment and supplies purchased under HHS grants for basic or applied 

research by non-profit institutions of higher education or non-profit organizations 

whose principal purpose is the conduct of scientific research, the recipient is exempt 

from any requirement to account for proceeds from their sale; however, OPDIVs 

have certain rights with respect to such property as specified in “Exempt Property” in 

this section. 

All other types of grants and recipients are subject to the requirements in 45 CFR 

74.34 or 92.32, if title to the equipment vests in the recipient rather than in the 

OPDIV. These requirements also apply to donated property used to meet a matching 

or cost-sharing requirement. If the grant-supported project or program for which 

equipment was acquired is still receiving OPDIV funding at the time of sale, the 

recipient must credit the OPDIV share of the proceeds to the grant and use that 

amount under the deductive alternative for program income. If the recipient is no 

longer receiving OPDIV grant support, the amount due should be paid in accordance 

with instructions from the OPDIV. 

If there is a residual inventory of unused supplies exceeding $5,000 in aggregate fair 

market value upon termination or completion of the grant and if the supplies are not 

needed for other federally sponsored programs or projects, the recipient may either 

retain them for use on other than federally sponsored activities or sell them, but, in 

either case, the recipient must compensate the OPDIV for its share as a credit to the 

grant. 

These grants and recipients also are subject to the requirements in 45 CFR 74.35 or 

92.33 with respect to the use or sale of unused supplies. If the recipient retains the 

supplies for use on other than federally sponsored activities, an amount is due the 

OPDIV as if they were sold. 

Revocable License 

In some cases, federally owned tangible personal property may be made available to 

a recipient under a revocable license agreement. The revocable license agreement 

between the OPDIV and the recipient provides for recipient use of the property for 

the period of grant support under the following conditions: 

• Title to the property remains with the Federal government. 

• The OPDIV reserves the right to require the property to be returned to the 

Federal government should it be determined to be in the best interests of the 

Federal government to do so. 

• The use to which the recipient puts the property does not permanently 

damage it for Federal government use. 

 II-65 
• The property is controlled and maintained in accordance with the 

requirements of the NoA. 

Debt Instruments 

Under certain programs and when authorized in the NoA, recipients may be allowed 

or required to enter into financing arrangement with third parties. Under such 

circumstances, the NoA will address the OPDIV’s role; provisions to be included in 

agreements with third parties; the recipient’s role with respect to the third parties, 

including responsibilities and liabilities in the event of non- or late payment by a third 

party; and the recipient’s accountability during and after the project period. 

Real Property 

Acquisition, Use, and Management 

Real property may be acquired only when authorized by statute and when specifically 

provided for in the NoA. In addition, activities under individual grants that constitute 

major renovation of real property or purchase of a trailer or modular unit that will be 

used as real property may be charged to HHS grants only with specific statutory 

authority and GMO approval. 

Real property constructed or acquired under an HHS grant is subject to the 

requirements of 45 CFR 74.30 through 74.32 and 74.37 or of 45 CFR 92.31, as 

applicable, regarding use, transfer of title, and disposition, unless alternate 

requirements are specified in the governing statute. For example, the governing 

statute for a construction grant program may contain usage and disposition 

requirements that are in addition to or different from the usage and disposition 

requirements of the governing regulations. To the extent statutory provisions differ 

from the requirements of 45 CFR part 74 or 92, including those described in this 

subsection, the statutory provisions, as reflected in the NoA, apply. In addition, 

statutory provisions or implementing program regulations may specify the duration 

of the recipient’s accountability obligations (e.g., 20 years) or allow for waivers. 

Real property constructed or renovated with HHS grant support may not be 

conveyed, transferred, assigned, mortgaged, leased, or in any other manner 

encumbered by the recipient, except as expressly authorized in writing by OPDIV. If 

the recipient defaults in any way on a mortgage, the recipient must immediately 

notify the GMO by telephone and in writing. If the mortgagor intends to foreclose, 

the recipient must notify the GMO in writing at least 30 days before the foreclosure 

action is initiated. 

The mortgage agreement must specifically allow, in the case of default, that HHS or 

its designee may assume the role of mortgagor and continue to make payments. If 

HHS (or its designee) chooses not to assume the role of mortgagor in the case of 

default, the recipient must pay HHS an amount equal to the share of the sales 

proceeds otherwise due the recipient multiplied by the HHS share of the property. 

Any assignment of the property and mortgage responsibilities to any party other 

than HHS is subject to prior approval of the mortgagor. 

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Disposition 

The recipient is accountable to the OPDIV for use of grant-supported real property as 

long as it owns the property or until it requests disposition instructions from the 

OPDIV. See Part IV to determine if an OPDIV has statutory or regulatory provisions 

that specify a different accountability period. 

For disposition of property acquired on an amortized acquisition basis, the formulas 

in 45 CFR 74.32 and 92.31 do not apply in determining the Federal share. In cases of 

amortized acquisition, the Federal share will be determined by multiplying the 

amount of mortgage principal already repaid at the time of disposition by the 

average Federal participation (taken from the FSR) plus the increase in value over 

the purchase price multiplied by the average Federal participation plus the Federal 

participation in the down payment. The computation of the Federal share of real 

property acquired with long-term debt financing must be computed for each year of 

grant support in which Federal funds are used to meet all or a portion of the down 

payment, the principal on the mortgage, or both. 

If a real estate transaction funded in whole or in part by HHS requires the use of a 

real estate appraisal (including, but not limited to, appraisals to determine the 

Federal share of real property and appraisals to determine required insurance 

levels), the appraisal must be 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, as amended 

(P.L. 101-73). 

Notice of Federal Interest 

To protect the Federal interest in real property that has been constructed or has 

undergone major renovation with HHS grant funds, recipients must record an NFI in 

the appropriate official records of the jurisdiction in which the property is located. 

Recordation must occur when construction or renovation begins. Fees charged for 

recording or modifying the NFI may be charged to the grant. A copy of the NFI must 

be provided to the awarding office. 

Insurance 

Immediately upon completion of construction, a nongovernmental recipient must, at 

a minimum, provide the same type of insurance coverage as it maintains for other 

property it owns, consistent with the minimum coverage specified below. 

“Completion of construction” means either the point at which the builder turns the 

facility over to the recipient (e.g., the date of the final acceptance of the building) or 

the date of beneficial occupancy, whichever comes first. 

If title to real property acquired with HHS grant funds vests in the recipient, the 

following minimum insurance coverage is required: 

• Title insurance policy that insures the fee interest in the real property for an 

amount not less than the full appraised value of the property. When the 

Federal participation in the construction of real property covers only a portion 

of a building, title insurance should cover the total cost of the facility to 

prevent liens on the unsecured portion from having an adverse impact on the 

portion with a Federal interest. If the recipient already owns the land (for 

 II-67 
example, land in the middle of a campus setting on which a building is being 

constructed), in lieu of a title insurance policy, the recipient may provide 

evidence satisfactory to the OPDIV, such as legal or title opinion, that it has 

good and merchantable title free of all mortgages or other foreclosable liens 

to all land, rights of way, and easements necessary for the project. In 

instances where a recipient is given land by the State, if the State recently 

acquired the land in a land swap transaction, the recipient should obtain title 

insurance. However, if the State has owned the land for a considerable period 

of time, title insurance would not be necessary; a copy of the State 

documents giving the land to the recipient would be sufficient. If the recipient 

must buy the land on which to build, a legal opinion would not be sufficient; 

title insurance must be obtained in order to protect the Federal interest in the 

building to be constructed. 

• Physical destruction insurance policy that insures the full appraised value of 

the facility from risk of partial and total physical destruction. When the 

Federal participation in the construction or renovation of real property covers 

only a portion of a building, the insurance should cover the total cost of the 

facility, because any damage to the building could make the building unusable 

and could thus affect the Federal interest. The insurance policy is to be 

maintained for the duration of the Federal interest in the property. The cost of 

insurance coverage after the period of grant support must be borne by a 

source other than the grant that provided the funds for the construction or 

renovation. The grant account will not remain active for this purpose. 

Governmental recipients may follow their own insurance requirements. Federally 

owned property provided to a recipient for use need not be insured by the recipient. 

Within 5 days of completion or beneficial occupancy, the recipient must submit, to 

the GMO, a written statement signed by the authorized organizational representative 

assuring that the recipient has purchased the required insurance policies on the 

OPDIV-funded facility and will maintain the insurance coverage at the full appraised 

value of the facility throughout the period of Federal interest as specified in the NoA. 

The OPDIV may waive one or both of the requirements above if the recipient shows 

that it is effectively self-insured against the risks involved. The term “effectively selfinsured” means that the recipient has sufficient funds to pay for any damage to the 

facility, including total replacement if necessary, or to satisfy any liens placed against 

the facility. If a recipient claims self-insurance, it must provide the OPDIV an 

assurance that it has sufficient funds available to replace or repair the facility or to 

satisfy all liens. This certification should state the source of the funds, such as the 

organization’s endowment or other special funds set aside specifically for this 

purpose. 

Intellectual Property 

It is HHS policy that the results and accomplishments of the activities that it funds 

should be made available to the public. PIs/PDs and recipient organizations are 

expected to make the results and accomplishments of their activities available to the 

research community and to the public at large. If the outcomes of the research result 

in inventions, the provisions of the Bayh-Dole Act of 1980, as implemented in 37 CFR 

part 401, apply. 

 II-68 
As long as recipients comply with the provisions of the Bayh-Dole Act, as amended 

by the Technology Transfer Commercialization Act of 2000 (P.L. 106-404), and 37 

CFR part 401, they have the right to retain title to any invention conceived or first 

actually reduced to practice using HHS grant funds. The principal objectives of these 

laws and the implementing regulation are to promote commercialization of federally 

funded inventions, while ensuring that inventions are used in a manner that 

promotes free competition and enterprise without unduly encumbering future 

research and discovery. 

The regulation requires the recipient to develop and commercialize the technology or 

use patent and licensing processes to transfer grant-supported technology to 

industry for development. Alternatively, unpatented research products or resources 

may be made available through licensing to vendors or other investigators. Sharing 

of copyrightable outcomes of research may be in the form of journal articles or other 

publications. 

The importance of each of these outcomes is reflected in the specific policies 

pertaining to rights in data, sharing of research data and unique research resources, 

and inventions and patents described in this section. 

Rights in Data 

In general, recipients own the rights in data resulting from a grant-supported project 

or program. However, the NoA may indicate alternative rights, e.g., under a 

cooperative agreement or based on specific programmatic considerations as stated in 

the applicable program announcement or solicitation. Except as otherwise provided 

in the NoA, any publications, data,18 or other copyrightable works developed under 

an HHS grant may be copyrighted without OPDIV prior approval. Rights in data also 

extend to students, fellows, or trainees under awards whose primary purpose is 

educational, with the authors free to copyright works without OPDIV approval. In all 

cases, whether HHS funded all or part of the project or program resulting in the 

data, the Federal government must be given a royalty-free, nonexclusive, and 

irrevocable license for the Federal government to reproduce, publish, or otherwise 

use the material and to authorize others to do so for Federal purposes, e.g., to make 

it available in government-sponsored databases for use by other researchers. The 

specific scope of OPDIV rights with respect to a particular grant-supported effort will 

be addressed in the NoA. Data developed by a subrecipient also are subject to this 

policy. 

Access to Research Data 

HHS handles requests for the release of research data from certain types of 

recipients as FOIA requests (see 45 CFR 74.36). The term “research data” is defined 

as the recorded factual material commonly accepted in the scientific community as 

necessary to validate research findings. It does not include preliminary analyses; 

 18 For this purpose, “data” means recorded information, regardless of the form or 

media on which it may be recorded, and includes writings, films, sound recordings, 

pictorial reproductions, drawings, designs or other graphic representations, 

procedural manuals, forms, diagrams, work flow charts, equipment descriptions, 

data files, data processing or computer programs (software), statistical records, and 

other research data. 

 II-69 
drafts of scientific papers; plans for future research; peer reviews; communications 

with colleagues; physical objects (e.g., laboratory samples, audio or video tapes); 

trade secrets; commercial information; materials necessary to be held confidential by 

a researcher until publications in a peer-reviewed journal; information that is 

protected under the law (e.g., intellectual property); personnel or medical files and 

similar files, the disclosure of which would constitute an unwarranted invasion of 

personal privacy; or information that could be used to identify a particular person in 

a research study. 

As required by 45 CFR 74.36, recipients that are institutions of higher education, 

hospitals, or non-profit organizations must release research data first produced in a 

project supported in whole or in part with Federal funds that are cited publicly and 

officially by a Federal agency in support of an action that has the force and effect of 

law (i.e., regulations and administrative orders). If the data are publicly available, 

HHS directs the requester to the public source. Otherwise, the OPDIV FOI 

coordinator handles the request, consulting with the affected recipient and the PI. 

This requirement also provides for assessment of a reasonable fee to cover grantee 

costs and (separately) the HHS costs of responding. 

This requirement to release research data does not apply to commercial 

organizations or to research data produced by State or local governments. However, 

if a State or local governmental recipient contracts with an educational institution, 

hospital, or non-profit organization, and the contract results in covered research 

data, those data are subject to the disclosure requirement. 

Publications 

As a means of sharing knowledge, HHS encourages recipients to arrange for 

publication of the results and accomplishments of HHS-supported activities. OPDIV 

prior approval is not required for publishing the results of an activity under a grant. 

Recipients also may assert copyright in scientific and technical articles based on data 

produced under the grant and transfer it to the publisher or others where necessary 

to effect journal publication or inclusion in proceedings associated with professional 

activities. Any such transfer is subject to the royalty-free, non-exclusive and 

irrevocable license to the Federal government and any agreement should note 

explicitly that the assignment is subject to the government license. 

Journal or other copyright practices are acceptable unless the copyright policy 

prevents the recipient from making copies for its own use (as provided in 45 CFR 

74.36 and 92.34). The recipient should account for royalties and other income 

earned from a copyrighted work as specified by the OPDIV (see Part IV and the 

NoA). 

For each publication that results from HHS grant-supported activities, recipients 

must include an acknowledgment of grant support using one of the following 

statements: 

“This publication was made possible by Grant Number ________ from 

_________.” 

“The project described was supported by Grant Number ________ 

from ________.” 

 II-70 
Recipients also must include a disclaimer stating the following: 

“Its contents are solely the responsibility of the authors and do not 

necessarily represent the official views of the [name of OPDIV, OPDIV 

component, or HHS].” 

If the recipient plans to issue a press release concerning the outcome of HHS grantsupported activities, it should notify the OPDIV in advance to allow for coordination. 

One copy of each publication resulting from work performed under an HHS grantsupported project must accompany the annual or final progress report submitted to 

the OPDIV. 

Patents and Inventions 

The Bayh-Dole Act of 1980 (P.L. 96-517; 35 U.S.C. 200–212) and the related EO 

12591 (April 10, 1987) provide incentives for the practical application of research or 

results of other activities supported through Federal funding agreements. To be able 

to retain rights and title to inventions made with Federal funds, so-called “subject” 

inventions, the recipient must comply with a series of regulations that ensure the 

timely transfer of the technology to the private sector, while protecting limited rights 

of the Federal government. 

The regulations apply to any subject invention—defined as any invention either 

conceived or first actually reduced to practice in the performance of work under the 

Federal award—and to all types of recipients of Federal funding. This includes nonprofit entities and small businesses or large businesses receiving funding through 

grants, cooperative agreements, or contracts as direct recipients of funds or as 

subrecipients or subcontractors under those awards. 

HHS recipients may retain intellectual property rights to subject inventions provided 

they do the following: 

• Report all subject inventions to the OPDIV 

• Make efforts to commercialize the subject invention through patent or 

licensing 

• Formally acknowledge the Federal government’s support in all patents that 

arise from the subject invention 

• Formally grant the Federal government a limited use license to the subject 

invention. 

Subawards and contracts under an award also must reflect the objectives of the 

Bayh-Dole Act and the Technology Transfer Commercialization Act of 2000 to ensure 

that inventions made are used in a manner to promote free competition and 

enterprise without unduly encumbering future research and discovery. 

Royalties and Licensing Fees from Copyrights, Inventions, and Patents 

HHS recipients do not have to report program income resulting from royalties or 

licensing fees from sale of copyrighted material unless the NoA provides otherwise. 

 II-71 
The NoA may include additional terms and conditions if commercialization of an 

invention is an anticipated outcome of a research project. 

Pursuant to the regulations implementing the Bayh-Dole Act (37 CFR 401.14(h)), 

HHS requires reporting of income resulting from HHS-funded inventions and patents. 

Specifically, as part of the annual invention utilization report, recipients must report 

income generated by all subject inventions to which title has been elected, including 

inventions that have been patented and those that are licensed but not patented 

(see “Invention Reporting” in this section). 

Invention Reporting 

Exhibit 9 summarizes recipient responsibilities for invention reporting as specified in 

37 CFR part 401. Recipients should refer to 37 CFR part 401 (available on the 

Interagency Edison site: https://s-edison.info.nih.gov/iEdison/) for a complete 

discussion of the regulations. 

Exhibit 9. Extramural Invention Reporting Compliance Responsibilities 

Action required 

When action 

must be taken Discussion 

37 CFR part 

401 

reference 

Employee Agreement to Disclose All Inventions 

The PI/PD (employee) must 

sign an agreement to abide by 

the terms of the Bayh-Dole Act 

and the HHS GPS as they 

relate to intellectual property 

rights. 

At time of employment. Recipients and subrecipients 

must have policies in place 

regarding ownership of 

intellectual property. 

401.14(f)(2) 

Invention Report and “Disclosure” 

The recipient must submit to 

the OPDIV a report of any 

subject invention. This 

includes a written description 

(the so-called “invention 

disclosure”) of the invention. 

Within 2 months of the 

inventor’s initial report of the 

invention to the recipient. 

There is no single format for 

disclosing the invention to the 

Federal government. The 

report must identify inventor(s), 

OPDIV grant number, and date 

of any public disclosure. 

401.14(a)(2) 

401.14(c)(1) 

Rights to Subrecipient Inventions 

Subrecipients retain rights to 

any subject inventions they 

make. 

Within 2 months of the 

inventor’s initial report of the 

invention to the subrecipient. 

(The subrecipient has the 

same invention reporting 

obligations as the recipient.) 

The recipient cannot require 

ownership of a subrecipient’s 

subject inventions as a term of 

the agreement. 

401.14(g)(1) 

401.14(g)(2) 

Election of Title to Invention 

The recipient must notify the 

OPDIV of its decision to retain 

or waive title to invention and 

patent rights. 

Within 2 years of the initial 

reporting of the invention to the 

OPDIV. 

 401.14(b) 

401.14(c)(2) 

401.14(f)(1) 

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Exhibit 9. Extramural Invention Reporting Compliance Responsibilities 

Action required 

When action 

must be taken Discussion 

37 CFR part 

401 

reference 

Confirmatory License 

For each invention, the 

recipient must provide a use 

license to the OPDIV for each 

invention. 

Promptly after election of title 

to the invention. 

 401.14(f)(1) 

Patent Application 

The recipient must inform the 

OPDIV of the filing of any nonprovisional patent application. 

The patent application must 

include a Federal government 

support clause. 

Within 1 year after election of 

title, unless there is an 

extension. 

Initial patent application is 

defined as a non-provisional 

U.S. application. The patent 

application number and filing 

date must be provided. 

401.14(c)(3) 

401.2(n) 

Assignment of Rights to Third Party 

If the recipient is a non-profit 

organization, it must seek 

OPDIV approval to assign 

invention or U.S. patent rights 

to any third party, including the 

inventor(s). 

As needed. Recipients that are for-profit 

entities (including small 

businesses) do not need to 

seek approval. 

401.14(k) 

Issued Patent 

The recipient must notify the 

OPDIV that a patent has been 

issued. 

When the patent is issued. The patent issue date, 

number, and evidence of 

Federal government support 

clause must be provided. 

401.5(f)(2) 

Extension of Time to Elect Title or File Patent 

The recipient may request an 

extension of up to 2 years for 

election of title, or 1 year for 

filing a patent application. 

As needed. Request for extension of time 

must be made. Such requests 

are preapproved. 

401.14(c)(4) 

Change in Patent Application Status 

The recipient must notify the 

OPDIV of changes in patent 

status. 

At least 30 days before any 

pending patent office deadline.

This notification allows the 

OPDIV to consider continuing 

the patent action. 

401.14(f)(3) 

Invention Utilization Report 

The recipient must submit 

information about the status of 

commercialization of any 

invention for which title has 

been elected. 

Annually. This report gives an indication 

of whether the objectives of 

the law are being met. Specific 

reporting requirements can be 

found in i-Edison (https://sedison.info.nih.gov/iEdison/). 

401.14(h) 

 II-73 
Exhibit 9. Extramural Invention Reporting Compliance Responsibilities 

Action required 

When action 

must be taken Discussion 

37 CFR part 

401 

reference 

Annual Invention Statement 

The recipient must indicate 

any inventions made during 

the previous budget period on 

all grant awards. 

Generally part of the 

competing application or noncompeting grant progress 

reports. 

For PHS OPDIVs, the 

information is requested as a 

checklist item on the PHS 398 

application or through the SF 

424 (R&R), as applicable, and 

on the non-competing grant 

progress report (PHS 2590). 

PHS 398 and 

PHS 2590; 

SF 424 

(R&R) 

Final Invention Statement and Certification 

The recipient must submit to 

the GMO a summary of all 

inventions made during the 

entire term of each grant 

award. 

Within 90 days after the project 

period (competitive segment) 

ends. 

Required information is 

specified on the HHS 568 

form. If no inventions occurred 

during the project period, a 

negative report must be 

submitted. 

401.14(f)(5) 

A recipient’s failure to comply with any of these or other regulations cited in 37 CFR 

part 401 may result in the loss of patent rights or an enforcement action. 

The Bayh-Dole Act includes provisions for the recipient to assign invention rights to 

third parties. Recipients that are non-profit organizations must request OPDIV 

approval for the assignment. If the assignment is approved and the rights are 

assigned to a third party, invention and patent reporting requirements apply to the 

third party. The recipient should review existing agreements with third parties and 

revise them, as appropriate, to ensure that they are consistent with the terms and 

conditions in the NoA and that the objectives of the Bayh-Dole Act are adequately 

represented in the assignment. 

Any invention made using funds awarded for educational purposes, e.g., training 

grants or certain types of career development awards, is not considered a subject 

invention and therefore is not subject to invention reporting requirements (as 

provided in 45 CFR part 74 and 37 CFR 401.1(b)). The recipient should seek the 

advice of the GMO to verify whether any invention made under a career development 

award should be considered a subject invention. 

All issues or questions regarding extramural technology transfer policy and reporting 

of inventions and their utilization should be referred to the GMO or other designated 

individual. 

Sharing Research Tools 

HHS believes that sharing of data and other research tools produced or developed by 

investigators under HHS grants, such as cell lines, certain types of animals (e.g., 

transgenic mice), and computer programs, is essential for expedited translation of 

research results into knowledge, products, and procedures to improve human health. 

 II-74 
HHS endorses the sharing of final research data and research tools to serve these 

and other important scientific goals and expects and supports the timely release and 

sharing of final research data and research tools from HHS-supported studies for use 

by other researchers. “Timely release and sharing” is defined as no later than the 

acceptance for publication of the main findings from the final data set or after 

submission to the OPDIV. Restricting the availability of unique resources can impede 

the advancement of further research. 

For any subaward, including a consortium agreement, that may result in research 

data or tools, the recipient must include a provision requiring third-party data or 

research tools to be made available to the recipient and, as appropriate, the OPDIV 

upon request, to allow for sharing. 

HHS recognizes that data sharing may be complicated or limited, in some cases, by 

organizational policies, local IRB rules, and local, State and Federal laws and 

regulations, including the Privacy Rule. The rights and privacy of individuals who 

participate in HHS-sponsored research must be protected at all times. Thus, data 

intended for broader use should be free of identifiers that would permit linkages to 

individual research participants and variables that could lead to deductive disclosure 

of the identity of individual subjects. Investigators also must exercise great care to 

ensure that resources involving human cells or tissues do not identify original donors 

or subjects, either directly or through identifiers such as codes linked to the donors 

or subjects. 

To facilitate the availability of research tools developed with OPDIV funds, 

investigators may distribute the materials through their own laboratory or 

organization or submit them, if appropriate, to a repository. Investigators are 

expected to submit unique biological information, such as DNA sequences or 

crystallographic coordinates, to the appropriate data banks so that they can be made 

available to the broad scientific community. When distributing unique resources, 

investigators are to include pertinent information on the nature, quality, or 

characterization of the materials. 

In addition to sharing data and research resources with the research community, 

upon request of the OPDIV, the recipient also must provide a copy of documents or a 

sample of any material developed under an HHS grant award. The recipient may 

charge a nominal fee to cover shipping costs for providing this material. Income 

earned from these charges must be treated as program income. 

Organizations that believe they will be unable to comply with these requirements 

should promptly contact the GMO to discuss the circumstances, obtain information 

that might enable compliance, and reach an understanding in advance of an award. 

Procurement Management 

Recipients may acquire a variety of commercially available goods or services in 

connection with a grant-supported project or program. States may follow the same 

policies and procedures they use for procurements from non-Federal funds. All other 

recipients must follow the requirements in 45 CFR 74.40 through 74.48 or 92.36, as 

applicable, for the purchase of goods or services through contracts under grants. The 

requirements for third-party activities involving transfer of substantive programmatic 

work are addressed under “Subawards” in this section. 

 II-75 
A contract under a grant must be a written agreement between the recipient and the 

third party. The contract must, as appropriate, state the activities to be performed; 

the time schedule; the policies and requirements that apply to the contractor, 

including those required by 45 CFR 74.48 or 92.36(i) and other terms and conditions 

of the grant (these may be incorporated by reference where feasible); the maximum 

amount of money for which the recipient may become liable to the third party under 

the agreement; and the cost principles to be used in determining allowable costs in 

the case of cost-type contracts. The contract must not affect the recipient’s overall 

responsibility for the direction of the project or program and accountability to the 

Federal government. Therefore, the agreement must reserve sufficient rights and 

control to the recipient to enable it to fulfill its responsibilities. 

When a recipient enters into a service-type contract in which the term is not 

concurrent with the budget period of the award, the recipient may charge the costs 

of the contract to the budget period in which the contract is executed even though 

some of the services will be performed in a succeeding period if the following 

conditions are met: 

• The awarding office has been made aware of this situation either at the time 

of application or through post-award notification. 

• The project has been recommended for a project period extending beyond the 

current year of support. 

• The recipient has a legal commitment to continue the contract for its full 

term. 

However, costs will be allowable only to the extent that they are for services 

provided during the period of OPDIV support. To limit liability if continued OPDIV 

funding is not forthcoming, it is recommended that recipients insert a clause in such 

contracts of $100,000 or less stipulating that payment beyond the end of the current 

budget period is contingent on continued Federal funding. The contract provisions 

prescribed by 45 CFR 74.48 and 92.36(i)(2) specify termination provisions for 

contracts in excess of $100,000. 

In general, the rental costs for facilities and equipment applicable to each budget 

period should be charged to that period. Recipients are encouraged to consult the 

GMO before entering into leases that will result in direct charges to the grant project. 

Approval Requirements 

The procurement standards in 45 CFR 74.44 and 92.36(g) allow OPDIVs to require 

approval of specific procurement transactions under the following circumstances (and 

provide a mechanism for governmental recipients to be exempt from this type of 

review): 

• A recipient’s procurement procedures or operations do not comply with the 

procurement standards required by those regulations. 

 II-76 
• The procurement is expected to exceed the “simplified acquisition threshold” 

(currently $100,000) (formerly the “small purchase threshold”) established by 

the Federal Property and Administrative Services Act, as amended, and is to 

be awarded without competition, or only one bid or proposal is received in 

response to a solicitation. 

• A procurement that will exceed the simplified acquisition threshold specifies a 

“brand name” product. 

• A proposed award over the simplified acquisition threshold is to be awarded to 

other than the apparent low bidder under a sealed-bid procurement. 

• A proposed contract modification changes the scope of a contract or increases 

the contract amount by more than the amount considered to be a simplified 

acquisition. 

When OPDIV prior approval is required, the recipient must make available sufficient 

information to enable review. This may include, at OPDIV discretion, pre-solicitation 

technical specifications or documents, such as requests for proposals or invitations 

for bids, or independent cost estimates. Approval may be deferred pending 

submission of additional information by the recipient or may be conditioned on the 

receipt of additional information. Any resulting OPDIV approval does not constitute a 

legal endorsement of the business arrangement by the Federal government nor does 

such approval establish the OPDIV as a party to the contract or any of its provisions. 

Requirements for Using Small Businesses, 

Minority-Owned Firms, and Women-Owned Businesses 

Recipients must make positive efforts to use small businesses, minority-owned firms, 

and women-owned businesses as sources of goods and services whenever possible. 

Recipients are required to take the following steps to implement this policy: 

• Place qualified small, minority-owned, and women-owned business 

enterprises on solicitation lists 

• Ensure that small, minority-owned, and women-owned business enterprises 

are solicited whenever they are potential sources 

• Consider contracting with consortia of small, minority-owned, or womenowned business enterprises when an intended contract is too large for any 

one such firm to handle on its own or, if economically feasible, divide larger 

requirements into smaller transactions for which such organizations might 

compete 

• Make information on contracting opportunities available and establish delivery 

schedules that encourage participation by small, minority-owned, and 

women-owned business enterprises 

• Use the services and assistance of the SBA and DoC’s Minority Business 

Development Agency, as appropriate 

• If subcontracts are to be let, require the prime contractor to take the 

affirmative steps listed above. 

 II-77 
Subawards 

This section includes the requirements for a grant involving subawards, including 

consortium agreements in which the recipient collaborates with one or more other 

organizations in carrying out the grant-supported activity. Subrecipients should be 

selected by the recipient using its established policies. HHS does not require that 

subawards comply with the procurement standards and requirements outlined above. 

The recipient is accountable to the OPDIV for the performance of the project, the 

appropriate expenditure of grant funds by all parties, and all other obligations of the 

recipient, as specified in the HHS GPS. In general, the requirements that apply to the 

recipient, including the intellectual property and program income requirements of the 

award, also apply to subrecipients. The recipient is responsible for including the 

applicable requirements of the HHS GPS in its subaward agreements. 

The recipient must enter into a formal written agreement with each subrecipient that 

addresses the arrangements for meeting the programmatic, administrative, financial, 

and reporting requirements of the grant, including those necessary to ensure 

compliance with all applicable Federal regulations and policies. At a minimum, the 

subaward agreement must include the following: 

• Identification of the PI/PD and individuals responsible for the programmatic 

activity at the subrecipient organization along with their roles and 

responsibilities. 

• Procedures for directing and monitoring the programmatic effort. 

• Procedures to be followed in providing funding to the subrecipient, including 

dollar ceiling, method and schedule of payment, type of supporting 

documentation required, and procedures for review and approval of 

expenditures of grant funds. 

• If different from those of the recipient, a determination of policies to be 

followed in such areas as travel reimbursement and salaries and fringe 

benefits (the policies of the subrecipient may be used as long as they meet 

HHS requirements). 

• Incorporation of applicable public policy requirements and provisions 

indicating the intent of the subrecipient to comply, including submission of 

applicable assurances and certifications. 

• For research subawards, inclusion of the following: 

h Statement specifying whether the financial conflict of interest 

requirements of the collaborating organization or those of the recipient 

apply. 

h Provision addressing ownership and disposition of data produced under 

the agreement. 

h Provision making the sharing of data and research tools and the 

inventions and patent policy applicable to the subrecipient and its 

employees in order to ensure that the rights of the parties to the 

 II-78 
agreement are protected and that the recipient can fulfill its 

responsibilities to the OPDIV. This provision must include a requirement to 

report inventions to the recipient and specify that the recipient has the 

right to request and receive data from the subrecipient on demand. 

• Provisions regarding property (other than intellectual property), program 

income, publications, reporting, record retention, and audit necessary for the 

recipient to fulfill its obligations to the OPDIV. 

Changes in Organizational Status 

Recipients must give HHS advance notice of the following types of changes in 

organizational status: 

• Merger—legal action resulting in the unification of two or more legal entities. 

When such an action involves the transfer of HHS grants, the procedures for 

recognizing a successor-in-interest will apply. When the action does not 

involve the transfer of HHS grants, the procedures for recognizing a name 

change normally will apply. 

• Successor-in-interest—process whereby the rights to and obligations under an 

HHS grant are acquired incidental to the transfer of all of the assets of the 

recipient or the transfer of that part of the assets involved in the performance 

of the grant. A successor-in-interest may result from legislative or other legal 

action, such as a merger or other corporate change. 

• Name change—action whereby the name of an organization is changed 

without otherwise affecting the rights and obligations of that organization as a 

recipient. 

If the change would be considered a change of grantee organization as described in 

“Prior-Approval Requirements—OPDIV Prior Approval,” the recipient must obtain that 

approval rather than simply notifying the OPDIV of its intent. 

Advance notification is required to ensure that the recipient still is able to meet its 

legal and administrative obligations to HHS and payments are not interrupted. 

Recipients are encouraged to contact the GMO of the lead OPDIV awarding office to 

explain the nature of the change in organizational status and receive guidance on 

whether it will be treated as a name change or successor-in-interest. The lead 

awarding office ordinarily will be the OPDIV with which the organization has the most 

HHS grants. If there is no advance consultation, HHS reserves the right to review the 

material provided, seek clarification or additional information, and make an 

independent determination. 

A recipient’s formal request for a change in organizational status should be 

submitted as soon as possible so that HHS can determine whether the organization 

will continue to meet the grant program’s eligibility requirements and take the 

necessary action to reflect the change in advance of the change in status. 

 II-79 
For a successor-in-interest, a letter signed by the authorized organizational 

representative of the current recipient (transferor) and the successor-in-interest 

(transferee) must be sent to the lead awarding office, following consultation with the 

GMO of that office. The letter must do the following: 

• Stipulate that the transfer will be properly effected in accordance with 

applicable law. 

• Indicate that the transferor relinquishes all rights and interests in all of the 

affected grants. 

• Request that the HHS awarding office (offices) modify its (their) records to 

reflect the transferee as the recipient of record. 

• State the effective date of the transfer. 

• Provide the transferee’s Entity Identification Number and DUNS number. 

• Include verification of the transferee’s compliance with applicable 

requirements (e.g., research misconduct). 

• Include a list of all affected HHS grants (active and pending) with the 

following information for each: 

h Complete grant number. 

h Name of PI/PD. 

h Current budget period and project period. 

h Total direct costs (as originally recommended) plus applicable indirect 

costs for each remaining budget period. If the successor-in-interest will 

occur during a budget period rather than on the anniversary date, the 

transferor also must provide estimated levels of current-year direct and 

indirect costs remaining as of the effective date of the transfer. The 

estimate may be reported on the official statement relinquishing interests 

and rights in the grant (e.g., PHS 3734 is available at 

http://www.hhs.gov/forms/publicuse.html or an equivalent relinquishing 

statement) for each affected grant or may be itemized by grant number as 

an attachment to the letter. 

• Include a complete application face page for each affected grant showing the 

transferee as the applicant organization. Each face page must be signed by 

both the PI/PD and the authorized organizational representative at the 

transferee organization. 

• Include a copy of the current negotiated indirect cost rate agreement for the 

transferee. 

In order to be recognized as the successor-in-interest, the “new” (transferee) 

organization must meet each grant program’s eligibility requirements. Upon review 

and acceptance of this information, the awarding office will revise the NoA to show 

the transferee as the recipient of record. 

 II-80 
For name changes, the recipient’s written notification to the lead awarding office 

must include the effective date of the change. Revised face pages are not required 

for name changes because name changes are processed with the next award action 

(e.g., non-competing continuation award), and the organization will submit a face 

page with the information submitted as part of that action. 

Federally Sponsored Surveys 

Recipients may use HHS grant funds to collect information through surveys or 

questionnaires under the following conditions: 

• When the collection of information is not a primary objective of the grant but 

is incidental to, or is an integral part of, a grant-supported activity. 

• When the collection of information is a primary objective of the grant, but 

such information is not intended primarily for the use of the Federal 

government or a party designated by the Federal government. (Contracts are 

used for this purpose unless a grant is specifically required by legislation.) 

When information is collected according to either of the two conditions above, 

recipients are prohibited from representing to their respondents that the information 

is being collected for, or in association with, the Federal government unless OPDIV 

approval has been obtained and, when required, OMB report clearance procedures as 

contained in OMB regulations implementing the PRA at 5 CFR part 1320, Controlling 

Paperwork Burdens on the Public, have been followed. (When OMB approval is 

required, the OPDIV, rather than the recipient, is responsible for obtaining the 

necessary clearance.) 

OMB clearance is required whenever HHS sponsors the use of a reporting form or 

plan to collect identical kinds of information or data from 10 or more people. 

Information collection is considered to be sponsored by HHS when one or more of 

the following circumstances exist: 

• The OPDIV authorizes the recipient of a grant to represent to respondents 

that the information is being collected for, or in association with, an OPDIV. 

• The recipient of a grant uses the report form or plan to collect information 

that an OPDIV has requested for the planning, operation, or evaluation of its 

program. 

• The terms and conditions of a grant award provide for OPDIV approval of the 

study design, questionnaire content, or data collection procedure. 

• The terms and conditions of a grant award provide for either submission of 

the data for individual respondents or the preparation and submission of 

special requested tabulations to the OPDIV. 

• Any information collection under a cooperative agreement. 

HHS and OMB approval may also be required if the use of a report form or plan 

presents a relatively high risk of unwarranted invasion of privacy. 

 II-81 
Collection of the following types of information is not subject to the clearance 

requirements under OMB regulations at 5 CFR part 1320: 

• Health professions data as described in Section 708 of the PHS Act, as 

amended 

• Tests or examinations given individuals for determining knowledge, abilities, 

or aptitudes of the person tested and the collection of information for 

identification or classification in connection with such tests 

• Information from patients that is to be used exclusively for research on or 

direct treatment of a clinical disorder; for the interpretation of biological 

analyses of body fluids, tissues, or other specimens; or for identification or 

classification of such specimens (see 5 CFR part 1320 for additional 

exemptions from clearance requirements). 

Monitoring 

Recipients are responsible for managing the day-to-day operations of grantsupported activities using their established controls and policies, as long as they are 

consistent with HHS requirements. However, to fulfill their role in regard to the 

stewardship of Federal funds, OPDIVs monitor their grants to identify potential 

problems and areas where technical assistance might be necessary. This active 

monitoring is accomplished through review of reports and correspondence from the 

recipient, audit reports, site visits, and other information available to the OPDIV. The 

names and telephone numbers of the individuals responsible for monitoring the 

programmatic and business management aspects of a project or activity will be 

provided to the recipient as part of the NoA. 

During post-award administration, the GMO monitors expenditures for conformance 

with cost policies. The GMO’s monitoring includes, among other things, responding to 

prior-approval requests and reviewing financial reports, audit reports, and other 

periodic reports. The GMO also may use audit findings as the basis for final cost 

adjustments. The PO’s monitoring includes review of progress reports, prior-approval 

requests, and other correspondence (written or telephonic), and site visits. 

Monitoring of a project or activity will continue for as long as the OPDIV retains a 

financial interest in the project or activity as a result of property accountability, 

audit, and other requirements that may continue for a period of time after the grant 

is administratively closed out and the OPDIV is no longer providing active grant 

support. 

Reporting 

HHS requires that recipients periodically submit financial and progress reports. Other 

required reports may include annual invention utilization reports, research 

misconduct reports, property reports, lobbying disclosures (as required by 45 CFR 

93.110(c)), audit reports, reports to the appropriate payment points (in accordance 

with instructions received from the payment office), and specialized programmatic 

reports. 

 II-82 
Unless otherwise indicated in the NoA, the GMO is generally the receipt point for 

most required reports, including non-competing continuation applications, annual 

and final progress reports, FSRs, final invention statements and certifications, 

property reports, and lobbying disclosure statements. Generally, an original and two 

copies of progress reports must be submitted. Submission of these reports to 

individuals other than the GMO may result in delays in processing of the noncompeting continuation award or the submission being considered delinquent. Also 

see Part IV of the HHS GPS. 

Recipients are allowed a specified period of time in which to submit required financial 

and final progress reports (see 45 CFR 74.51, 74.52, 92.40, and 92.41 and the 

discussion in this subsection). Failure to submit complete, accurate, and timely 

reports may indicate the need for closer monitoring by HHS or may result in possible 

award delays or enforcement actions, including conversion to a reimbursement 

payment method or withholding a non-competing continuation award (also see 

“Overdue Reports” in this section). 

Financial Reporting 

Reports of expenditures are required as documentation of the financial status of 

grants according to the official accounting records of the recipient. Financial or 

expenditure reporting is accomplished using the FSR (SF 269 or SF 269A); the 

recipient must use the long form (SF 269) to report program income earned and 

used. 

The FSR generally is required annually, unless otherwise indicated in the NoA. If an 

FSR is required annually and the award is operating under an authorized no-cost 

extension, an FSR must be submitted for each 12 months of activity, regardless of 

the overall length of the extended budget period. For example, if the budget period 

would have ended on July 31, 2006, but is extended to July 31, 2007, the recipient 

must submit two FSRs—one for the period August 1, 2005-July 31, 2006 and one for 

the period August 1, 2006-July 31, 2007. When required annually, the report must 

be submitted for each budget period no later than 90 days after the close of the 

budget period or applicable 12-month period. 

If FSRs are required more frequently than annually, the NoA will specify both the 

frequency and due date. Some OPDIVs provide for electronic submission to the 

OPDIV. See Part IV for OPDIV-specific information concerning financial reporting, 

including the means of submission. 

For some awards, in lieu of the annual FSR, the OPDIV will use the quarterly FCTR, 

submitted to PMS to monitor the financial aspects of grants. The GMO may review 

the report for patterns of cash expenditures, including accelerated or delayed 

drawdowns, and to assess whether performance or financial management problems 

exist. For these awards, an FSR generally is required only at the end of a competitive 

segment. It must be submitted within 90 days after the end of the competitive 

segment and must report on the cumulative support awarded for the entire segment. 

An FSR must be submitted at this time whether or not a competing continuation 

award is made. If no further award is made, this report will serve as the final FSR. 

Before submitting FSRs, recipients must ensure that the information submitted is 

accurate, complete, and consistent with the recipient’s accounting system. The 

authorized organizational representative’s signature on the FSR certifies that the 

 II-83 
information in the FSR is correct and complete and that all outlays and obligations 

are for the purposes set forth in grant documents, and represents a claim to the 

Federal government. Filing a false claim may result in the imposition of civil or 

criminal penalties (see “Fraud, Waste, and Abuse” in Part I of the HHS GPS). 

In some cases, the recipient may have to revise or amend a previously submitted 

FSR. When the revision results in a balance due to the OPDIV, the recipient must 

submit a revised FSR whenever the overcharge is discovered, no matter how much 

time has lapsed since the original due date of the report. Revised expenditure 

reports representing additional expenditures by the recipient that were not reported 

to the OPDIV within the 90-day time frame may be submitted to the GMO with an 

explanation for the revision. The explanation also should indicate why the revision is 

necessary and describe what action is being taken by the recipient to preclude 

similar situations in the future. This should be done as promptly as possible, but not 

later than 1 year from the due date of the original report, i.e., 15 months following 

the end of the budget period. If an adjustment is to be made, the awarding office will 

advise the recipient of actions it will take to reflect the adjustment. The OPDIV will 

not accept any revised report received after that date and will return it to the 

recipient. 

Progress Reporting 

Progress reports generally are required annually as part of the non-competing 

continuation award process. However, the OPDIV may require these reports more 

frequently. Progress reports must be submitted to, and approved by, the OPDIV to 

non-competitively fund each additional budget period within a previously approved 

project period (competitive segment). When used in lieu of a non-competing 

continuation application, the progress report typically includes an updated budget in 

addition to other required information. 

The form/format to be used and the information to be included in the progress report 

are specified in the NoA or in specific OPDIV guidance, e.g., non-competing 

continuation guidance. Some OPDIVs have implemented procedures for the 

electronic transmission of progress reports. See Part IV for OPDIV-specific 

information on electronic procedures for submitting progress reports. 

Progress reports must be submitted directly to the awarding office. Late submission 

or receipt of an incomplete grant progress report will result in delaying the issuance 

and funding of the non-competing continuation award and may result in a reduced 

award amount. 

The progress report for the final budget period of a competitive segment for which a 

competing continuation application is submitted will be part of that application; 

however, if an award is not made or the recipient does not submit an application for 

continued support, a final progress report is required. 

The OPDIV will specify the requirements for progress reporting under construction 

grants or grants supporting both construction activities, including acquisition or 

modernization, and nonconstruction activities. 

 II-84 
Other Reporting 

Each competing continuation grant application and progress report (when used in 

lieu of a non-competing continuation application) must indicate whether or not any 

subject inventions were made during the preceding budget period. If inventions were 

made, the recipient must indicate whether they have been reported. The recipient 

also must submit an annual invention utilization report for all subject inventions to 

which title has been elected and inventions that have been licensed but not patented 

(research tools). The utilization report provides a way to evaluate the extent of 

commercialization of subject inventions, consistent with the objectives of the BayhDole Act. 

Bayh-Dole regulations allow recipients to report inventions electronically (37 CFR 

401.16). Electronic reporting is available through an Internet-based system called 

Interagency Edison (https://s-edison.info.nih.gov/i-Edison/). Recipients should make 

all reasonable efforts to submit invention reports using i-Edison, where possible. The 

system supports confidential transmission of required information and provides a 

utility for generating reports and reminders of pending reporting deadlines. Further 

information about the system, including instructions for creating an account needed 

to submit reports electronically, is available on the i-Edison site. 

Title to federally owned property remains vested in the Federal government. 

Annually, recipients must submit to the OPDIV an inventory listing federally owned 

property in the recipient’s custody. Upon completion of the award or when the 

property is no longer needed, the recipient must report the property to the awarding 

office for further agency utilization. If the OPDIV has no further need for the 

property, it must be declared excess and reported to GSA, unless the OPDIV has 

statutory authority to dispose of the property by alternative methods (e.g., the 

authority provided by the Federal Technology Transfer Act, 15 U.S.C. 3710(I) to 

donate research equipment to educational and non-profit organizations in accordance 

with EO 12821, “Improving Mathematics and Science Education in Support of the 

National Education Goals”). The OPDIV will issue appropriate instructions to the 

recipient. 

Overdue Reports 

Failure to submit required reports within the time allowed may result in suspension 

or termination of an active grant, withholding a non-competing continuation award, 

or other enforcement actions, including withholding of payments or converting to the 

reimbursement method of payment. Continued failure to submit required reports 

may result in the imposition of special award provisions or cause other eligible 

projects or activities involving that recipient or the individual responsible for the 

delinquency to not be funded. 

If at any time the recipient provides an acceptable explanation regarding the late 

submission of a report, the OPDIV may waive the reporting requirement or set a new 

due date. However, once a report becomes overdue, such action will be taken by the 

OPDIV only if the reasons for the recipient’s inability to submit the report on time are 

legitimately beyond its control or if the purposes for which the report is to be used 

can be accomplished through other means. Failure to meet a new date may result in 

the OPDIV taking action as described above. 

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Submission of a required report does not necessarily fulfill the recipient’s obligation. 

Such reports must also meet the content requirements in regulations or other grant 

terms. Where reports need to be revised in order to be accepted, the recipient must 

provide a revised report by the due date indicated or immediate fund cutoff or other 

enforcement actions may be taken with regard to the delinquency. 

Record Retention and Access 

Recipients generally must retain financial and programmatic records, supporting 

documents, statistical records, and all other records that are required by the terms 

of a grant, or may reasonably be considered pertinent to a grant, for a period of 3 

years from the date the annual FSR is submitted. For awards where the FSR is 

submitted at the end of the competitive segment, the 3-year retention period will be 

calculated from the date the FSR for the entire competitive segment is submitted. 

Those recipients must retain the records pertinent to the entire competitive segment 

for 3 years from the date the FSR is submitted. See 45 CFR 74.53 and 92.42 for 

exceptions and qualifications to the 3-year retention requirement (e.g., if any 

litigation, claim, financial management review, or audit is started before the 

expiration of the 3-year period, the records must be retained until all litigation, 

claims, or audit findings involving the records have been resolved and final action 

taken). Those sections also specify the retention period for other types of grantrelated records, including indirect cost proposals and property records. See 45 CFR 

74.48 and 92.36 for record retention and access requirements for contracts under 

grants. 

Audit Requirements 

An audit is a systematic review or appraisal made to determine whether internal 

accounting and other control systems provide reasonable assurance of the following: 

• Financial operations are properly conducted. 

• Financial reports are timely, fair, and accurate. 

• The entity has complied with applicable laws, regulations, and terms and 

conditions of award. 

• Resources are managed and used economically and efficiently. 

• Desired results and objectives are being achieved effectively. 

Recipients (other than Federal institutions) and subrecipients are subject to the audit 

requirements of OMB Circular A-133, as implemented by 45 CFR 74.26 and 92.26, or 

the audit requirements stated in 45 CFR 74.26(d) and in the HHS GPS (for types of 

organizations to which OMB Circular A-133 does not directly apply). In general, OMB 

Circular A-133 requires a State government, local government, or non-profit 

organization (including institutions of higher education) that expends $500,000 or 

more per year under Federal grants, cooperative agreements, and/or procurement 

contracts to have an annual audit by a public accountant or a Federal, State, or local 

governmental audit organization. The audit must meet the standards specified in 

generally accepted government auditing standards (GAGAS). 

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A for-profit organization is required to have a non-Federal audit if, during its fiscal 

year, it expended a total of $500,000 or more under one or more HHS awards (as a 

direct recipient and/or as a subrecipient). Title 45, part 74.26(d) of the CFR 

incorporates the thresholds and deadlines of OMB Circular A-133 but provides forprofit 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”], (GPO stock 020-000-00-265-4) of all the HHS awards, or (2) an 

audit that meets the requirements of OMB Circular A-133. Foreign recipients are 

subject to the same audit requirements as for-profit organizations specified in 

45 CFR 74.26(d). 

When a recipient procures audit services, the procurement must comply with the 

procurement standards of 45 CFR part 74 or 92, as applicable, including obtaining 

competition and making positive efforts to use small, minority-owned, and womenowned business enterprises. Recipients should ensure that comprehensive 

solicitations made available to interested firms include all audit requirements and 

specify the criteria to be used for selection of the firm. Recipients’ written 

agreements with auditors must specify the rights and responsibilities of each party. 

OMB Circular A-133 explains in detail the scope, frequency, and other aspects of the 

audit. Some highlights of this circular are as follows: 

• Covered organizations expending $500,000 or more per year in Federal 

awards are required to have an audit made in accordance with the circular. 

However, if the awards are under one program, the organization can have 

either a single organization-wide audit or a program-specific audit of the 

single program, subject to the provisions of Section 235 of the circular. OPDIV 

research awards may not be considered a single program for this purpose. 

Covered organizations expending less than $500,000 in any year are exempt 

from these audit requirements in that year but must have their records 

available for review by the OPDIV. 

• The data collection form and copies of the reporting package must be 

submitted to the FAC at the following address: 

Federal Audit Clearinghouse 

Bureau of the Census 

1201 E. 10th Street 

Jeffersonville, IN 47132 

• The reporting package must contain the following: 

h Financial statements and Schedule of Expenditures of Federal Awards 

h Independent auditor’s report, including an opinion on the financial 

statements and the Schedule of Expenditures of Federal Awards, a report 

on compliance and internal control over financial reporting, and a report 

on compliance with requirements applicable to each major program and 

on internal control over such compliance requirements 

h A schedule of findings and questioned costs 

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h If applicable, a summary of prior audit findings and a corrective action 

plan. 

• An audit under OMB Circular A-133 is in lieu of a financial audit of individual 

Federal awards. However, Federal agencies may request additional audits 

necessary to carry out their responsibilities under Federal laws or regulations. 

Any additional audits will build upon work performed by the independent 

auditor. 

If the schedule of findings and questioned costs discloses an audit finding related to 

an HHS award or if the schedule of prior audit findings reports the status of any audit 

finding relating to an HHS award, the FAC will provide copies of the audit report to 

NEARC, OIG, HHS. NEARC will, in turn, distribute them within HHS for further action, 

as necessary. 

Recipients must follow a systematic method for ensuring timely and appropriate 

resolution of audit findings and recommendations, whether discovered as a result of 

a Federal audit or a recipient-initiated audit. Recipients usually are allowed 30 days 

from the date of request to respond to the responsible audit resolution official (Action 

Official) concerning audit findings. Failure to submit timely responses may result in 

cost disallowance or other actions by HHS or the OPDIV. At the completion of the 

audit resolution process, the recipient will be notified of the Action Official’s final 

decision. The recipient may appeal this decision if the adverse determination is of a 

type covered by the OPDIV or HHS grant appeals procedures (see “Grant Appeals 

Procedures”). Refunds owed to the Federal government as a result of audit 

disallowances must be made in accordance with instructions issued by the Action 

Official. 

It is imperative that recipients submit required OMB Circular A-133 audits within the 

time limits specified in the circular. If recipients are delinquent in complying with the 

provisions of the circular, HHS or the OPDIV will impose sanctions that may result in 

the loss of Federal funds. No audit costs will be allowed either as indirect costs or 

direct costs to Federal awards if the required audits have not been completed or 

have not been conducted in accordance with the provisions of OMB Circular A-133. 

Enforcement Actions 

A recipient’s failure to comply with the terms and conditions of award, including 

confirmed instances of research misconduct, may cause an OPDIV to take one or 

more enforcement actions, depending on the severity and duration of the noncompliance. The OPDIV will undertake any such action in accordance with applicable 

statutes, regulations, and policies. The OPDIV generally will afford the recipient an 

opportunity to correct the deficiencies before taking enforcement action unless public 

health or welfare concerns require immediate action. However, even if a recipient is 

taking corrective action, the OPDIV may take proactive steps to protect the Federal 

government’s interests, including placing special conditions on awards or precluding 

the recipient from obtaining future awards for a specified period, or may take action 

designed to prevent future non-compliance, such as closer monitoring. If the OPDIV 

takes an enforcement action as a result of research misconduct or will more closely 

monitor an award through the use of special conditions, the OPDIV will share this 

information with other HHS components. 

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Modification of the Terms and Conditions of Award 

During grant performance, the GMO may include special conditions in the award to 

require correction of identified financial or administrative deficiencies. When the 

special conditions are imposed, the GMO will notify the recipient of the nature of the 

conditions, the reason why they are being imposed, the type of corrective action 

needed, the time allowed for completing corrective actions, and the method for 

requesting reconsideration of the conditions. (See 45 CFR 74.14 or 92.12.) 

The OPDIV also may withdraw approval of the PI/PD or other key personnel if there 

is a reasonable basis to conclude that they are no longer qualified or competent to 

perform. In that case, the OPDIV may request that the recipient designate a new 

PI/PD or other key personnel. 

The decision to modify the terms of an award—by imposing special conditions, by 

withdrawing approval of the PI/PD or other key personnel, or otherwise—is 

discretionary on the part of the OPDIV. 

Withholding a Non-Competing Continuation Award 

An OPDIV may decide not to make a non-competing continuation award within the 

current competitive segment for one or more of the following reasons: 

• Adequate Federal funds are not available to support the project. 

• A recipient failed to show satisfactory progress in achieving the objectives of 

the project. 

• A recipient failed to meet the terms and conditions of a previous award. 

• For whatever reason, continued funding would not be in the best interests of 

the Federal government. 

If a non-competing continuation award is denied (withheld) because the recipient 

failed to comply with the terms and conditions of a previous award, the recipient 

may appeal that determination. 

Depending on the nature of the deficiency, an OPDIV also may temporarily withhold 

payment or convert the grant from an advance payment method to a reimbursement 

method. 

Suspension or Termination 

If a recipient has failed to materially comply with the terms and conditions of award, 

the OPDIV may suspend the grant, pending corrective action, or may terminate the 

grant for cause. The regulatory procedures that pertain to suspension and 

termination are specified in 45 CFR 74.61 and 74.62 and in 45 CFR 92.43. 

The OPDIV generally will suspend (rather than immediately terminate) a grant and 

allow the recipient an opportunity to take appropriate corrective action before 

making a termination decision. The OPDIV may decide to terminate the grant if the 

recipient does not take appropriate corrective action during the period of suspension. 

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The OPDIV may terminate—without first suspending—the grant if the deficiency is so 

serious as to warrant immediate termination or if public health or welfare concerns 

require immediate action. Termination for cause may be appealed under the OPDIV 

and HHS grant appeals procedures. 

A grant also may be terminated, partially or totally, by the recipient or by the OPDIV 

with the consent of the recipient. If the recipient decides to terminate a portion of a 

grant, the OPDIV may determine that the remaining portion of the grant will not 

accomplish the purposes for which the grant was originally awarded. In any such 

case, the recipient will be advised of the possibility of termination of the entire grant 

and will be allowed to withdraw its termination request. If the recipient does not 

withdraw its request for partial termination, the OPDIV may initiate procedures to 

terminate the entire grant for cause. 

See “Selected Items of Cost” for the allowability of termination costs. Allowability of 

these costs does not vary whether a grant is terminated for cause by the OPDIV, 

terminated at the request of the recipient, or terminated by mutual agreement. 

Other options available to an OPDIV include suspension or debarment under 45 CFR 

part 76. Suspension under 45 CFR part 76 (see Eligibility—Suspension and 

Debarment” in Part I) is a distinct action from “suspension” described above in 

conjunction with termination. 

Closeout 

The OPDIV will close out a grant as soon as possible after expiration if the grant will 

not be extended or after termination, as provided in 45 CFR 74.71 through 74.73 

and in 45 CFR 92.50. Closeout includes ensuring timely submission of all required 

reports and adjustments for amounts due the recipient or the OPDIV. Closeout of a 

grant does not automatically cancel any requirements for property accountability, 

record retention, or financial accountability. Following closeout, the recipient remains 

obligated to return funds due as a result of later refunds, corrections, or other 

transactions, and the Federal government may recover amounts based on the results 

of an audit covering any part of the period of grant support. 

Unless the GMO grants an extension, recipients must submit a final FSR, final 

progress report, and Final Invention Statement and Certification within 90 days of 

the end of grant support. Failure to submit timely and accurate final reports may 

affect future funding to the organization or awards with the same PI/PD. 

Final Financial Status Report 

A final FSR is required for 

• any grant that is terminated, 

• any grant that is transferred to a new recipient, or 

• any award at the end of the project period (or if comprised of multiple 

competitive segments, at the end of each competitive segment). 

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The final FSR must cover the entire project period (competitive segment) or as much 

of the project period (competitive segment) as has been funded before termination 

or transfer. Final FSRs must have no unliquidated obligations and must indicate the 

exact balance of unobligated funds. Unobligated funds must be returned to the 

OPDIV or must be reflected by an appropriate accounting adjustment in accordance 

with instructions from the GMO or from the payment office. For those organizations 

receiving their funds through PMS, final reports, as specified by PMS, must be 

submitted to that office. It is the recipient’s responsibility to reconcile reports 

submitted to PMS and to the OPDIV. Reconciliation consists of ensuring that 

disbursements equal obligations and drawdowns or making any adjustments as 

necessary, e.g., for an overpayment. Withdrawal of the unobligated balance 

following expiration or termination of a grant is not considered an adverse action and 

is not subject to appeal. 

When the submission of a revised final FSR results in additional claims by the 

recipient, the OPDIV will consider the approval of such claims subject to the following 

minimum criteria: 

• The recipient must indicate why the revision is necessary and explain and 

implement internal controls that will preclude similar occurrences in the 

future. 

• The charge must represent otherwise allowable costs under the provisions of 

the grant. 

• There must be an unobligated balance for the budget period sufficient to 

cover the claim. 

• The funds must still be available for use. 

• The OPDIV must receive the revised FSR within 12 months of its original due 

date. 

Final Progress Report 

A final progress report is required for any grant that is terminated and at the end of 

the project period. The final progress report should follow specific OPDIV instructions 

and be submitted to the GMO, but minimally will include a summary of progress 

toward the achievement of the originally stated aims, a list of significant results 

(positive or negative), and a list of publications. If the recipient submits a competing 

continuation application, the final progress report requirement will be met by the 

information included in that application. 

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Final Invention Statement and Certification 

For research grants, the recipient must submit a Final Invention Statement and 

Certification (HHS 568), whether or not the funded activity results in any subject 

inventions. The HHS 568 must list all inventions that were conceived or first actually 

reduced to practice during the course of work under the grant, and it must be signed 

by the PI/PD and an authorized organizational representative. The completed form to 

be submitted to the GMO should cover the period from the original effective date of 

support through the date of expiration or termination of the award. If there were no 

inventions, the form should indicate “None.” Copies of the HHS 568 are available on 

the i-Edison Web site at https://s-edison.info.nih.gov/iEdison/. 

Debt Collection 

An OPDIV may administratively recover funds paid to a recipient in excess of the 

amount to which the recipient is finally determined to be entitled under the terms 

and conditions of the award, including misspent funds or unallowable costs incurred. 

If the recipient does not pay back the funds in accordance with the demand by the 

OPDIV, which specifies the period of time for repayment, the OPDIV may collect the 

debt by 

• making an administrative offset against payments that would be due under 

other grant awards, 

• withholding advance payments that would otherwise be due, or 

• taking any other action permitted by statute. 

Several Federal statutes governing debt collection and the Federal Claims Collection 

Standards (31 CFR parts 900-904) require the OPDIV to collect debts due to the 

Federal government and, except where prohibited by law, to charge interest on all 

delinquent debts owed to the OPDIV by recipients (also see HHS claims collection 

regulations at 45 CFR part 30). Debts may result from cost disallowances, recovery 

of funds, unobligated balances, or other circumstances. 

Unless otherwise specified in law, regulation, or the terms and conditions of the 

award, debts are considered delinquent 30 days after notification to the recipient of 

the indebtedness. The interest on delinquent debts will be computed from the 

original notification date to the recipient of the indebtedness. The interest rate 

applied will be the current value of funds rate or the private consumer rate of 

interest fixed by Treasury, whichever is higher. A higher rate may be charged if 

necessary to protect the interests of the Federal government. 

Penalties and administrative collection costs also will be charged in accordance with 

the act and the implementing HHS regulations, as follows: 

• A penalty charge of 6 percent a year will be assessed on debts that are more 

than 90 days overdue. Penalty charges will accrue from the date the debt 

became overdue until the indebtedness is paid. 

• Delinquent debtors will be assessed charges to cover the Federal 

government’s administrative costs of collecting overdue debts. From time to 

 II-92 
time, HHS will publish a notice in the Federal Register setting forth the 

amounts to be assessed for administrative collection costs. 

If a recipient appeals an adverse monetary determination under 45 CFR part 16 or 

specific OPDIV appeal procedures, collection will be suspended pending a final 

decision on the appeal. If the determination is sustained (either fully or partially), 

interest will be charged beginning with the date of the original notification to the 

recipient of the indebtedness. 

Appeals 

HHS permits recipients to appeal to the DAB certain post-award adverse 

administrative decisions made by HHS officials (see 45 CFR part 16). In addition, 

some OPDIVs have implemented OPDIV-specific appeal procedures (see Part IV). In 

general, a recipient may appeal the following OPDIV actions: 

• Termination, in whole or in part, of a grant for failure of the recipient to carry 

out its approved project in accordance with the applicable law and the terms 

and conditions of award or for failure of the recipient otherwise to comply 

with any law, regulation, assurance, term, or condition applicable to the grant 

• Determination that an expenditure not allowable under the grant has been 

charged to the grant or that the recipient has otherwise failed to discharge its 

obligation to account for grant funds 

• Denial (withholding) of a non-competing continuation award for failure to 

comply with the terms of a previous award 

• Determination that a grant is void (i.e., a decision that an award is invalid 

because it was not authorized by statute or regulation or because it was 

fraudulently obtained). 

The formal notification of an adverse determination will contain a statement of the 

recipient’s appeal rights. As the first level in appealing an adverse determination, the 

recipient must submit a request for review to the HHS or OPDIV official specified in 

the notification, detailing the nature of the disagreement with the adverse 

determination and providing supporting documents in accordance with the 

procedures contained in the notification. A recipient may not submit an appeal 

directly to the DAB where OPDIV appeal procedures are in place. In those instances, 

the DAB will review only those appeals that have been reviewed and acted on by the 

OPDIV. 

 II-93 
In addition to the adverse determinations indicated, the DAB is the single level of 

appeal for disputes related to the establishment of indirect cost rates, research 

patient care rates, and certain other cost allocations used in determining amounts to 

be reimbursed under HHS grants (e.g., cost allocation plans negotiated with State or 

local governments and computer, fringe benefit, and other special rates). 

HHS encourages its OPDIVs and recipients to try to resolve disputes by using 

alternative dispute resolution (ADR) techniques. ADR often is effective in reducing 

the cost, delay, and contentiousness involved in appeals and other traditional ways 

of handling disputes. ADR techniques include mediation, neutral evaluation, and 

other consensual methods. Information about ADR is available from the HHS Dispute 

Resolution Specialist at the Departmental Appeals Board, U.S. Department of Health 

and Human Services, Washington, DC 20201. 

Requirements for Specific Types of Grants 

Conference Grants 

This section addresses requirements for grants that support domestic and 

international conferences, which may be supported by grants or cooperative 

agreements. If no specific or alternative requirement for conference grants is stated 

below or elsewhere in this HHS GPS, the requirements applicable to all other types of 

grants apply. Questions concerning conference grants or the allowability of 

conference activity under other types of OPDIV grants should be directed to the 

GMO. 

Definitions 

Definitions of key terms are as follows: 

• Scientific meeting (conference)—a gathering, symposium, seminar, workshop, 

or any other organized, formal event where people assemble to coordinate, 

exchange, and disseminate information or to explore or clarify a defined 

subject, problem, or area of knowledge. 

• International conference—a meeting so designated by its sponsor or one to 

which open invitations are issued on an equal basis to potential participants in 

two or more countries other than the United States or Canada. The meeting 

may be held in any country, including the United States. 

• Domestic conference—a meeting held in the United States or Canada 

primarily for U.S. or U.S.-Canadian participation (even if foreign speakers are 

invited). 

 II-94 
Representation 

Appropriate representation of women, individuals who are members of racial/ethnic 

minority groups, people with disabilities, and other individuals who have been 

traditionally underrepresented must be included in all aspects of planning, 

organization, and implementation of OPDIV-sponsored or -supported meetings. 

“Appropriate representation” is based on the availability of individuals from these 

groups known to be working in a particular field of endeavor. If appropriate 

representation is not apparent, the OPDIV will not make an award until the applicant 

has submitted acceptable documentation of its compliance. 

Funding 

Awards in support of a single conference will be made for a project period 

commensurate with the time involved in planning and conducting the conference and 

post-conference follow-up, usually 1 year. A conference grant made to a 

permanently sponsoring organization for conferences held annually or biennially on a 

recurring topic may be awarded for up to a total of 5 years and will be funded 

annually, based on the availability of funds. Continued funding beyond the first year 

will be contingent on a report of satisfactory progress. A change in conference focus 

is considered a change in scope and requires OPDIV prior approval. 

Acknowledgment of Support and Disclaimer 

Conference grant materials, including promotional materials, the agenda, and any 

Internet sites that advertise the conference, must acknowledge that HHS provided 

support for the conference, whether in whole or in part. That acknowledgment must 

be accompanied by a disclaimer indicating that information provided or views 

expressed at the conference, whether orally or in writing, or in any documents 

resulting from the conference, do not necessarily reflect the official views of the 

OPDIV providing the support or imply endorsement by the Federal government. 

Use of the following language fulfills this requirement: 

“Funding for this conference was made possible [in part, if applicable] by 

[insert grant or cooperative agreement number] from [insert name of 

OPDIV]. The views expressed in written conference materials or publications 

and by speakers and moderators do not necessarily reflect the official policies 

of the Department of Health and Human Services nor does mention of trade 

names, commercial practices, or organizations imply endorsement by the U.S. 

Government.” 

Use of HHS and OPDIV Logos 

Generally, the NoA will indicate the conditions for use of the HHS or OPDIV logo in 

conference materials. If not specified in the NoA, a recipient must obtain prior 

approval to use an HHS or OPDIV logo. Unauthorized use of the HHS or OPDIV name 

or logo may result in imposition of civil monetary penalties (as provided in 42 CFR 

part 1003). 

 II-95 
Allowable and Unallowable Costs 

Grant funds may be awarded to provide general support of domestic or international 

conferences held in the United States or Canada. Grant funds may not be used to 

provide general support for international conferences held outside the United States 

or Canada. Grant funds may be awarded to support only specific aspects of an 

international conference held outside the United States or Canada. An example of a 

specific aspect would be a selected symposium, panel, or workshop. 

This section highlights allowable and unallowable costs under conference grants. No 

costs other than those specified in Exhibit 10 as allowable, including any 

qualifications on their allowability, are permitted under conference grants. Exhibit 11 

addresses areas for which applicants/recipients frequently seek clarification about 

allowability. 

Exhibit 10. Allowable Costs under Conference Grants 

Grant funds 

may be used for Under the following circumstances 

Conference services Necessary recording of proceedings, simultaneous translation, and 

subsequent transcriptions. 

Consultant services Consultant fees, including travel and supporting costs (per diem or, where 

applicable, subsistence). 

Equipment rental Rental of necessary equipment. 

Federal employees See “Requirements for Specific Types of Recipients–Grants to Federal 

Institutions and Payments to (or on Behalf of) Federal Employees under 

Grants.” 

Meals When certain meals are an integral and necessary part of a conference (i.e., a 

working meal where business is transacted), grant funds may be used for such 

meals, as qualified under “Travel” in this exhibit. 

Publication costs When grant funds are awarded to pay for either the entire or partial cost of 

publication of proceedings or a book or pamphlet, costs of special plates, 

charts, diagrams, printing, distribution, mailing, postage, and general handling, 

unless otherwise specified in the NoA. 

Registration fees Registration fees paid by the recipient to other organizations on behalf of 

attendees, provided such fees cover only those allowable costs properly 

chargeable to the grant. 

Salaries In accordance with the policy of the recipient, all or part of the salaries of 

professional personnel, clerical assistants, editorial assistants, and other nonprofessional staff in proportion to the time or effort directly related to the 

conference. 

Speakers’ fees Speakers’ fees for services rendered. 

Supplies Purchase of supplies for the conference if the supplies are received and used 

during the project period. 

 II-96 
Exhibit 10. Allowable Costs under Conference Grants 

Grant funds 

may be used for Under the following circumstances 

Travel Travel of staff, speakers, participants, and attendees, if identified in the 

application and approved at the time of award. Travel expenses for employees 

of the recipient are governed by the recipient’s travel policies, consistently 

applied regardless of the source of funds. Any U.S. foreign travel restrictions 

that are in effect at the time of the award will be followed, such as 

¡ limitations or restrictions on countries to which travel will be supported or 

budgetary or 

¡ other limitations on availability of funds for foreign travel. 

Proposed per diem or subsistence allowances must be reasonable and limited 

to the days of attendance at the conference plus the actual travel time to reach 

the conference location by the most direct route. Local mileage costs only may 

be paid for local participants. Where meals and/or lodgings are furnished 

without charge or at a nominal cost (e.g., as part of the registration fee), the 

proposed per diem or subsistence allowance must take this into consideration. 

Transportation costs for attendees and participants at the conference may not 

exceed coach class fares. In all cases, U.S. flag carriers will be used where 

possible. 

Exhibit 11. Selected Unallowable Costs under Conference Grants 

Item Description 

A&R Not allowable under any circumstances. 

Entertainment and 

personal expenses 

Costs of amusement, diversion, social activities, ceremonials, and related 

incidental costs, such as bar charges, tips, personal telephone calls, and 

laundry charges of participants or guests, are unallowable. However, meals 

may be allowable as provided under “Meals” in Exhibit 10. 

Equipment purchase Not allowable under any circumstances. 

Honoraria Honoraria or other payments given for the purpose of conferring distinction or 

to symbolize respect, esteem, or admiration may not be paid from grant funds. 

Indirect costs Not allowable under any circumstances. 

Local participants’ 

expenses 

With the exception of local mileage as indicated under “Travel” in Exhibit 10, 

grant funds may not be used to pay per diem or expenses for local participants 

in the conference. 

Membership dues Not allowable under any circumstances. 

Research patient care Not allowable under any circumstances. 

Intellectual Property: Publications, Copyright, and Public Disclosure 

If a recipient publishes material developed in whole or in part with HHS funds, the 

material may be distributed free of charge. If the recipient charges for the material, 

the sales proceeds are considered program income and must be accounted for as 

specified in the NoA and reported on the FSR. 

 II-97 
Unless otherwise provided in the terms and conditions of the award, the recipient is 

free to arrange for copyright of any publication resulting from an OPDIV-supported 

conference. However, any such copyrighted publication is subject to a nonexclusive, 

irrevocable, royalty-free license to the Federal government to reproduce, translate, 

publish, and dispose of the material and to authorize others to use the work for 

government purposes. Copyright does not extend to any materials prepared by 

Federal employees as part of their official duties. 

The recipient should notify conference participants that any presentation or 

discussion constitutes public disclosure of information. Once information is disclosed 

publicly, it may adversely impact the degree to which any intellectual property rights 

could be protected. 

Reporting and Record Retention 

Recipients are responsible for submitting the following reports to the OPDIV upon 

completion or termination of a grant in support of a conference. 

Progress/Final Report 

For single conferences, a final report of the conference must be submitted in 

accordance with OPDIV instructions to the awarding office within 90 days after the 

end of the project period. 

With the approval of the OPDIV, copies of proceedings or publications resulting from 

a conference may be substituted for the final report, provided they contain the 

information specified for inclusion in the final report. 

Financial Status Report 

An FSR is required from the recipient within 90 days after the end of the project 

period. Records of expenditures and any program income generated must be 

maintained in accordance with the provisions of 45 CFR 74.53 or 92.42. 

Construction and Modernization of Facilities 

This section applies to the following OPDIV grant-supported activities: 

• Construction of new facilities, which includes the installation of fixed 

equipment, but excludes the cost of land and off-site improvements 

• Modernization of existing facilities, which includes alteration, renovation, 

remodeling, improvement, expansion, or repair; provision of equipment 

necessary to make the building suitable for use by a particular program; and 

the modernization, or completion, of shell space. This may be under a grant 

for this purpose or as A&R under another type of grant. 

To provide support for construction or modernization that is considered “major”, an 

OPDIV must have specific statutory authority allowing construction or modernization. 

Even if an OPDIV has this authority, a recipient may not incur costs for construction 

or modernization unless the OPDIV specifically authorizes such costs. 

 II-98 
In addition, an applicant/recipient may propose to undertake an A&R project under a 

non-construction grant. HHS characterizes A&R projects as “minor” or “major,” 

depending on the type of activity proposed and the cost of the project and the 

threshold set by the HHS GPS or the OPDIV (see “Cost Considerations—Allowable 

Costs and Activities,” “Prior-Approval Requirements—OPDIV Prior Approval,” and Part 

IV). An OPDIV may support a major A&R project only if it has specific statutory 

authority allowing modernization. Generally, an A&R project that is under the OPDIV 

threshold is treated as minor A&R; however, depending on the activity proposed, it 

may be considered modernization (which cannot be supported unless the OPDIV has 

the required statutory authority). The requirements that apply to minor A&R projects 

are addressed in “Allowable Costs and Activities.” 

Except where indicated, the requirements in this section apply to HHS grantsupported construction or modernization (hereafter, “construction”) in lieu of the 

requirements stated elsewhere in Part II of the HHS GPS for construction or 

modernization. Other activities under the award would be subject to those other 

policies. However, there may be areas of overlap, e.g., a rebudgeting action that 

causes a minor A&R project to become a major A&R project. 

Funding 

Construction grants usually involve a single award, covering more than 1 year, made 

on the basis of an application for the entire construction project. Incremental funding 

(budget periods) within a project period normally is not used for construction grants. 

Allowable and Unallowable Costs and Activities 

Exhibits 12 and 13 indicate types of costs and activities generally allowable and 

unallowable under HHS construction grants. The allowability and unallowability of 

costs and activities apply to the use of Federal funds and funds expended by the 

grantee to satisfy cost sharing or matching requirements (see “Matching or Cost 

Sharing”). The lists are not all-inclusive. Program guidelines and other terms and 

conditions of the award should be consulted for the specific costs allowable under a 

particular program or grant. 

Exhibit 12. Allowable Costs and Activities under Construction Grants 

Item Description 

Acquisition and installation 

of fixed equipment 

Allowable. 

Architectural and 

engineering services 

Allowable. 

Bid advertising Allowable. 

Bid guarantees and 

performance and payment 

bonds 

Bid guarantees and performance and payment bonds are allowable as 

provided in 45 CFR 74.48 or 92.36(h). 

Contingency fund Applicants for construction grants may include a project contingency 

amount with the initial cost estimates for construction contracts to 

provide for unanticipated charges. This amount will be limited to 5 

percent of construction costs before bids are received and must be 

reduced to 2 percent after a construction contract has been awarded. 

 II-99 
Exhibit 12. Allowable Costs and Activities under Construction Grants 

Item Description 

Filing fees for recording the 

NFI 

Allowable. 

Force account If the grantee’s own construction and maintenance staffs are used in 

carrying out modernization activities (i.e., force account), the associated 

costs are allowable provided the grantee 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 

OPDIV prior approval.

Compliance with the 

National Historic 

Preservation Act 

Allowable. May include hiring special consultants to research and 

document the historic value of proposed performance sites and costs 

associated with preparation and presentation of required materials to 

inform the public and others. 

Incentive costs for 

contractors 

Allowable consistent with contract type as specified in the solicitation of 

bids or proposals and in the contract. Incentive costs must be 

reasonable and appropriately documented, e.g., that conditions to earn 

the incentive were met. In addition to an incentive fee provision, 

incentive-type contracts may also contain a penalty provision. Other 

types of bonus payments are not allowable. 

Inspection fees Allowable. 

Insurance Costs of title insurance, physical-destruction insurance, and liability 

insurance are generally allowable. Physical destruction and liability 

insurance are usually 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. Title insurance, if 

required, may be charged to the grant in proportion to the amount of 

OPDIV participation in the property (see “Real Property —Insurance “). 

Legal fees Legal fees related to obtaining a legal opinion regarding title to a site are 

allowable. 

Pre-award costs Costs incurred before award for architect’s fees and consultant’s fees 

necessary to the planning and design of the project are allowable if the 

project is subsequently approved and funded. 

Project management Allowable. 

Relocation expenses Allowable. 

Sidewalks necessary for use 

of facility 

Allowable. 

Site clearance. Site clearance costs are allowable as long as they are reflected in the 

bid. 

Site survey and soil 

investigation 

Allowable. 

NEPA analysis Costs associated with evaluation of the environmental effects of 

proposed construction activity and producing the Environmental Impact 

Statement (EIS) are allowable. 

 II-100 
Exhibit 12. Allowable Costs and Activities under Construction Grants 

Item Description 

Threat-risk assessment. Costs incurred for a site-specific or project-specific assessment of 

security risk by a qualified professional are allowable. The threat-risk 

assessment identifies and quantifies potential threats, both internal and 

external to the building, its contents, the personnel working in it, and the 

general public. The analysis also includes a thorough examination and 

evaluation of the physical aspects of the proposed facility, along with 

operational issues. 

Exhibit 13. Unallowable Costs and Activities under Construction Grants 

Bonus payments other than earned incentive payments to contractors under formal incentive 

arrangements are unallowable. 

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. 

Indirect/F&A costs. 

Fund-raising expenses. 

Land acquisition. 

Legal services not related to site acquisition. 

Movable equipment. 

Off-site improvements such as parking lots are not allowable. 

Prior-Approval Requirements 

Recipients must obtain OPDIV prior approval for the following types of recipientinitiated project or budget changes: 

• A revision that would result in a change in scope of the project, including 

proposed modifications that would materially alter the costs of the project, 

space utilization, or financial layout, resulting in changes in the previously 

approved procurement method or contract. Modifications that would 

materially alter the costs include significant rebudgeting actions, whether or 

not the particular expenditure requires prior approval and increase in the 

amount of Federal funds needed to complete the project. 

• Any other applicable change as specified in “Prior-Approval Requirements.” 

• Change in the use of the facility (see “Use of Facility and Disposition” in this 

section). 

The request for approval must include sufficient information to allow the OPDIV to 

review the circumstances and need for the proposed change. After receipt of OPDIV 

prior approval, the recipient may make or authorize the approved modifications of 

 II-101 
the construction contract. Other less substantive modifications to construction 

contracts may be made without OPDIV prior approval. However, copies of all change 

orders to construction contracts must be retained as grant-related records (see 

“Record Retention and Access”). 

Procurement Requirements 

Construction activity usually is carried out through one or more contracts under the 

grant. Therefore, the circumstances of the procurement are critical to the successful 

completion of the grant-supported project. All construction work must be procured 

by the methods described in 45 CFR 74.40 through 74.48 or in 92.36, as applicable. 

Equal Employment Opportunity, Labor Standards, 

and Other Contract Requirements 

Equal employment opportunity and labor standards requirements for federally 

assisted construction and modernization must be specified in the information 

provided to potential bidders/offerors on construction contracts under HHS grants 

and must be included in the resulting contract documents (see 45 CFR part 74, 

Appendix A, and 45 CFR 92.36(i)). The Davis-Bacon Act or the Copeland “AntiKickback” Act apply only if specifically required by the program’s authorizing statute. 

The NoA will indicate if they apply. 

Equal Employment Opportunity Requirements 

Construction contracts (and subcontracts) awarded under HHS grants are subject to 

the requirements of EO 11246 (September 24, 1965), as amended, as implemented 

in 41 CFR part 60-1 by OFCCP, DoL. The recipient is required to include the “Equal 

Opportunity Clause” at 41 CFR 60-1.4(b) in any construction contract under the 

grant. The contractor must be directed to include this clause in any applicable 

subcontracts. 

In addition, recipients and construction contractors under HHS grants are required to 

comply with the solicitation and contract requirements for affirmative action specified 

in 41 CFR part 60-4 for contracts in specified geographical areas that will exceed 

$10,000. These requirements are specified in EO 11246 (“Notice of Requirement for 

Affirmative Action to Ensure Equal Employment Opportunity”) and EO 11246 

(“Standard Federal Equal Employment Opportunity Construction Contract 

Specifications”). 

The OFCCP regulations also require that the recipient notify the applicable OFCCP 

regional, area, or field office when it expects to award a construction contract that 

will exceed $10,000. 

Further information about these requirements and the full text of these regulations 

are available at http://www.dol.gov/esa/ofcp_org.htm 

Labor Standards Requirements 

Preservation of Open Competition and Government Neutrality toward Government 

Contractors’ Labor Relations on Federal and Federally Funded Construction Projects.

Pursuant to EO 13202, as amended by EO 13208 (April 6, 2001), executive agencies 

issuing grants, providing Federal assistance, or entering into cooperative agreements 

 II-102 
for construction projects (including major and minor A&R) must ensure that bid 

specifications, project agreements, or other controlling documents for construction 

services contracts awarded by recipients of grants, cooperative agreements, or other 

financial assistance do not do the following: 

• Require or prohibit bidders, offerors, contractors, or subcontractors to enter 

into or adhere to agreements with one or more labor organizations, on the 

same or other related construction projects. It does not prohibit contractors 

or subcontractors from voluntarily entering into such agreements. 

• Otherwise discriminate against bidders, offerors, contractors, or 

subcontractors for becoming, refusing to become, or remaining signatories, or 

otherwise adhering to agreements with one or more labor organizations, on 

the same or other related construction projects. 

Non-segregated Facilities. Pursuant to 41 CFR 60-1.8, for any contract for 

construction services that will exceed $10,000, the grantee must require each 

prospective contractor to submit a certification that the contractor 

• does not, and will not, maintain any facilities it provides for its employees in a 

segregated manner; 

• does not or will not permit its employees to perform their services at any 

location, under the contractor’s control, where segregated facilities are 

maintained; and 

• will obtain a similar certification before awarding any covered subcontract. 

Contract Work Hours and Safety Standards. Contractors and subcontractors 

providing construction services under HHS grants with contracts or subcontracts 

exceeding $100,000 are subject to the requirements of the Contract Work Hours and 

Safety Standards Act, 40 U.S.C. 3701–3708, concerning the payment of overtime 

and the maintenance of healthful and safe working conditions if the statute 

authorizing the grant provides wage standards for the project to be funded by the 

grant. 

Under this act, wages paid any laborer or mechanic employed by the contractor or 

subcontractor must be computed on the basis of a standard workweek of 40 hours. 

For all work in excess of the standard workweek, mechanics and laborers must be 

compensated at a rate not less than one-and-a-half times the basic rate of pay. If 

this requirement is violated, the contractor or subcontractor is liable to the employee 

for the unpaid wages and may be liable to the Federal government for liquidated 

damages. The OPDIV or the recipient may withhold otherwise payable funds to 

satisfy any such liability. The statute also specifies penalties for intentional violation 

of these requirements. 

Further, pursuant to standards issued by the Secretary of Labor, a contractor or 

subcontractor under an HHS grant (with contracts or subcontracts exceeding 

$100,000) must not require any laborer or mechanic employed in the performance of 

the contract to work in surroundings or under working conditions that are unsanitary, 

hazardous, or dangerous to an individual’s health or safety. Violation of these 

requirements may be cause for debarment from future Federal contracts or financial 

assistance. 

 II-103 
Other Requirements 

Liquidated Damages. Invitations for bids must stipulate a time for completion of the 

project, expressed either in calendar days or as a fixed date, for each prime contract 

to be awarded under the project. At the option of the grantee, a liquidated damages 

provision may be included in the contract, allowing for assessment of damages when 

the contractor has not completed the construction or modernization by the date 

specified in the contract. Liquidated damages must be real and justified and must be 

approved by the OPDIV before solicitation. Where damages are assessed, any 

amounts paid belong to the recipient. 

Disposition of Unclaimed Wages. During or after the period of performance of an 

HHS-assisted contract for construction services, if it is discovered that an employee 

is entitled to wages but cannot be located for the purposes of payment (or for some 

reason refuses to accept payment), the grantee may eventually have to repay the 

Federal government. 

The recipient should notify the GMO that an escrow account has been established in 

the affected employee’s name and should maintain the account for 2 years (or longer 

if required by State or local law) following the completion of the contract. Upon the 

expiration of this period, any amounts still unclaimed will be disbursed by refunding 

to the OPDIV either the entire amount, if the construction or modernization project 

was 

100 percent funded by the OPDIV, or an amount representing the percentage of 

OPDIV participation in the project. If the project was funded by more than one HHS 

program at differing rates, the refund should be based on an average percentage 

calculated by weighting each program’s rate of participation by the dollar amount of 

that program’s contribution. 

If the contractor has made a reasonable effort to locate the employee by having mail 

forwarded and contacting the employee’s union, the recipient need not repeat such 

attempts. If there is reason to believe that the contractor’s efforts to locate 

employees that are due wages were not thorough, the recipient should attempt to 

locate the employees. Doing so will reduce the likelihood of future claims against the 

recipient. If any wages held in escrow are paid to an employee or an employee’s 

legal representative while the account is maintained, a complete report must be 

made to the GMO when the account is closed. 

Use of Facility and Disposition 

HHS awards for construction or modernization generally require that a facility be 

used for the programmatic purpose of the award as long as needed for that purpose 

(see the NoA or Part IV). During that time, the recipient must use the facility for the 

originally authorized purpose unless it obtains prior approval from the OPDIV to use 

the facility for an alternate purpose. If, during the required usage period, the facility 

is no longer used for the original intended purpose, the OPDIV may, for recipients 

covered by 45 CFR part 74, provide prior approval for alternate use as specified in 45 

CFR 74.32; direct the recipient to sell the property or allow it to retain title and 

recover the OPDIV share; or direct that title be transferred to a third party named by 

the OPDIV (see “Property Management—Real Property”). 

The usage obligation may also be transferred to facilities of substantially comparable 

or greater monetary value or utility to carry out the original purpose for which the 

 II-104 
grant was awarded. In this event, the remaining usage obligation must be released 

from the original facility constructed with grant funds and transferred to the new 

facility. The recipient remains subject to all other requirements imposed by the NoA 

or successor document (if the change occurs following the period of grant support). 

The OPDIV will monitor compliance with these requirements through periodic facility 

use certifications or reports, site visits, and other appropriate means for the 

duration of the required usage period. After the required usage period, the 

organization has no further accountability to the OPDIV concerning the use of the 

property or any sales proceeds. 

If, during the required usage period, the facility is no longer used for the original 

intended purpose and the OPDIV did not provide prior approval for an alternate use, 

the recipient must comply with disposition requirements. The OPDIV may recover its 

share of the construction or modernization costs. For disposition of property acquired 

on an amortized acquisition basis, the formulas in 45 CFR 74.32 and 92.31 do not 

apply in determining the Federal share. In cases of amortized acquisition, the Federal 

share will be determined by multiplying the amount of mortgage principal already 

repaid at the time of disposition by the average Federal participation (taken from the 

FSR) plus the increase in value over the purchase price multiplied by the average 

Federal participation plus the Federal participation in the down payment. The 

computation of the Federal share of real property acquired with long-term debt 

financing must be computed for each year of grant support in which Federal funds 

are used to meet all or a portion of the down payment, principal on the mortgage, or 

both. 

Traineeship, Fellowship, and Similar Awards Made 

to Organizations on Behalf of Individuals 

Applicants/recipients should consult the funding opportunity announcement and any 

program guidance or guidelines for application instructions; eligibility requirements, 

including citizenship and sponsorship requirements; and other program-specific 

requirements related to required forms, allowable costs, and reporting requirements. 

Detailed requirements for the Kirschstein-National Research Service Awards program 

are found at http://grants1.nih.gov/training/extramural.htm. Some of the 

administrative requirements that pertain to fellowships under that program are 

described below. See Part IV for other programs. 

Initiation of Support 

The OPDIV will notify the individual of the intention to make an award and confirm 

the plans for the start of fellowship support. The fellowship award notice allows the 

individual to begin the fellowship immediately on or after the issue date, but permits 

up to 6 months for the individual to make final arrangements, such as the 

completion of degree requirements, final coordination with the sponsor, and, if 

necessary, a move to the sponsoring institution. The fellow must start the period of 

training under the award by the latest activation date as shown on the award notice, 

i.e., 6 months from the award issue date. The activation period may be extended in 

unusual circumstances. Written requests for extensions should be submitted by the 

fellow and must be countersigned by the sponsor and the authorized organizational 

representative. 

 II-105 
An activation notice must be submitted to the awarding office as of the day the 

fellow begins training. A payback agreement may also be required to be completed 

and submitted (see Part IV or the program guidelines). A stipend may not be paid 

until the forms are submitted and the fellow begins training. If necessary for payroll 

purposes, the activation notice and payback agreement may be submitted up to 30 

days before the start date. However, any change in the planned activation start date 

must be reported immediately to the sponsoring institution’s business office and to 

the OPDIV. If an award is conditioned upon completion of degree requirements, the 

fellow must submit, with the activation notice, proof of completion by the degreegranting institution. 

Fellowship support generally is approved for consecutive years of training. The initial 

award usually is for 12 months. Subsequent periods of approved fellowship training 

are consecutive with the first year of support and are usually in 12-month 

increments (budget periods). Awards for less than 12 months will be prorated 

accordingly. If a fellow decides not to activate the award, or to terminate early, he or 

she should notify the recipient organization’s business office, the sponsor, and the 

OPDIV immediately, in writing. The OPDIV will make any necessary adjustments in 

the stipend and other costs, including the institutional allowance. 

Payment 

Payment is as follows: 

• Domestic organizations. Non-Federal sponsoring organizations receive an 

award for the stipend, institutional allowance, and tuition and fees (when 

applicable). The organization directly pays the fellow and disburses all other 

awarded costs. 

• Federal laboratories. Fellows training at Federal laboratories are paid stipends 

directly by the OPDIV. Reimbursement to the fellow for appropriate 

expenditures from the institutional allowance also is paid by the OPDIV. 

• Foreign organizations. Fellows training at foreign sites receive stipends 

directly from the OPDIV. However, the institutional allowance is awarded to 

and disbursed by the sponsoring organization. 

Allowable Costs 

Exhibit 14 lists and describes allowable costs of fellowships. 

Exhibit 14. Allowable Costs of Fellowships 

Item Description 

 II-106 
Exhibit 14. Allowable Costs of Fellowships 

Item Description 

Stipend A stipend is provided as a subsistence allowance for fellows to help defray living 

expenses during the training experience. It is not provided as a condition of 

employment with either the Federal government or the sponsoring organization. 

Stipends must be paid in accordance with stipend levels established by the OPDIV, 

which are based on a 12-month full-time training appointment. In the event of early 

termination, the stipend will be prorated according to the amount of time spent in 

training, and the OPDIV will issue a revised NoA. No departure from the standard 

stipend provided by the OPDIV under the fellowship may be negotiated by the 

sponsoring institution with the fellow. 

Stipend levels are updated nearly every year. When increases are approved, they are 

published and posted on the OPDIV Web site. The awarding office will adjust 

fellowship awards on their anniversary dates to include the currently applicable stipend 

amount. 

Institutional 

allowance 

An institutional allowance is generally provided to help support the costs of training. 

The specific levels of allowance for support, including those for individuals training at 

Federal laboratories, for-profit organizations, or foreign organizations, are published by 

the OPDIV and posted on its Web site. Costs for tuition and fees, where appropriate, 

will be awarded independent of the institutional allowance. 

The institutional allowance is a fixed amount. Expenditures under institutional 

allowances are not subject to OPDIV prior-approval requirements, and the institution is 

not required to account for these expenditures on an actual cost basis. Except for 

fellows at Federal training sites, consistent with OPDIV policy governing the type of 

expenditures appropriate for the institutional allowance, the sponsoring organization 

authorizes the expenditure of the institutional allowance on behalf of the fellow 

according to the organization’s policy. The organization is entitled to expend up to the 

full institutional allowance upon official activation of the award. However, if an individual 

fellow is not in a training status for more than 6 months of the award year, only one-half 

of that year’s institutional allowance may be charged to the grant. The NoA will be 

revised and the balance must be refunded to the OPDIV. 

The type of sponsoring institution dictates what costs may be charged to this category 

and how the funds are to be administered. 

Non-Federal 

public and 

private nonprofit 

organizations 

(domestic and 

foreign)

The allowance is intended to defray expenses for the individual fellow such as supplies, 

equipment, travel to meetings, and health insurance and to otherwise offset, insofar as 

possible, appropriate administrative costs of training. Funds are paid directly to and 

administered by the sponsoring organization. 

Federal 

laboratories 

The allowance is intended to cover the costs of meeting travel, health insurance, and 

books. Funds are administered by the OPDIV. 

 II-107 
Exhibit 14. Allowable Costs of Fellowships 

Item Description 

For-profit 

institutions

The allowance is intended to cover the costs of meeting travel, health insurance, and 

books. Funds are paid directly to the sponsoring organization for disbursement to the 

fellow. 

The following are guidelines for the use of the institutional allowance: 

¡ Travel. Payment for travel to meetings is appropriate when it is necessary for the 

individual’s training and when the costs are incurred within the period of grantsupported training. For fellows at Federal laboratories, reimbursement of travel costs 

must be in accordance with current Federal travel regulations. Funds may not be 

expended to cover the costs of travel between the fellow’s place of residence and 

the domestic training organization, except that the sponsoring organization may 

authorize the cost of a one-way travel allowance in an individual case of extreme 

hardship. 

¡ Extraordinary costs. Additional funds may be requested by the organization when 

the training of a fellow involves extraordinary costs for travel to field sites remote 

from the sponsoring organization or accommodations for fellows who are disabled, 

as defined by the Americans with Disabilities Act. The funds requested for 

extraordinary costs must be reasonable in relationship to the total dollars awarded 

under a fellowship and must be directly related to the approved training activity. 

Such additional funds will be provided only in exceptional circumstances that are 

fully justified and explained by the organization. 

¡ Health insurance. A fellow’s health insurance is an allowable cost only if applied 

consistently to all people in a similar training status regardless of the source of 

support. Family health insurance is an allowable cost for fellows who have families 

and are eligible for family health insurance coverage at the sponsoring organization. 

Self-only health insurance is an allowable cost for fellows without families. Health 

insurance can include coverage for costs such as vision and/or dental care if 

consistent with organizational policy. 

Tuition and 

fees 

Costs associated with tuition and fees are allowable only if they are required for 

specific courses in support of the training. The recipient should consult the OPDIV 

guidelines or Part IV for specific guidance on the reimbursement of tuition and fees. 

Travel to 

foreign 

training sites 

For fellows at foreign training sites, in addition to the institutional allowance, awards 

may include a single economy or coach round-trip travel fare. No allowance is provided 

for dependents. U.S. flag air carriers must be used to the maximum extent possible 

when commercial air transportation is the means of travel between the United States 

and a foreign country or between foreign countries. This requirement will not be 

influenced by factors of cost, convenience, or personal travel preference. 

Employee 

benefits 

Since fellowships are not provided as a condition of employment with either the Federal 

government or the sponsoring organization, recipients may not seek funds, or charge 

fellowship awards, for costs that normally would be associated with employee benefits 

(for example, FICA, workers compensation, and unemployment insurance). 

 II-108 
Supplementation of Stipends, Compensation, and Other Income 

Stipend Supplementation 

Fellows receive stipends to defray living expenses. Stipends may be supplemented 

by an organization from non-Federal funds provided this supplementation does not 

require any additional obligation from the fellow. An organization can determine the 

amount of stipend supplementation, if any, it will provide according to its own 

formally established policies governing stipend support. These policies must be 

consistently applied to all individuals in a similar status regardless of the source of 

funds. Federal funds may not be used for stipend supplementation unless specifically 

authorized under the terms of the program from which funds are derived. Under no 

circumstances may OPDIV funds be used for supplementation. An individual may use 

Federal educational loan funds or VA benefits when permitted by those programs as 

described in this section. 

Compensation 

Fellows may seek part-time employment incidental to their training program to offset 

further their expenses. Funds characterized as compensation may be paid to fellows 

only when there is an employer-employee relationship, the payments are for services 

rendered, and the situation otherwise meets the conditions for compensation of 

students as detailed in “Selected Items of Cost.” In addition, compensation must be 

in accordance with organizational policies applied consistently to both federally and 

non-federally supported activities and must be supported by acceptable accounting 

records that reflect the employer-employee relationship agreement. Under these 

conditions, the funds provided as compensation (salary, fringe benefits, and/or 

tuition remission) for services rendered, such as teaching or laboratory assistance, 

are not considered stipend supplementation; they are allowable charges to Federal 

grants, including HHS grants. However, the OPDIV expects that compensation from 

HHS grants will be for limited part-time employment apart from the normal training 

activities. Compensation may not be paid from a grant that supports the same 

activity that is part of the fellow’s planned training experience as approved in the 

fellowship application. Under no circumstances may the conditions of stipend 

supplementation or the services provided for compensation interfere with, detract 

from, or prolong the fellow’s approved training program. Fellowship sponsors must 

approve all instances of employment on HHS grants to verify that the circumstances 

will not detract from or prolong the approved training program. 

Concurrent Benefits 

A fellowship under the Kirschstein-National Research Service Awards may not be 

held concurrently with another federally sponsored fellowship or similar Federal 

award that provides a stipend or otherwise duplicates provisions of the fellowship 

award. 

Educational Loans or GI Bill 

An individual may accept concurrent educational remuneration from the VA (GI Bill) 

and Federal educational loan funds. Such funds are not considered supplementation 

or compensation. 

Taxability of Stipends 

 II-109 
Section 117 of the Internal Revenue Code applies to the tax treatment of 

scholarships and fellowships. Degree candidates may exclude from gross income (for 

tax purposes) any amount used for course tuition and related expenses such as fees, 

books, supplies, and equipment required for courses of instruction at a qualified 

educational organization. Non-degree candidates are required to report as gross 

income any monies paid on their behalf for stipends or any course tuition and fees 

required for attendance. The taxability of stipends in no way alters the relationship 

between fellows and sponsoring organizations. Stipends are not considered salaries. 

In addition, recipients of fellowships are not considered to be in an employeeemployer relationship with the OPDIV or the sponsoring organization solely as a 

result of the fellowship award. The interpretation and implementation of the tax laws 

are the domain of the IRS and the courts. HHS takes no position on what the status 

may be for a particular taxpayer, and it does not have the authority to dispense tax 

advice. Individuals should consult their local IRS office about the applicability of the 

law to their situation and for information on their tax obligations. 

Form 1099 

Although stipends are not considered salaries, this income is still subject to Federal 

and, sometimes, State income tax. Such income may be reported by the sponsoring 

organization on IRS Form 1099, Statement of Miscellaneous Income. Normally, the 

business office of the sponsoring organization will be responsible for annually 

preparing and issuing IRS Form 1099 for fellows paid through the organization 

(fellows at domestic non-Federal organizations). Sponsoring organizations are not 

required to issue a Form 1099, but it is a useful form of documentation of income 

received and a reminder to the fellow that some tax liability may exist. Fellows are 

reminded that, even if the sponsoring organization does not issue a Form 1099, they 

still are required to report stipends as income. The OPDIV will issue a Form 1099 for 

each fellow training at a Federal or foreign laboratory and receiving a stipend check 

from the U.S. Treasury. 

Reporting Requirements 

The submission of the forms described in this section is critical to establishing and 

paying stipends and other costs and determining payback service, if applicable. All of 

these forms generally are available in PDF-fillable and RTF formats at the OPDIV Web 

site or http://grants.nih.gov/grants/forms.htm. The awarding office may provide 

copies of applicable forms with—or reference the Web site in—the NoA. 

Activation Notice 

Immediately upon the initiation of training, the individual must complete and sign a 

fellowship activation notice (e.g., PHS 416-5), obtain the signature of the authorized 

organizational representative, and forward the notice along with a payback 

agreement (where required) to the awarding office. For fellows paid directly by the 

OPDIV, the activation notice is required at the start of each award year. The form 

should not be submitted before the fellow actually begins training. Stipend checks 

are issued when both the activation notice and the payback agreement (where 

required) are received by the awarding office. For fellows whose stipend is paid 

through the organization, the activation notice is required for the initial year only. 

The activation notice may be submitted up to 30 days before the individual begins 

training if necessary for payroll purposes. However, the organization must not 

release any funds until the individual has started training. Furthermore, if the 

 II-110 
individual does not begin training on the day indicated, the organization must notify 

the awarding office immediately. Competing continuation awards must be activated 

on the day following the end of the last budget period of the previous award. 

Payback Agreement 

A payback agreement (e.g., PHS 6031), where required, must be signed by each 

person who is to receive a fellowship. Recipients should consult the OPDIV program 

guidelines or Part IV for guidance regarding the submission of a payback agreement. 

Termination Notice 

The termination notice (e.g., PHS 416-7) (along with the activation notice and the 

award notice) is the basis for validating the total period of fellowship support and 

establishing the amount of payback obligation, if any. A reminder of this reporting 

requirement may be sent to the fellow by the awarding office before the scheduled 

termination date. For early terminations, the completed form will be required 

immediately upon receipt of notification from the fellow or an authorized 

organizational representative. The lack of timely and accurate information on this 

form could adversely affect the payback process. 

Progress Reports 

Progress reports must be submitted for non-competing continuation support. 

Progress report forms and instructions generally are available from the OPDIV Web 

site or at http://grants.nih.gov/grants/forms.htm. Report form pages are available in 

PDF-fillable and RTF formats. Inadequate or incomplete progress reports may be 

returned to the fellow for revision and may result in a delay of continued support. A 

final progress report is required as part of the termination notice. 

Financial Status Report 

An annual or final FSR is not required on fellowship awards. 

Changes in the Project/Activity 

Fellowship awards are made for training at a specific organization under the guidance 

of a particular sponsor. OPDIV approval is required for a transfer of the award to 

another organization, a change in sponsor, or a project/activity change. As part of 

the approval process, if a fellow sponsored by a domestic non-Federal organization 

requests a transfer to another domestic non-Federal organization before the end of 

the current award year, the initial organization may be requested to continue to pay 

the stipend until the end of the current year. Disposition of the institutional 

allowance is negotiable between the two sponsoring organizations. No activation 

notice is required from the new sponsoring organization. 

Transfers involving Federal or foreign sponsoring organizations require unique 

administrative procedures and approvals. Because each transfer varies depending on 

individual circumstances, the sponsoring organization should contact the awarding 

office for specific guidance. 

 II-111 
Any proposed change in the individual’s specified area of training must be reviewed 

and approved in writing by the OPDIV to ensure that the training continues to fall 

within the area of the original reviewed application. When the sponsor is going to be 

absent for more than 3 months, an interim sponsor must be named by the 

organization and approved in writing by the OPDIV. 

Consecutive Support 

If a fellow switches from one grant mechanism to another (e.g., from an institutional 

research training grant to a fellowship or from one OPDIV or OPDIV component to 

another), the requirement for payback service incurred is deferred until the total 

period of support is completed. All fellowship applications are reviewed to determine 

if previous fellowship support has been provided. 

Termination 

An OPDIV may terminate a fellowship before its normal expiration date if it 

determines that the recipient has materially failed to comply with the terms and 

conditions of the award or to carry out the purpose for which it was made. If an 

award is terminated for cause, the OPDIV will notify the fellow in writing of the 

determination, the reasons for the determination, the effective date, and the right to 

appeal the decision. 

The OPDIV also may terminate an award at the request of the sponsoring 

organization or the recipient. The awarding office must be notified immediately if a 

sponsoring organization wants to terminate an individual fellow or the fellow decides 

to terminate training before the scheduled expiration date. If a fellowship is 

terminated early, the stipend must be prorated according to the amount of time 

spent in training, and the award notice will be revised. The balance of any 

institutional allowance (at least one-half) must be refunded if the training has been 

for 6 months or less. 

Copyright 

Except as otherwise provided in the conditions of the award, when a publication or 

similar copyrightable material is developed from work supported by HHS, the author 

is free to arrange for copyright without approval of the OPDIV. Such copyrighted 

materials are subject to a royalty-free, nonexclusive, and irrevocable license to the 

Federal government to reproduce them, translate them, publish them, and use and 

dispose of them, and to authorize others to do so for Federal government purposes. 

Inventions and Patents 

Fellowships funded primarily for educational purposes are not subject to invention 

reporting requirements nor does the OPDIV have any rights to inventions under 

those awards (as specified in 37 CFR 401.1(b)). Kirschstein-National Research 

Service Award fellows training at HHS represent an exception to this policy. Those 

fellows are subject to the provisions of EO 10096 and the OPDIV determines the 

disposition of rights to any invention conceived or actually reduced to practice during 

the period of the fellowship. 

 II-112 
Disposition of Professional Fees 

Fees resulting from clinical practice, professional consultation, or other comparable 

activities performed pursuant to the purpose of the award must be assigned to the 

sponsoring organization for disposition in accordance with established organizational 

policy. The term “professional fees” does not apply to honoraria, fees for scholarly 

writing, delivery of occasional outside lectures, or service in an advisory capacity to 

public or private non-profit organizations, which, if permitted by organizational 

policy, may be retained by the fellow. 

Requirements for Specific Types of Recipients 

Grants to Foreign Organizations, International Organizations, 

and Domestic Grants with Foreign Components 

and Subawards to Foreign Organizations 

Most of the policies contained in this HHS GPS apply to grants made to foreign 

organizations and international organizations (hereafter “foreign grants”), including 

the requirements of 45 CFR part 74 or 45 CFR part 92, as applicable to the type of 

foreign organization, and the cost principles incorporated by reference in those 

regulations. If an applicant/recipient would be unable to comply with these 

requirements, the authorized organizational representative should contact the GMO. 

Specific exceptions and modifications of the HHS GPS requirements for foreign 

grants, and highlights of other policies, are set forth in this section. This section also 

includes policies that apply to domestic grants with a foreign component. 

Public Policy Requirements 

All public policy requirements included in “Public Policy Requirements” in Part I apply 

to foreign grants, with the following exceptions: 

• Civil rights. None of the civil rights requirements specified in “Public Policy 

Requirements” apply to foreign grants. 

• Debarment and suspension. Applicants and recipients that are foreign 

governments or governmental entities, public international organizations, or 

foreign-government-owned or -controlled (in whole or in part) entities are not 

subject to the debarment or suspension certification requirement or to 

debarment or suspension under 45 CFR part 76. All other foreign 

organizations and international organizations are subject to these 

requirements. 

• Drug-free workplace. Foreign applicants and recipients may be exempted 

from the drug-free workplace requirements of 45 CFR part 83 based on a 

documented finding by the OPDIV that application of those requirements is 

inconsistent with U.S. international obligations or the laws and regulations of 

a foreign government. 

• Environmental requirements. Receipt of a grant does not make a foreign 

applicant/recipient subject to environmental requirements that would not 

otherwise apply to it. 

 II-113 
Funding and Payment 

The application budget, requests for funds, and financial reports must be stated in 

U.S. dollars using the currency rate in effect at the time of submission. Once an 

award is made, the OPDIV may adjust for currency exchange fluctuations as part of 

the non-competing continuation award process. This may result in an upward or 

downward adjustment from the total approved budget for that budget period based 

on the net change from the prior year’s award. 

Awards to foreign organizations and international organizations generally are paid by 

the OPDIV’s servicing finance office rather than through PMS unless the recipient is 

serviced by a U.S. owned- or -based bank. All payments will be in U.S. dollars at the 

rate of exchange current at the time of payment. Foreign recipients are strongly 

encouraged to use U.S. banks to ensure that payments arrive on time. 

Payments are made by U.S. Treasury check. If paid by the OPDIV, grants normally 

will be paid on a predetermined quarterly advance basis, usually in four equal 

installments, unless the total amount of the award is $25,000 or less. If the amount 

advanced to an organization based on the predetermined quarterly advance is 

insufficient to meet the grant’s cash requirements, the recipient must make a written 

request to the GMO for any additional funds needed. If payments are made by PMS, 

they are made on the same basis as for domestic grants (see “HHS Grants Process—

Payment”). 

Allowable Costs 

The costs that are generally allowable under grants to domestic organizations also 

are allowable under foreign grants, with the following exceptions: 

• A&R. Major A&R costs are unallowable under foreign grants and domestic 

grants with foreign components. Minor A&R costs are allowable (see “Cost 

Considerations—Allowable Costs and Activities” and “Prior-Approval 

Requirements”). 

• Audit costs. Costs of financial-related audits are allowable (see “Audit” in this 

section). 

• Customs and import duties. These costs, which include consular fees, customs 

surtax, value-added taxes, and other related charges, are unallowable under 

foreign grants and domestic grants with foreign components. 

• Indirect costs. With the exception of the American University of Beirut, which 

is not considered a foreign organization, and the World Health Organization, 

indirect costs will not be reimbursed. 

• Research patient care costs. Research patient care costs are allowable only in 

exceptional circumstances as determined by the OPDIV. 

Prior-Approval Requirements 

Foreign grants generally are included in expanded authorities. 

 II-114 
A change in the performance site within a foreign country or performance in a 

country other than that specified in the approved application requires OPDIV prior 

approval. The transfer of work by a domestic recipient to a foreign component also 

requires OPDIV prior approval. 

A change of grantee organization that involves the transfer of a grant to or between 

foreign organizations or international organizations requires OPDIV approval and, 

where applicable, the associated National Advisory Council or Board. OPDIV approval 

also is required for the transfer of a grant from a foreign organization to a domestic 

organization. 

Audit 

Foreign recipients are subject to the same audit requirements as for-profit 

organizations (specified in 45 CFR 74.26(d)). 

Subawards 

Subawards to foreign entities that are considered financial assistance arrangements 

(rather than acquisition of goods or services) require special oversight by recipients. 

The recipient must do the following: 

• Ensure that appropriate OPDIV approval is obtained for a foreign subaward; 

i.e., that the OPDIV approves of the intent to subaward (subgrant) as defined 

in 45 CFR 74.2 and 45 CFR 92.3 (see “Prior Approval Requirements—OPDIV 

Prior Approval”). The recipient does not have to obtain GMO approval of the 

selected subrecipient or the agreement between the recipient and 

subrecipient. 

• Determine whether the subaward recipient is subject to OMB Circular A-133 

audit requirements (generally the case only if the subaward recipient has 

direct awards from HHS because HHS has adopted A-133 as the standard 

audit requirement for foreign recipients). 

• Determine appropriate means of oversight, including review of reports, or onsite reviews, or alternatives to an A-133 audit if one will not be available 

during the period of the subaward, as part of seeking OPDIV approval, and 

indicate how it will monitor foreign subawards. 

• Provide adequate evidence during its own A-133 audit and in reports to the 

OPDIV that it is meeting its subrecipient monitoring responsibilities. 

Grants to Federal Institutions and Allowable Costs and 

Payments to (or on Behalf of) Federal Employees under Grants 

Most of the policies contained in this HHS GPS apply to grants made to Federal 

institutions. If an applicant/recipient would be unable to comply with these 

requirements, the authorized Federal official should contact the GMO. Specific 

exceptions and modifications of the HHS GPS requirements for Federal recipients, 

and highlights of other policies, are set forth in this section. 

 II-115 
Eligibility 

Federal institutions are eligible to receive certain types of grants from PHS OPDIVs. 

This includes, but is not necessarily limited to, grants for research, training, and 

demonstration projects. Federal institutions must meet the eligibility requirements of 

the grant program from which support is sought. However, in no case may an 

awarding office issue a grant award to any component of its own OPDIV. 

Although the performance site may be at a level lower than the agency or 

department, when an award is made to an eligible Federal institution, the Federal 

agency or department will be the designated recipient and must assume 

responsibility for the project. Federal institutions must also ensure that their own 

authorizing legislation will allow them to receive a PHS grant and be able to comply 

with the award terms and conditions. 

A document certifying both the assumption of responsibility and authority to receive 

a grant must be submitted at the time of each new and competing continuation 

application. The certification must be signed by the head of the responsible Federal 

department or independent agency or a designee who reports directly to the 

department or agency head. (In the case of the Department of Defense, the 

Departments of the Army, Navy, and Air Force are considered the Federal 

department and their Secretaries as the responsible Department head.) 

The certification requirement does not apply to VA hospitals, Bureau of Prisons 

(Department of Justice) hospitals, IHS hospitals, or other PHS OPDIVs applying for 

grants. Generally an award to a PHS OPDIV other than to an IHS hospital will be 

considered only if a project cannot be supported within the mission of the applicant 

OPDIV or organizational segment, the activity cannot be performed elsewhere, its 

non-pursuit would have an adverse or potentially important impact on the OPDIV 

mission, and a grant is determined to be the appropriate means of carrying out the 

activity. 

Payment 

Grants to DoD normally will be paid by U.S. Treasury check after submission of the 

appropriate interagency form. Payments to all other Federal departments and 

agencies generally will be accomplished by transfers of funds between 

appropriations. 

Allowable Costs under Grants to Federal Institutions 

Allowable costs under grants to Federal institutions will be determined by the 

established policies of the institution, consistently applied to both its own activities 

and to grant-supported activities, and by the requirements shown in Exhibit 15. In 

the absence of a governing organizational policy, the cost principles for State, local, 

and Indian tribal governments (OMB Circular A-87) will apply. 

 II-116 
Exhibit 15. Allowable Costs under Grants to Federal Institutions 

These costs are 

allowable 

only as specified If 

Indirect costs Indirect costs will not be provided to Federal institutions. 

Institutional allowances 

under fellowships 

Institutional allowances may be requested by Federal institutions sponsoring 

a predoctoral or postdoctoral fellow. 

Federal (U.S. 

Government) employees 

No salary or fringe benefit payments may be made from HHS grant funds to 

support career, career-conditional, or other Federal employees (civilian or 

uniformed services) with permanent appointments provided for under existing 

position ceilings of a Federal institution receiving a grant. While the level of 

effort required for the project must be allowed by the recipient as part of the 

individuals’ official duties, salary costs associated with an individual 

participating in an official capacity as a Federal employee under a grant to 

that Federal institution are not allowable costs under an HHS grant. See 

“Payments to (or on behalf of) Federal Employees under Grants” for the 

conditions under which salary and fringe benefits may be paid for Federal 

employees working on a grant-supported project when the recipient is a nonFederal organization or a Federal institution other than the one that employs 

the individual. 

Project-related travel costs of such employees are allowable as long as they 

consistent with the FTR. See Exhibit 16 in this section. 

Payments to temporary 

employees 

Payments to individuals specifically hired to assist in the performance of the 

grant are allowable. 

Equipment Accountability 

HHS will consider all nonexpendable personal property acquired under a grant 

awarded to a Federal institution as federally owned, subject to 45 CFR 92.32. Upon 

completion of the award, or when the property is no longer needed, the recipient 

must request disposition instructions from the OPDIV. 

Procurement Requirements 

Procurement under grants to Federal institutions is governed by the FAR and the 

recipient agency’s FAR supplement. 

Intellectual Property 

Inventions resulting from grants supporting the activities of Federal employees under 

grants to Federal institutions must be reported simultaneously to the OPDIV and to 

the employing agency under the terms of EO 10096, as amended, and are subject to 

the licensing requirements of 37 CFR part 401. (See https://sedison.info.nih.gov/iEdison/ for reporting requirements.) In cases where the VA is 

involved with the invention but is not the recipient, and the recipient chooses not to 

elect title or pursue practical application of an invention, the recipient must note VA’s 

involvement on its notice to the OPDIV and provide a courtesy copy of the OPDIV 

notification to the appropriate VA office. The OPDIV will notify the recipient and the 

VA whether the OPDIV has an interest in taking title and/or continuing the pursuit of 

practical application of the invention. 

 II-117 
Reporting Requirements 

Federal institutions must submit annual FSRs and progress reports. 

Allowable Costs and Payments to (or on Behalf of) 

Federal Employees under Grants 

Exhibit 16 lists and describes allowable costs and payments to Federal employees 

under grants. 

Exhibit 16. Allowable Costs and Payments to (or on Behalf of) 

Federal Employees under Grants 

Item Description 

General Only four types of costs—consultant fees, outpatient or subject costs, salary or fringe 

benefits (when the employee is not an employee of a recipient Federal institution or is a 

part-time VA employee as described in this exhibit), and travel costs—can be charged to 

OPDIV grants on behalf of Federal employees, whether by a recipient or subrecipient, and 

under the conditions specified only. Applicants/recipients should advise any Federal 

employees with whom these types of arrangements may be made to consult with their 

employing agency concerning their ability to meet the required conditions. 

The applicant/recipient must submit, as part of the grant application or subsequent 

request, any letters or documentation specified below, and that documentation must be 

deemed acceptable by the GMO before the Federal employee may be involved in a 

project. 

These limitations do not apply to individuals that are classified as special government 

employees because of service on advisory groups or as a result of a formal consulting 

arrangement with a Federal agency. (See the HHS Standards of Conduct at 45 CFR part 

73, Subpart J for additional guidance.) 

Consultant 

fees 

These costs are allowable only for medical personnel of the Uniformed Services of the 

United States (excluding PHS Commissioned Officers) and when all of the following 

conditions are present: 

¡ The employees are providing the kind and extent of medical services approved in the 

grant award. 

¡ Adequate numbers of qualified civilian personnel are not available to provide these 

services, and eligible Federal medical personnel are hired only in addition to those 

qualified civilian medical personnel, if any, who are available. 

The applicant/recipient organization provides prior written authorization from the proposed 

consultant’s commanding officer that he or she is authorized to work on the grantsupported activity during non-duty hours or while on authorized leave, and can be paid for 

his or her efforts. 

Outpatient 

or subject 

costs 

These costs are allowable when the employee is an outpatient or subject under study in 

connection with grant-supported activities. 

 II-118 
Exhibit 16. Allowable Costs and Payments to (or on Behalf of) 

Federal Employees under Grants 

Item Description 

Salary or 

fringe 

benefits 

Salary payments may be made from OPDIV grant funds to career, career-conditional, or 

other Federal employees (civilian or uniformed services) with permanent appointments 

provided under existing position ceilings of a Federal institution only if prior approval is 

obtained from an authorized official of the employee’s agency and the employee is one of 

the following: 

¡ A PHS Commissioned Officer or a civil service employee carrying out duties for which 

specific statutory authorization exists permitting direct Federal assistance in lieu of cash 

under the grant, or where the government is reimbursed for services rendered subject 

to restrictions applicable to such personnel, including the applicable Federal standards 

of conduct (for HHS, 45 CFR part 73). 

¡ A PHS Commissioned Officer on LWOP if the 

 recipient has obtained written prior approval from the OPDIV; 

 total amount of salary paid from OPDIV grant funds is proportional to the time 

devoted to the project and does not exceed the total annual amount of pay and 

allowances the individual would have received if not in LWOP status; and 

 parties concerned have made a prior determination that there is no possibility of dual 

compensation and there is no actual or apparent conflict of interest or other violation 

of the applicable standards of conduct. 

¡ A civil service employee participating in a grant to a non-Federal organization and all of 

the following conditions are met: 

 The individual is participating as part of an approved IPA assignment in a role other 

than as PI/PD. IPA assignments generally do not exceed 2 years and may not 

exceed 4 years of continuous duration (5 U.S.C. 3372). Based on this statutory time 

restriction, the involvement of the civil service employee should be limited in scope. 

Therefore, the proposed PI/PD for an HHS grant may not be participating through an 

IPA. On a case-by-case basis, the OPDIV may determine that certain other key 

personnel on the project are sufficiently critical to its long-term success that 

participation through an IPA is not appropriate. 

 Before making any payment from HHS grant funds to such an employee, the 

recipient must certify that the employee is on an IPA assignment and must provide 

adequate documentation, as determined by OPDIV, of the IPA assignment and 

information about its nature and duration. 

 The level of effort required for the project must be allowed by the employing agency 

as part of the individual’s official duties. Salary payments from OPDIV grant funds 

must be proportional to the time an individual devotes to the grant-supported project. 

The total salary support may not exceed the normal level of compensation from 

Federal salary if the individual were not participating in the grant. 

 The parties concerned have made a prior determination that there is no possibility of 

dual compensation and there is no actual or apparent conflict of interest or other 

violation of the applicable standards of conduct. 

 II-119 
Exhibit 16. Allowable Costs and Payments to (or on Behalf of) 

Federal Employees under Grants 

Item Description 

Salaries 

under 

research 

grants to 

VANPCs 

In accordance with the established policies and salary structure of the VANPC, if the PI is 

a part-time VA employee, grant funds may be used to pay the differential between the 

individual’s VA part-time salary and the salary level for a full-time VANPC commitment in 

proportion to the level of effort devoted to the project. Therefore, if the PI has a part-time 

appointment with the VANPC, an appropriate portion of the individual’s salary that would 

otherwise be supported by the non-profit VANPC may be charged to the grant. An HHS 

grant may not be the source of funding for an increase in an investigator’s salary 

regardless of the type of entity with which the investigator holds an appointment (e.g., 

university, VA, or VANPC). 

Travel 

costs 

These costs are allowable if the employee is 

¡ performing allowable reimbursable services as specified under “Salary or Fringe 

Benefits” above, or 

¡ attending an OPDIV grant-supported conference 

 during non-duty hours, 

 while in a preexisting LWOP status or one that continues beyond the conference, or 

 while on detail to a State or local government, educational institution, or other nonprofit organization. 

Such payments must be made in accordance with established organizational policy, 

consistently applied regardless of the source of funds, and the parties concerned must 

take reasonable steps to ensure that there is no actual or apparent conflict of interest. 

Grants to For-Profit Organizations 

General 

For-profit organizations generally are subject to the same requirements specified in 

the HHS GPS for non-profit organizations, including those relating to personal 

property title and management. However, some of the terms and conditions for 

grants to for-profit (commercial) organizations vary from the standard terms and 

conditions included in the HHS GPS. In addition, the terms and conditions of the 

SBIR and STTR programs vary from those otherwise applicable to for-profit 

organizations. This section addresses separately the policies applicable to for-profit 

organizations generally and those that apply to SBIR and STTR awards specifically. It 

also highlights several policies that apply equally to for-profit and non-profit 

recipients. If an exception is not stated below or in the NoA, the public policy 

requirements cited in the “Public Policy Requirements” section of this HHS GPS, 

including the requirements for the protection of human subjects and animal welfare, 

apply. 

Allowable Costs and Payment of Fee 

No cost principles are specifically applicable to grants to for-profit organizations. 

Therefore, the cost principles for commercial organizations set forth in the FAR 

(48 CFR Subpart 31.2) generally are used to determine allowable costs under HHS 

grants to for-profit organizations. As provided in those costs principles, allowable 

travel costs may not exceed those established by the FTR (available at 

http://www.gsa.gov). In addition, as provided in 45 CFR 74.27(a), HHS does not 

 II-120 
allow for-profit organizations to be reimbursed for IR&D (self-sponsored) costs. The 

cost principles in 45 CFR part 74, Appendix E, are used to determine allowable costs 

under HHS grants to proprietary hospitals. 

Except for grants awarded under the SBIR/STTR programs, no profit or fee will be 

provided to a for-profit organization, whether as a recipient or subrecipient. A profit 

or fee under a grant is not a cost, but is an amount in excess of actual allowable 

direct and indirect costs. In accordance with normal commercial practice, a profit/fee 

may be paid to a contractor under an HHS grant providing routine goods or services 

to the recipient. 

Intellectual Property 

Intellectual property requirements set forth in 37 CFR part 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 OPDIV approval. To the extent 

authorized by 35 U.S.C. 205 (the Patent Act, as amended), the Federal government 

will not make public any information disclosing a Federal government-supported 

invention. 

Audit 

The requirements for non-Federal audits of for-profit organizations are specified in 

45 CFR 74.26(d). A for-profit organization is required to have a non-Federal audit if, 

during its fiscal year, it expended a total of $500,000 or more under one or more 

HHS awards (as a direct recipient and/or as a subrecipient). Title 45, part 74.26(d), 

of the CFR incorporates the thresholds and deadlines of OMB Circular A-133 but 

provides for-profit organizations two options regarding the type of audit that will 

satisfy the audit requirements: 

• A financial-related audit, as defined in, and in accordance with, 

the Government Auditing Standards, of all its HHS awards. The 

standards, commonly known as the “Yellow Book” (GPO stock 

020-000-00-265-4), are available at 

http://www.gao.gov/govaud/ybk01.htm. The Government 

Auditing Standards audits must be completed and submitted 

within 30 days after receipt of the auditor’s report or 9 months 

after the end of the audit period (i.e., the end of the 

organization’s fiscal year), whichever is earlier. 

• An audit that meets the requirements of OMB Circular A-133. OMB Circular A133 is available at 

http://www.whitehouse.gov/omb/circulars/a133/a133.html. 

 II-121 
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 audit must be submitted to the following office: 

National External Audit Review Center 

HHS Office of Audit Services 

323 West 8th Street 

Lucas Place 

Room 514 

Kansas City, MO 64105. 

For-profit organizations expending less than $500,000 a year are not required to 

have an annual audit for that year but must make their grant-related records 

available to the OPDIV or other designated officials for review or audit. 

Small Business Innovation Research 

and Small Business Technology Transfer Programs 

Certain OPDIVs are required by statute to reserve a portion of its annual extramural 

budget for projects under the SBIR and STTR programs. These programs primarily 

are intended to encourage private-sector commercialization of technology and to 

increase small business participation in federally funded R&D. 

Both the SBIR and STTR programs consist of the following three phases; however, 

individual projects may not be eligible for all three phases: 

• Phase I. The objective of this phase is to establish the technical merit and 

feasibility of proposed research or R&D efforts and to determine the quality of 

performance of the applicant (small business concern or SBC) before 

providing further Federal support in Phase II. 

• Phase II. The objective of this phase is to continue the research or R&D 

efforts initiated in Phase I. Funding will be based on the results of Phase I and 

the scientific and technical merit and commercial potential of the Phase II 

application. Only Phase I recipients are eligible to receive Phase II funding. 

Unless submitted as a Fast-Track application (see below), Phase II 

applications may be submitted only after the Phase I award is made. OPDIVs 

expect non Fast-Track Phase II applications to be submitted within the first 

six receipt dates following expiration of the Phase I budget period, i.e., 

normally 2 years beyond the expiration date of the Phase I award. 

• Phase III. The objective of this phase, where appropriate, is for the SBC to 

pursue, with non-Federal funds, the commercialization of the results of the 

research or R&D funded in Phases I and II. 

There are two major differences between the SBIR and STTR programs: 

• The STTR program requires that the SBC formally partner with a single, nonprofit research institution in the collaborative conduct of a project that has 

potential for commercialization. To be eligible for an STTR award, at least 

40 percent of the research must be performed by the SBC and at least 30 

percent of the research must be performed by a domestic non-profit research 

institution through a formal, cooperative arrangement. Such organizations 

 II-122 
include universities, non-profit hospitals, and other non-profit research 

organizations as well as Federally Funded Research and Development 

Centers. (The same requirement applies to Phase I and to Phase II.) STTR 

grants are awarded to the SBC, which will receive all of the funding for the 

project and disperse the appropriate funding to the research institution. The 

SBIR program does not have this requirement; therefore, the SBC may 

conduct the entire SBIR project without outside collaboration. 

• The SBIR program requires that the primary employment of the PI (greater 

than 50 percent of the individual’s time) be with the SBC at the time of award 

and during the conduct of the project. The STTR program does not have this 

requirement, i.e., the PI may have his or her primary employment with an 

organization other than the SBC, including the collaborating research 

institution. However, there must be an official relationship between the PI and 

the SBC. As an eligibility criterion, the PI also is required to devote at least 10 

percent of his or her time to the STTR project. 

The Fast-Track application process expedites award decisions and funding of SBIR 

and STTR Phase II applications for scientifically meritorious projects that have a high 

potential for commercialization. The Fast-Track process allows Phase I and Phase II 

grant applications to be submitted and reviewed together. Typically, Fast-Track 

applications will receive a single rating. An OPDIV determines whether to allow SBCs 

to use the Fast-Track review option. Therefore, before submitting applications for 

Fast-Track review, applicants are strongly encouraged to consult with OPDIV 

program staff. SBIR/STTR Phase I and Phase II applications submitted concurrently 

without prior consultation with the OPDIV may be redirected for review under the 

OPDIV’s normal review procedures. For additional information on the submission of 

Fast-Track applications, see the OPDIV’s SBIR/STTR program solicitations. 

Qualification as a Small Business Concern 

Each organization receiving a grant under the SBIR/STTR programs must qualify as a 

U.S.-owned SBC—an entity that, at the time of the Phase I and Phase II awards, 

meets all of the following criteria: 

• The entity is organized for profit and has a place of business located in the 

United States, operates primarily within the United States, or makes a 

significant contribution to the U.S. economy through payment of taxes or use 

of American products, materials, or labor. 

• It is in the legal form of an individual proprietorship, partnership, limited 

liability company, corporation, joint venture, association, trust, or 

cooperative. If the entity is a joint venture, there can be no more than 49 

percent participation by foreign business entities. 

• As provided by the express terms of 13 CFR 121.702(a), it is at least 51 

percent owned and controlled by one or more individuals who are citizens of, 

or permanent resident aliens in, the United States. In the case of a joint 

venture, each party to the venture must be 51 percent owned and controlled 

by one or more individuals who are citizens of, or permanent resident aliens 

in, the United States. Under these regulations, corporations or artificial 

entities cannot quality as individuals who are U.S. citizens. Further, indirect 

 II-123 
ownership of the entity by a U.S. citizen does not satisfy the requirements of 

13 CFR 121.702(a). 

h Example 1. An entity applying for an SBIR/STTR grant is 100 percent 

owned by Company A. Company A is 100 percent owned by U.S. citizens. 

The entity is not eligible for support under the SBIR/STTR program 

because it is not 51 percent directly owned and controlled by citizens of, 

or permanent resident aliens in, the United States. 

h Example 2. An entity applying for an SBIR/STTR grant is 51 percent 

owned by U.S. citizens of and permanent resident aliens in the United 

States and 49 percent owned by a corporation. The entity is eligible for 

support under the SBIR/STTR program, assuming it meets the other 

eligibility criteria (e.g., size), because 51 percent of the ownership rests 

directly with U.S. citizens and permanent resident aliens of the United 

States. 

• The entity, including its affiliates, cannot have more than 500 employees. In 

accordance with 13 CFR 121.103, affiliation exists when, either directly or 

indirectly, (1) one concern controls or has the power to control the other, or 

(2) a third party or parties controls or has the power to control both. One of 

the circumstances that would lead to a finding that an organization is 

controlling or has the power to control another organization involves sharing 

common office space, employees, and/or other facilities (e.g., laboratory 

space). The research and analytical work performed by the recipient under an 

SBIR/STTR award is to be conducted in research space occupied by, available 

to, and under the control of, the recipient. However, when required by the 

project activity, access to special facilities or equipment in another 

organization is permitted, as in cases where the SBIR recipient has entered 

into a consortium arrangement with another organization for a specific, 

limited portion of the research project. See 13 CFR 121.3-2(a) and 13 CFR 

121.3-2(t) for additional information concerning this criterion. 

All appropriate factors will be considered in determining whether an entity qualifies 

for an SBIR/STTR award, including common ownership, common management, and 

contractual relationships. 

Place of Performance 

For both Phase I and Phase II SBIR/STTR awards, the research or R&D project 

activity must be performed in its entirety in the United States. (The United States is 

defined as the 50 States, the territories and possessions of the United States, the 

Commonwealth of Puerto Rico, the Federated States of Micronesia, the Republic of 

Palau, the Republic of the Marshall Islands, and the District of Columbia.) 

In those rare instances where the study design requires use of a foreign site (e.g., to 

conduct testing of specific patient populations), the investigator must thoroughly 

justify in the application the need for use of a foreign site. Similarly, in those rare 

instances where it may be necessary to purchase materials from other countries, 

investigators must thoroughly justify the request. The OPDIV will consider these 

instances on a case-by-case basis, and they should be discussed with cognizant 

OPDIV staff before submitting an application. Whether the request is approved or 

disapproved, it will be explicitly addressed in the NoA if an award is made. Whenever 

 II-124 
possible, work outside the United States, which is necessary to the completion of the 

project, should be supported by funding other than SBIR/STTR grants. 

Minimum Level of Effort 

Generally, under SBIR Phase I awards, a minimum of two-thirds or 67 percent of the 

research or analytical effort must be carried out by the SBC. In addition, payments, 

in the aggregate, to consultants, consortium participants and contractors for portions 

of the scientific/technical effort generally may not exceed 33 percent of the total 

requested amount. 

Generally, under SBIR Phase II awards, a minimum of one-half or 50 percent of the 

research or analytical effort must be carried out by the SBC. In addition, payments, 

in the aggregate, to consultants, consortium participants, and contractors for 

portions of the scientific/technical effort generally may not exceed 50 percent of the 

total requested amount. 

For STTR awards (both Phase I and Phase II), at least 40 percent of the work is to be 

performed by the SBC and at least 30 percent of the work is to be performed by the 

single, non-profit research institution. The basis for determining the percentage of 

work to be performed by each of the cooperating parties is the total of direct and 

F&A costs attributable to each party, unless otherwise described and justified in the 

“Contractual Arrangements” portion of the “Research Plan” section of the grant 

application. 

Public Policy Requirements 

The requirements concerning disclosure of financial conflicts of interest (see “Public 

Policy Requirements—Other Research-Related Requirements—Financial Conflict of 

Interest”) do not apply to applications or awards under Phase I of the SBIR/STTR 

programs. 

Allowable Costs and Fee 

Profit or Fee. A reasonable profit or fee may be paid to an SBC receiving an award 

under Phase I or Phase II of the SBIR and STTR programs. The profit or fee is not 

considered a “cost” for purposes of determining allowable use, program income 

accountability, or audit thresholds. The profit or fee may be used by the SBC for any 

purpose, including additional effort under the SBIR/STTR award. It is intended to 

provide a reasonable profit consistent with normal profit margins for for-profit 

organizations for R&D work. Fee amounts may not exceed 8 percent of total costs 

(direct plus indirect) exclusive of fee, unless there is compelling justification and the 

request is approved by the OPDIV. Regardless, total costs and fee must be 

accommodated within the statutory limitations on the size of awards under the 

SBIR/STTR programs (see Part IV for allowable fee percentage). The profit or fee 

should be drawn from PMS in increments proportional to the drawdown of funds for 

direct and indirect costs. The profit or fee applies solely to the SBC receiving the 

SBIR/STTR award and not to any other participant; however, in accordance with 

normal commercial practice, the SBC may pay a profit or fee to a contractor 

providing routine goods or services to the SBC under the grant. 

For multi-year awards, i.e., those where the approved project period will exceed 1 

year, the overall fee negotiated will be divided into the number of years in the 

 II-125 
project period and the resulting amount added to each budget period as a “fixed 

fee.” The fee paid is not subject to the cost principle tests of allowability and it will 

not be adjusted downward based on actual allowable costs incurred. However, in the 

event of a termination or the withholding a non-competing continuation award for 

failure to make satisfactory progress, non-compliance with the terms and conditions 

of a previous award or absence of an appropriation, the recipient is not entitled to 

any fee amount in excess of the negotiated percentage applied to the period for 

which grant support has been provided. 

Indirect Costs. 

• Phase I. If the applicant SBC has a currently effective indirect cost rate with a 

Federal agency, that rate should be used when calculating proposed indirect 

costs for an application. (However, the rate must be adjusted for IR&D 

expenses, which are not allowable under HHS awards.) If the applicant SBC 

does not have a currently effective negotiated indirect cost rate with a Federal 

agency, the applicant should propose estimated indirect costs at a rate not to 

exceed 40 percent of the total direct costs. However, SBCs are reminded that 

only actual indirect costs are to be charged to projects. (If awarded at a rate 

of 40 percent or less, the rate used to charge actual indirect costs to projects 

cannot exceed the awarded rate unless the SBC negotiates an indirect cost 

rate with a Federal agency.) OPDIVs will not negotiate indirect cost rates for 

Phase I awards. 

• Phase II. If the applicant SBC has a currently effective negotiated indirect 

cost rate with a Federal agency, that rate should be used when calculating 

proposed indirect costs for an application. (However, the rate must be 

adjusted for IR&D expenses, which are not allowable under HHS awards.) If 

the applicant SBC does not have a currently effective negotiated indirect cost 

rate with a Federal agency, the applicant should propose an estimated 

indirect cost rate in the application. If the requested indirect cost rate is 25 

percent of total direct costs or less, no further justification is required at the 

time of award, and indirect costs will be awarded at the requested rate. 

However, SBCs are reminded that only actual indirect costs may be charged 

to projects. If awarded at a rate of 25 percent or less of total direct costs, the 

rate used to charge actual indirect costs to projects cannot exceed the 

awarded rate unless the SBC negotiates an indirect cost rate with DFAS. 

DFAS—the office authorized to negotiate indirect cost rates with SBCs 

receiving HHS SBIR/STTR awards—will negotiate indirect cost rates for SBCs 

receiving Phase II awards that requested a rate greater than 25 percent of 

total direct costs. 

Upon request, the applicant SBC should provide DFAS with an indirect cost 

proposal and supporting financial data for its most recently completed fiscal 

year. If financial data are not available for the most recently completed fiscal 

year, the applicant should submit a proposal showing estimated rates with 

supporting documentation. Further information about DFAS is available at its 

Web site or by telephone (see Part III of the HHS GPS). 

Market Research 

HHS will not support market research, including studies of the literature that lead to 

a new or expanded statement of work, under the grant. For purposes of the 

 II-126 
 II-127 

SBIR/STTR programs, “market research” is the systematic gathering, editing, 

recording, computing, and analyzing of data about problems relating to the sale and 

distribution of the subject of the proposed research. It includes various types of 

research, such as the size of potential markets and potential sales volume, the 

identification of consumers most apt to purchase the products, and the advertising 

media most likely to stimulate their purchases. However, “market research” does not 

include activities under a research plan or protocol that include a survey of the public 

as part of the objectives of the project to determine the impact of the subject of the 

research on the behavior of individuals. 

Intellectual Property 

Rights to data, including software developed under the terms of any funding 

agreement resulting from an HHS award, must remain with the recipient except that 

any such copyrighted material is subject to a royalty-free, nonexclusive and 

irrevocable license to the Federal government to reproduce, publish, or otherwise 

use the material, and to authorize others to do so for Federal purposes. In addition, 

under the SBIR/STTR programs, in contrast to awards to for-profit organizations 

under other support mechanisms, such data must not be released outside the 

Federal government without the recipient’s permission for a period of 4 years from 

completion of the project under which the data were generated. 

The STTR program requires that the small business recipient and the single, nonprofit research institution execute an agreement allocating between the parties 

intellectual property rights and rights, if any, to carry out follow-on research, 

development, or commercialization of the subject research. (A model agreement, 

“Allocation of Rights in Intellectual Property and Rights to Carry Out Follow-On 

Research, Development, or Commercialization,” is available at the NIH Web site at 

http://grants.nih.gov/grants/funding/sbir.htm.) By signing the face page of the grant 

application, the SBC’s AOO certifies that the agreement with the research institution 

will be effective at the time the grant award is made. A copy of the agreement must 

be furnished upon request to the awarding office. 

SBIR/STTR recipients are covered by 37 CFR part 401 with respect to inventions and 

patents. 

Data Sharing. Applicants for SBIR Phase II funding of $500,000 or more of direct 

costs in any single year must comply with the HHS policy on data sharing consistent 

with the Small Business Act. If the final data would not be amenable to sharing, e.g., 

proprietary data, the SBC should explain that in the application. In addition, as 

indicated under “Intellectual Property” in this subsection, whether or not the award 

meets the threshold for data sharing, the OPDIV will not release data outside the 

Federal government without the recipient’s permission for a period of 4 years from 

completion of the project under which the data were generated. The entire policy 

may be found at http://grants.nih.gov/grants/policy/data_sharing/index.htm. 
Part III: Points of Contact 

Exhibit 17 lists pertinent offices and officials, along with their addresses and 

telephone numbers. 

Exhibit 17. Points of Contact 

Office or Official Address and telephone numbers 

Office of the Inspector General (OIG) 

http://www.oig.hhs.gov

Department of Health and Human Services 

OIG Hotline 

Attn: HOTLINE 

330 Independence Avenue, SW 

Washington, DC 20201 

800-HHS-TIPS (1-800-447-8477) 

e-mail: HHSTips@org.hhs.gov 

For questions concerning A-133 audit requirements: 

National External Audit Resources 

Office of Audit Services 

323 West 8th Street 

Lucas Place, Room 514 

Kansas City, MO 64105 

800-374-6714 (voice) 

816-374-6727 (fax) 

http://harvester.census.gov/sac

Office for Human Research Protections 

(OHRP) 

http://www.hhs.gov/ohrp

The Tower Building 

1101 Wootton Parkway, Suite 200 

Rockville, MD 20852 

866-447-4777 (toll free) 

240-453-6900 (local) 

e-mail: ohrp@osophs.dhhs.gov

Office of Laboratory Animal Welfare 

(OLAW) 

http://grants.nih.gov/grants/olaw/olaw.htm

6705 Rockledge Drive 

Rockledge I, Suite 360, MSC-7982 

Bethesda, MD 20892-7982 

301-496-7163 

e-mail: 

olaw@od.nih.gov (for general questions, copies of 

documents, or compliance issues) 

assurance.olaw@od.nih.gov (for questions or information 

about assurances) 

Office of Research Integrity (ORI) 

http://ori.dhhs.gov

The Tower Building 

1101 Wootton Parkway, Suite 750 

Rockville, MD 20852 

240-453-8200 

e-mail: askORI@osophs.dhhs.gov

 III-1 
Exhibit 17. Points of Contact 

Office or Official Address and telephone numbers 

Departmental Appeals Board (DAB) 

http://www.hhs.gov/dab/

Department of Health and Human Services 

Departmental Appeals Board, MS 6132 

Alternative Dispute Resolution and Civil Remedies 

Divisions 

330 Independence Avenue, SW 

Room G-644 

Washington, DC 20201 

Note: DAB does not receive courier deliveries at this 

address. 

202-565-0200 (Chair and Appellate and ADR Divisions) 

202-565-9462 (Civil Remedies Division) 

e-mail: DAB@hhs.gov 

Office for Civil Rights (OCR) 

http://www.hhs.gov/ocr

Office of Program Operations 

200 Independence Avenue, SW 

Room 509 F 

Washington, DC 20201 

800-368-1019 

e-mail: OCRMail@hhs.gov

Program Support Center 

Financial Management Service 

Division of Payment Management (DPM) 

http://www.dpm.psc.gov 

http://www.dpm.psc.gov/Contact.aspx

(Find Account Representative 

P.O. Box 6021 

Rockville, MD 20852 

301-443-9193 

301-443-3586 (fax) 

e-mail: info@psc.dhhs.gov

Division of Cost Allocation (DCA) 

http://rates.psc.gov/

Mid-Atlantic Field Office 

(Services Alabama, Delaware, District of 

Columbia, Florida, Georgia, Kentucky, 

Maryland, Mississippi, North Carolina, 

Pennsylvania, South Carolina, Tennessee, 

Virginia and West Virginia) 

330 Independence Avenue, SW 

Cohen Building, Room 10-67 

Washington, DC 20201 

202-401-2808 

Northeastern Field Office 

(Services Connecticut, Maine, 

Massachusetts, New Hampshire, New 

Jersey, New York, Rhode Island, Vermont, 

Puerto Rico, the Virgin Islands, Canada 

and Europe) 

26 Federal Plaza 

Room 41-122 

New York, NY 10278 

212-264-2069 

Central States Field Office 

(Services Arkansas, Illinois, Indiana, Iowa, 

Kansas, Louisiana, Michigan, Minnesota, 

Missouri, Nebraska, New Mexico, Ohio, 

Oklahoma, Texas and Wisconsin) 

1301 Young Street 

Room 702 

Dallas, TX 75202 

214-767-3261 

Western Field Office 

(Services Alaska, Arizona, California, 

Colorado, Hawaii, Idaho, Montana, 

Nevada, North Dakota, Oregon, South 

Dakota, Utah, Washington, Wyoming, 

Australia, and Asia) 

50 United Nations Plaza 

Room 347 

San Francisco, CA 94102 

415-437-7820 

 III-2 
 III-3 

Exhibit 17. Points of Contact 

Office or Official Address and telephone numbers 

Office of Acquisition Management and 

Policy (OAMP) 

Division of Financial Advisory Services 

(DFAS) 

http://oamp.od.nih.gov/dfas/dfas.asp 

6100 Executive Boulevard, Room 6B05 

MSC-7540 

Bethesda, MD 20892-7540 

301-496-4401 

301-402-0177 
Appendix A: Abbreviations 

Following are abbreviations of terms used throughout this document. They are 

included in a single location as an aid to the reader. 

A&R alteration and renovation 

ACH Automated Clearinghouse 

AHRQ Agency for Healthcare Research and Quality 

CDC Centers for Disease Control and Prevention 

CFR Code of Federal Regulations 

CoC certificate of confidentiality 

DAB Departmental Appeals Board 

DCA Division of Cost Allocation, HHS 

DEA Drug Enforcement Administration 

DFAS Division of Financial Advisory Services, NIH 

DoC Department of Commerce 

DoD Department of Defense 

DoL Department of Labor 

DPM Division of Payment Management, HHS 

EIN Entity Identification Number 

EO Executive Order 

F&A facilities and administrative (costs) 

FAC Federal Audit Clearinghouse 

FAR Federal Acquisition Regulation 

FCTR Federal Cash Transactions Report (SF 272) 

FDA Food and Drug Administration 

FEMA Federal Emergency Management Agency 

FOIA Freedom of Information Act 

FSR Financial Status Report (SF 269 or 269A) 

FTR Federal Travel Regulation 

FWA Federal-Wide Assurance 

GMO Grants Management Officer 

GMS Grants Management Specialist 

GPO Government Printing Office 

GSA General Services Administration 

HHS Department of Health and Human Services 

HRSA Health Resources and Services Administration 

IACUC Institutional Animal Care and Use Committee 

IDE investigational device exception 

IHS Indian Health Service 

IND Investigational new drug 

 A-1 
IPA Intergovernmental Personnel Act 

IR&D independent research and development 

IRB Institutional Review Board 

IRS Internal Revenue Service 

LOI Letter of intent 

LWOP leave without pay 

NEARC National External Audit Review Center, OIG 

NEPA National Environmental Policy Act 

NFI Notice of Federal Interest 

NIH National Institutes of Health 

NoA Notice of Award (Notice of Grant Award) 

OCR Office for Civil Rights, HHS 

OFCCP Office of Federal Contract Compliance Programs, DoL 

OG Office of Grants 

OHRP Office for Human Research Protections 

OIG Office of the Inspector General 

OLAW Office of Laboratory Animal Welfare, NIH 

OMB Office of Management and Budget 

ONR Office of Naval Research 

OPDIV Operating Division 

OPHS Office of Public Health and Science 

ORI Office of Research Integrity 

PA program announcement 

PD Program Director/Project Director 

PHS Public Health Service 

PI Principal Investigator 

P.L. Public Law 

PMS Payment Management System 

PO Project Officer/Program Official 

PRA Paperwork Reduction Act 

RA Review Administrator 

R&D research and development 

RFA Request For Applications 

SAMHSA Substance Abuse and Mental Health Services Administration 

SBA Small Business Administration 

SBC small business concern 

SBIR Small Business Innovation Research Program 

SF Standard Form 

SPOC State Single Point of Contact 

STTR Small Business Technology Transfer Program 

U.S.C. United States Code 

 A-2 
 A-3 

USDA United States Department of Agriculture 

VA Department of Veterans Affairs 

VANPC VA-Affiliated Non-Profit Research Corporation 
Appendix B: Glossary 

This glossary defines terms commonly used in the HHS GPS. These definitions are 

included for purposes of clarity in this document and are not intended to replace 

controlling definitions found in applicable statutes and regulations. The policy 

associated with these definitions is found in Part II of the HHS GPS, unless otherwise 

indicated. 

accrual basis An accounting method in which revenues and expenses are identified with 

specific periods of time, such as a month or year, and are recorded when they 

are earned or incurred without regard to the date of receipt or payment of cash; 

distinguished from cash basis. 

acquisition cost The net invoice price of property or supplies, including the cost of modifications, 

attachments, accessories, or auxiliary apparatus necessary to make the 

property usable for the purpose for which it was acquired. Other charges, such 

as the cost of installation, transportation, taxes, duty, and protective in-transit 

insurance, are included or excluded from the unit acquisition cost in 

accordance with the recipient’s regular accounting practices. The term does not 

include costs for rental of property or alteration and rental of real property. 

administrative 

requirements 

The general practices that are common to the administration of grants, such as 

financial accountability, reporting, equipment management, and retention of 

records. 

advance payment A payment made to a recipient upon its request either before cash 

disbursements are made by the recipient or through the use of predetermined 

payment schedules. Most HHS advance payments are made by the Payment 

Management System (PMS), the HHS centralized grant payment system. 

allocable cost A cost that is allocable to a particular cost objective (i.e., a specific function, 

grant project, service, department, or other activity) in accordance with the 

relative benefits received. A cost is allocable to a Federal award where it is 

treated consistently with other costs incurred for the same purpose in like 

circumstances and (1) is incurred specifically for the award, (2) benefits both 

the award and other work and can be distributed in reasonable proportion to 

the benefits received, or (3) is necessary for the overall operation of the 

organization. 

allowable cost A cost incurred by a recipient that is 

(1) reasonable for the performance of the award; 

(2) allocable; 

(3) in conformance with any limitations or exclusions set forth in the Federal 

cost principles applicable to the organization incurring the cost or in the NoA as 

to the type or amount of cost; 

(4) consistent with regulations, policies, and procedures of the recipient that are 

applied uniformly to both federally supported and other activities of the 

organization; 

(5) accorded consistent treatment as a direct or indirect cost; 

(6) determined in accordance with generally accepted accounting principles; 

and 

(7) not included as a cost in any other federally supported award (unless 

specifically authorized by statute). 

 B-1 
alteration and 

renovation 

Work that changes the interior arrangements or other physical characteristics of 

an existing facility or installed equipment so that it can be used more effectively 

for its currently designated purpose or adapted to an alternative use to meet a 

programmatic requirement. Alteration and renovation may include work referred 

to as improvements, conversion, rehabilitation, remodeling, or modernization, 

but is distinguished from construction and large-scale permanent 

improvements. 

alternative dispute 

resolution 

A process in which mediation or other techniques are used to avoid or resolve 

disputes. Alternative dispute resolution is intended to reduce cost, delay, and 

contentiousness in the resolution process as well as to prevent disputes from 

escalating to levels requiring more formal or judicial resolution. 

applicable credit Those receipts that offset or reduce direct or indirect costs. Typical examples of 

such transactions include purchase discounts, rebates, or allowances; 

recoveries or indemnities on losses; insurance refunds; and adjustments of 

overpayments or erroneous charges. 

application A request for financial support of a project, program, or activity submitted on 

specified forms and in accordance with OPDIV instructions. (See “Types of 

Applications and Letters of Intent” in Part I for an explanation of the types of 

applications.) 

approved budget The financial expenditure plan for a grant-supported project, program, or 

activity, including revisions approved by the OPDIV and permissible revisions 

made by the recipient. The approved budget consists of Federal (grant) funds 

and, if required by the terms and conditions of the award, non-Federal 

participation in the form of matching or cost sharing. Expenditures under an 

approved budget that consists of both Federal and non-Federal shares are 

deemed to be borne by the recipient in the same proportion as the percentage 

of Federal/non-Federal participation in the overall budget. 

assurance A written statement by an applicant, normally included with the application, 

indicating that it will abide by a particular requirement if a grant is awarded. 

(See Part I.) 

audit resolution The process of resolving audit findings, including those related to management 

and systems deficiencies and monetary findings (i.e., questioned costs). 

award The document that provides OPDIV funds to a recipient to carry out an 

approved program or project (based on an approved application or progress 

report). The term, when used as a noun, is sometimes used interchangeably 

with “grant.” 

awarding office The OPDIV organizational component responsible for the business 

management and non-programmatic aspects of the award and administration 

of grants. When referring to the focal point for recipient-initiated prior approval 

requests or actions by an awarding office that may require changes in the 

terms and conditions of award, reference will be to the GMO. 

budget periods The intervals of time (usually 12 months each) into which a project period is 

divided for budgetary and funding purposes. Funding of individual budget 

periods sometimes is referred to as “incremental funding.” 

carryover Unobligated Federal funds remaining at the end of any budget period that may 

be carried forward to another budget period to cover allowable costs of that 

budget period (whether as an offset or additional authorization). Obligated but 

unliquidated funds are not considered carryover. 

 B-2 
cash basis An accounting method in which revenue and expenses are recorded on the 

books of account when received and paid, respectively, without regard to the 

period in which they are earned or incurred; distinguished from accrual basis. 

cash contribution The recipient’s cash outlay, including the outlay of money contributed to the 

recipient by third parties. 

change of grantee A process in which the legal and administrative responsibility for a grantsupported project, program, or activity is transferred from one legal entity to 

another before the end of the project period. This action also may be termed 

“transfer of a grant.” 

clinical trial A biomedical or behavioral research study of human subjects that is designed 

to answer specific questions about biomedical or behavioral interventions 

(drugs, treatments, devices, or new ways of using known drugs, treatments, or 

devices). Clinical trials are used to determine whether new biomedical or 

behavioral interventions are safe, efficacious, and effective. Clinical trials of an 

experimental drug, treatment, device, or intervention may proceed through four 

phases: 

Phase I—testing in a small group of people (e.g., 20 to 80) to determine 

efficacy and evaluate safety (e.g., determine a safe dosage range and identify 

side effects). 

Phase II—study in a larger group of people (several hundred) to determine 

efficacy and further evaluate safety. 

Phase III—study to (1) determine efficacy in large groups of people (from 

several hundred to several thousand) by comparing the intervention to other 

standard or experimental interventions, (2) monitor adverse effects, and (3) 

collect information to allow safe use. 

Phase IV—studies done after the intervention has been marketed. These 

studies are designed to monitor the effectiveness of the approved intervention 

in the general population and to collect information about any adverse effects 

associated with widespread use. 

closeout The process by which an OPDIV determines whether all applicable 

administrative actions and all work required under the award have been 

completed by the recipient and the awarding office. 

cognizant agency The Federal agency that, on behalf of all Federal agencies, is responsible for 

reviewing, negotiating, and approving cost allocation plans, indirect cost rate 

and similar rates; monitoring non-Federal audit reports; conducting Federal 

audits as necessary; and resolving cross-cutting audit findings. The cognizant 

agency under applicable cost principles and under OMB Circular A-133 may be 

different for a given recipient. 

competition A process in which applications undergo an objective review; the applications 

are evaluated against established review criteria and scored and rated 

accordingly. 

competitive 

segment 

The initial project period recommended for support (up to 5 years) or each 

extension of a project period resulting from a competing continuation award. 

completion date The date on which all work under an award is completed or the date in the NoA 

(as amended) on which Federal sponsorship ends (i.e., the end of a project 

period). 

 B-3 
consortium 

agreement 

A formal agreement whereby a project is carried out by a recipient and one or 

more other organizations that are separate legal entities. Under the agreement, 

the recipient must perform a substantive role in the conduct of the planned 

project or program activity and not merely serve as a conduit of funds to 

another party or parties. Consortium agreements are considered subawards for 

purposes of this policy statement. 

contract under a 

grant 

A written agreement between a recipient and a third party to acquire 

commercial goods or services. 

construction A project to support the initial building or major A&R (i.e., large-scale 

modernization or permanent improvement) of a facility. 

consultant An individual who provides professional advice or services for a fee, but 

normally not as an employee of the engaging party. The term “consultant” also 

includes a firm that provides paid professional advice or services. 

cooperative 

agreement 

A financial assistance support mechanism used when there will be substantial 

Federal programmatic involvement. Substantial involvement means that OPDIV 

program staff will collaborate or participate in project or program activities as 

specified in the NoA. 

copyright A form of protection provided by the laws of the United States (Title 17, U.S. 

Code) to the authors of “original works of authorship,” including literary, 

dramatic, musical, artistic, and certain other intellectual works, including 

computer programs. This protection is available to both published and 

unpublished works. 

cost analysis The breakdown and verification of cost data proposed in an application budget, 

including evaluating specific elements of costs and examining them to 

determine the necessity, reasonableness, and allocability of the costs and their 

allowability pursuant to the applicable Federal cost principles and other 

governing requirements. 

cost sharing See “matching or cost sharing.” 

Departmental 

Appeals Board 

The administrative board responsible for resolving certain disputes arising 

under HHS assistance programs. The DAB provides an impartial adjudicatory 

hearing process for appealing certain final written decisions by GMOs. The 

DAB’s jurisdiction is specified in 45 CFR part 16, “Procedures for HHS Grant 

Appeals Board.” 

direct assistance A financial assistance support mechanism, which must be specifically 

authorized by statute, whereby goods or services are provided to recipients in 

lieu of cash. Direct assistance generally involves the assignment of Federal 

personnel or the provision of equipment or supplies such as vaccines. This type 

of financial assistance also is described as “non-monetary assistance.” 

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. 

domestic 

organization 

A public (including a State or other governmental agency) or private non-profit 

or for-profit organization that is located in the United States or its territories, is 

subject to U.S. laws, and assumes legal and financial accountability for funds 

awarded and for the performance of the grant-supported activities. 

 B-4 
Entity Identification 

Number 

A three-part coding scheme of 12 characters used in PMS to identify 

organizations and individuals. The first character identifies the recipient as an 

organization or an individual. The next 9 characters are the Internal Revenue 

Service tax number identification (TIN) for organizations or the social security 

number (SSN) for individuals. The last 2 characters are a suffix to provide 

distinction between organizational entities that are assigned a single EIN and 

those that have more than one EIN. The entities could be subsidiaries, 

divisions, branches, subdivisions, or other organizational groupings of a major 

organizational entity. 

equipment An article of tangible nonexpendable personal property that has a useful life of 

more than 1 year and an acquisition cost of $5,000 or more per unit or the 

capitalization threshold established by the recipient, whichever is less. 

excess property The property under the control of any OPDIV that, as determined by the head 

of the OPDIV or designee, is no longer required for its needs or the discharge 

of its responsibilities. 

exempt property Tangible personal property acquired, in whole or part, with Federal funds, 

where the OPDIV has statutory authority to vest title in the recipient without 

further obligation to the Federal government. 

expanded 

authorities 

Operating authorities provided to recipients that waive the requirement for 

OPDIV prior approval for specified actions. 

expenditure report For non-construction grants, generally the FSR; and for construction grants, the 

Outlay Report and Request for Reimbursement for Construction Programs. 

expiration date The date signifying the end of the current budget period, as indicated in the 

NoA, after which the recipient does not have authority to obligate grant funds. 

facilities and 

administrative costs 

See “indirect costs.” 

Federal cash 

transactions report 

A standard form, PMS 272, used to obtain disbursement information and to 

monitor cash advanced to recipients. 

Federal funds 

authorized 

The total amount of Federal funds obligated by the OPDIV for use by the 

recipient. This amount may include any authorized carryover of unobligated 

funds from one of the two preceding budget periods. 

Federal institution A Cabinet-level department or independent agency of the executive branch of 

the Federal government or any component organization of such a department 

or agency. 

Federal share The amount, generally expressed as a percentage of total project costs, of 

financial, property, and other direct assistance provided by the OPDIV, as 

specified in the NoA. 

federally recognized 

Indian tribal 

government 

The governing body of an Indian tribe, band, nation, or other organized group 

or community, including any Native village as defined in Section 3 of the Alaska 

Native Claims Settlement Act of 1971 (43 U.S.C. 1601 et seq.), that is certified 

by the Secretary of the Interior as eligible for the special programs and services 

provided through the Bureau of Indian Affairs and the Indian Health Service. 

fee An amount, in addition to actual, allowable costs, paid to an organization 

providing goods or services consistent with normal commercial practice. This 

payment also is referred to as “profit.” 

financial assistance Transfer of money, property in lieu of money, or other direct assistance to an 

eligible recipient to support or stimulate a public purpose authorized by statute. 

 B-5 
Financial Status 

Report 

A standard Federal form, SF 269 (long form) or SF 269A (short form), that 

shows the status of funds in non-construction programs and is used to monitor 

the financial progress of awards. The forms require information on total outlays 

(Federal and recipient shares) and unobligated balances of Federal funds. The 

long form is used for grants that involve program income. 

flow-down or 

flow-through 

provisions 

The rules governing whether, and how, grant terms apply to subawards or 

contracts under grants. 

foreign 

component 

The performance of any significant element or segment of a project outside of 

the United States, either by the recipient or by a researcher or other individual 

employed by a foreign organization, whether or not grant funds are expended. 

foreign 

organization 

An organization located in a country other than the United States and its 

territories that is subject to the laws of that country, regardless of the citizenship 

of the proposed PI/PD. 

for-profit 

organization 

An organization, institution, corporation, or other legal entity that is organized or 

operated for the profit or financial benefit of its shareholders or other owners. 

Such organizations also are referred to as “commercial organizations.” 

full-time 

appointment 

The number of days per week and/or months per year representing full-time 

effort at the applicant/recipient organization, as specified in organizational 

policy. The organization’s policy must be applied consistently, regardless of the 

source of support. 

funding opportunity 

announcement 

An OPDIV’s formally issued announcement of the availability of Federal funding 

through one of its financial assistance programs. The announcement invites 

applications and provides such information as eligibility and evaluation criteria, 

funding preferences/priorities, how to obtain application kits, and the 

submission deadline (see Part I). 

grant A financial assistance support mechanism providing money, property or other 

direct assistance in lieu of money, or both, to an eligible entity to carry out an 

approved project or activity in support of a public purpose and not the direct 

benefit of the government. A grant is used whenever the OPDIV anticipates no 

substantial programmatic involvement with the recipient during performance of 

the financially assisted activities. 

grant-supported 

project or activity 

Those activities specified or described in an application or in a subsequent 

submission that are approved by an OPDIV for funding, regardless of whether 

Federal funding constitutes all or only a portion of the financial support 

necessary to carry them out. 

high risk The term used to describe a recipient who is at risk of financial failure or failure 

to perform based on a history of poor performance or poor business practices, 

financial instability, or inadequate management systems. 

human subject A living individual about whom an investigator obtains data through intervention 

or interaction with the individual or obtains identifiable private information. 

Regulations governing the use of human subjects extend to use of human 

organs, tissues, and body fluids from identifiable individuals as human subjects 

and to graphic, written, or recorded information derived from such individuals. 

indirect costs Costs that are incurred by a recipient for common or joint objectives and cannot 

be identified specifically with a particular project or program. These costs also 

are known as “facilities and administrative costs.” 

 B-6 
institutional review 

board 

An administrative body whose purpose is to protect the rights and welfare of 

human subjects recruited to participate in research activities conducted under 

the auspices of the organization with which it is affiliated. The IRB has the 

authority to approve, require modifications in, or disapprove all research 

activities that fall within its jurisdiction. 

intangible property This term means property that ordinarily does not have physical existence. It 

includes, but is not limited to, copyrights for which assignments of rights are 

acquired under awards; patents and other intellectual property for which 

ownership is acquired under awards; loans, notes, and other debt instruments 

(even if considered tangible for other purposes); lease agreements; and stock 

and other instruments of property ownership. The term excludes copyrights, 

patents, and other intellectual property that are generated or developed, rather 

than acquired, under awards. 

international 

organization 

An organization that identifies itself as international or intergovernmental and 

has membership from, and represents the interests of, more than one country, 

without regard to whether the headquarters of the organization and location of 

the activity are inside or outside of the United States. 

invention Any discovery that is or may be patentable or otherwise protectable. The term 

“subject invention” means any invention of an awardee conceived or first 

actually reduced to practice in the performance of work under a funding 

agreement, i.e., contract, grant, or cooperative agreement. 

key personnel The PI/PD and other individuals who contribute to the programmatic 

development or execution of a project or program in a substantive, measurable 

way, whether or not they receive salaries or compensation under the grant. 

local government A county, municipality, city, town, township, local public authority (including any 

public and Indian housing agency), school district, special district, intra-State 

district, council of governments (whether or not incorporated under State law), 

any other regional or interstate government entity (such as regional planning 

agencies), or any agency or instrumentality of a local government. The term 

does not include institutions of higher education and hospitals. 

matching or cost 

sharing 

The value of third-party in-kind contributions and the portion of the costs of a 

federally assisted project or program not borne by the Federal government. 

Costs used to satisfy matching or cost-sharing requirements are subject to the 

same policies governing allowability as other costs under the approved budget. 

misconduct in 

science 

See “research misconduct.” 

monitoring A process in which a grant’s programmatic performance and business 

management performance are assessed by reviewing information gathered 

from various required reports, audits, site visits, and other sources. 

non-competing 

extension 

A limited period of time beyond the end of the project period, authorized by an 

OPDIV or a recipient under an expanded authority, needed to complete project 

activities. 

non-Federal share The portion of allowable project costs not borne by the Federal government. 

objective review An advisory review of discretionary grant applications conducted by unbiased 

reviewers with expertise in the programmatic area for which applications are 

submitted. 

obligations The amounts of orders placed, contracts and subawards, goods and services 

received, and similar transactions by a recipient during a budget period that will 

require payment during the same or a future budget period. 

 B-7 
outlays or 

expenditures 

The charges made to the federally sponsored project or program. They may be 

reported on a cash or accrual basis. 

patent A property right awarded by the Federal government whereby the government 

grants the right to exclude others from making, using, or selling the invention 

for a period of years. 

peer review A form of objective review, generally required by statute, in which the 

assessment of scientific or technical merit of applications is carried out by 

individuals with knowledge and expertise equivalent (peer) to that of the 

individuals whose applications for support they are reviewing. 

pre-award costs Costs incurred prior to the beginning date of the project period, in anticipation 

of an award and at the applicant’s own risk, for otherwise allowable costs. 

prior approval Written consent or issuance of an award by the OPDIV GMO in response to a 

written request from the recipient to incur a specific direct cost or take other 

action that requires such approval (as specified in Part II of the HHS GPS). If 

the costs or other actions are specifically identified in an application, approval 

of the application, and issuance of an award based thereon, constitutes such 

authorization. Prior approval for components of indirect costs must be obtained 

from the cognizant agency or as specified in the applicable cost principles. 

profit See “fee.” 

program income Gross income earned by a recipient that is directly generated by the grantsupported project, program, or activity or earned as a result of the award. 

progress report Periodic, usually annual, reports submitted by the recipient and used by the 

OPDIV to assess progress and, except for the final progress report, to 

determine whether to provide funding for the budget period subsequent to that 

covered by the report. 

project or program 

costs 

The total allowable costs incurred by a recipient (and the value of in-kind 

contributions made by third parties) in accomplishing the objectives of the 

award during the project period. 

project period The total time for which support of a project has been programmatically 

approved. The total project period comprises the initial competitive segment, 

any subsequent competitive segments resulting from a competing continuation 

award, and any non-competing extensions. 

real property Land, including land improvements, structures, and appurtenances, but not 

movable machinery and equipment. 

reasonable cost A cost whose nature or amount does not exceed that which would be incurred 

by a prudent person under the circumstances prevailing when the decision was 

made to incur the cost. 

recipient The organization or individual that receives a grant or cooperative agreement 

award from an OPDIV and is responsible and accountable for the use of the 

funds provided and for the performance of the grant-supported project or 

activity. The recipient is the entire legal entity even if a particular component is 

designated in the NoA. The term includes “grantee.” 

reimbursement A payment made to a recipient upon its request after it makes cash 

disbursements. Most reimbursement payments are processed through the 

Payment Management System (PMS), the Department’s centralized grants 

payment system. 

 B-8 
research A systematic, intensive study intended to increase knowledge or understanding 

of the subject studied, a systematic study specifically directed toward applying 

new knowledge to meet a recognized need, or a systematic application of 

knowledge to the production of useful materials, devices, and systems or 

methods, including design, development, and improvement of prototypes and 

new processes to meet specific requirements. Also termed “research and 

development.” 

research 

misconduct 

Fabrication, falsification, or plagiarism in proposing, performing, or reviewing 

research, or in reporting research results. Fabrication is making up data or 

results and recording or reporting them. Falsification is manipulating research 

materials, equipment, or processes, or changing or omitting data or results 

such that research is not accurately represented in the research record. 

Plagiarism is the appropriation of another person’s ideas, processes, results, or 

words without giving appropriate credit. The term does not include honest error 

or differences of opinion. 

research patient 

care 

Routine and ancillary services provided by hospitals to patients participating in 

research programs. The costs of these services are normally assigned to 

individual research projects through the development and application of 

research patient care rates or amounts (collectively referred to as “rates”). 

significant 

rebudgeting 

A threshold that is reached when expenditures in a single direct cost budget 

category deviate (increase or decrease) from the approved budget amount for 

that budget category for that budget period by a specified amount, usually more 

than 25 percent of the total costs awarded. Significant rebudgeting is one 

indicator of change in scope. 

small business 

concern 

A business that is independently owned and operated and not dominant in its 

field of operation; has its principal place of business in the United States and is 

organized for profit; is at least 51 percent owned or, in the case of a publicly 

owned business, at least 51 percent of its voting stock is owned by U.S. 

citizens or lawfully admitted permanent resident aliens; has, including its 

affiliates, not more than 500 employees; and meets other regulatory 

requirements established by the SBA at 13 CFR 121. 

State government The government of any State of the United States, the District of Columbia, the 

Commonwealth of Puerto Rico, any U.S. territory or possession, or any agency 

or instrumentality of a State exclusive of local governments. State institutions of 

higher education and State hospitals are not considered State governments for 

purposes of the HHS general administrative requirements for grants and the 

HHS GPS. 

stipend A payment made to an individual under a fellowship or training grant in 

accordance with established levels to provide for the individual’s living 

expenses during the period of training. A stipend is not considered 

compensation for the services expected of an employee. 

subaward Financial assistance in the form of money or property in lieu of money provided 

under an award by a recipient to an eligible subrecipient (or by an eligible 

subrecipient to a lower-tier subrecipient). The term includes financial assistance 

when provided by any legal agreement, even if the agreement is called a 

contract, but does not include either procurement of goods or services or, for 

purposes of this policy statement, any form of assistance other than grants and 

cooperative agreements. The term includes consortium agreements. 

subrecipient An entity that receives a subaward from a recipient or another subrecipient 

under an award of financial assistance and is accountable to the recipient or 

other subrecipient for the use of the Federal funds provided by the subaward. 

 B-9 
substantive 

programmatic work 

The primary project activities for which grant support is provided. 

supplies Personal property other than equipment, intangible property, and debt 

instruments. The category of “supplies” includes items that could be considered 

equipment, but do not meet the threshold definition. 

suspension Temporary withdrawal of a recipient’s authority to obligate grant funds, pending 

either corrective action by the recipient, as specified by the OPDIV, or a 

decision by the OPDIV to terminate the award. This meaning of the term 

“suspension” differs from that used in conjunction with the debarment and 

suspension process. 

tangible property Equipment, supplies, and any other property other than that defined as 

intangible property. It also does not include copyrights, patents, and other 

intellectual property that is generated or developed (rather than acquired) under 

an award. 

termination Permanent withdrawal by the OPDIV of a recipient’s authority to obligate 

previously awarded grant funds before that authority would otherwise expire, 

including the voluntary relinquishment of that authority by the recipient. 

terms and 

conditions of award 

All legal requirements imposed on a grant by the OPDIV, whether based on 

statute, regulation, policy, or other document referenced in the NoA, or 

specified by the NoA itself. In addition to general terms and conditions, the NoA 

may include other conditions that are considered necessary to attain the 

award’s objectives, facilitate post-award administration, conserve grant funds, 

or otherwise protect the Federal government’s interests. 

third-party in-kind 

contributions 

The value of non-cash contributions directly benefiting a grant-supported 

project or program that is provided by non-Federal third parties to the recipient, 

the subrecipient, or a cost-type contractor under the grant or subgrant without 

charge. In-kind contributions may be in the form of real property, equipment, 

supplies and other expendable property, and goods and services directly 

benefiting and specifically identifiable to the project or program. 

total project or 

program costs 

The total allowable costs (both direct and indirect) incurred by the recipient to 

carry out a grant-supported project or activity. Total project or program costs 

include costs charged to the award and costs borne by the recipient to satisfy a 

matching or cost-sharing requirement. 

unallowable cost A cost specified by law or regulation, Federal cost principles, or term and 

condition of award that may not be reimbursed under a grant or cooperative 

agreement 

unliquidated 

obligations 

The amount of obligations incurred by the recipient that has not been paid (for 

financial reports prepared on a cash basis) or the amount of obligations 

incurred by the recipient for which an outlay has not been recorded (for reports 

prepared on an accrual basis). 

unobligated balance The portion of the funds authorized by the Federal agency that has not been 

obligated by the recipient. 

vertebrate animal Any live animal having a backbone or spinal column used or intended for use in 

research, research training, experimentation, biological testing, or related 

purposes. 

withholding of 

payment 

An action taken by an OPDIV, after appropriate administrative procedures have 

been followed, that restricts a recipient’s ability to access its grant funds until 

the recipient takes corrective action required by the OPDIV. 

 B-10 
 B-11 

withholding of 

support 

A decision by an OPDIV not to make a non-competing continuation award 

within a previously approved project period. 

woman-owned 

business 

A business that is, at least, 51 percent owned, controlled, and operated by a 

woman or women. 
Index 

Page references containing an n refer to footnotes. 

Pages references preceded by B refer to definitions 

A 

Abbreviations list ..................................................................................................................................... A-1 

Abortion funding restriction............................................................................................................II-6, II-22 

Accelerated expenditures...............................................................................................................II-45, II-62 

Accessibility standards, facilities ............................................................................................................II-21 

Acknowledgment 

of Federal funding........................................................................................................................II-3, II-24 

of Federal support......................................................................................................................II-32, II-73 

Activation Notice, fellowship ...................................................................................................II-110, II-114 

Administration for Children and Families.................................................................................................. I-1 

Administration on Aging............................................................................................................................ I-1 

Administrative requirements .............................................................................................................. I-4, II-1 

definition...............................................................................................................B-1 

fellowships.......................................................................................................II-109 

Advances of grant funds, interest earned on............................................................................................II-64 

Advertising, costs ....................................................................................................................................II-31 

Advisory Council on Historic Preservation.............................................................................................. I-21 

Affiliated organization services, cost considerations ..............................................................................II-25 

Age Discrimination Act of 1975 .......................................................................................................II-3, II-8 

Agency for Healthcare Research and Quality ................................................................................ I-1, II-13n

Alcoholic beverages, costs ......................................................................................................................II-31 

Allocability test, allowability of costs and ..............................................................................................II-26 

allocable cost, definition..........................................................................................B-1 

Allowability of costs ..................................................................................................II-26, II-30 et seq., B-1 

financial system and..............................................................................................II-48 

matching or cost sharing..........................................................................................II-47 

Also see Cost considerations; specific types of grants, recipients

Alteration and renovation (A&R). Also see Construction grants 

allowability .........................................................................................................................................II-31 

definition...............................................................................................................................................B-2 

major A&R ...................................................................................II-31, II-33, II-102, II-103, II-118, B-4 

minor A&R ..................................................................................................................II-31,II-103, II-118 

prior-approval requirements ...............................................................................................................II-50 

public policy requirements .........................................................................................................II-4, II-21 

Animal welfare............................................................................................................. I-33, II-3, II-12, II-61 

Animals, costs .........................................................................................................................................II-32 

Appeals procedures 

adverse determinations and.................................................................................................................II-97 

alternative dispute resolution..............................................................................................................II-98 

Departmental Appeals Board............................................................................................ II-97, III-2, B-4 

Applicable credits....................................................................................................................................II-30 

Application 

budget................................................................................................................I-22 

definition...............................................................................................................................................B-2 

false, fictitious, or fraudulent information in......................................................................................... I-8 

 C-1 
types of applications .................................................................................................................I-15 et seq. 

Application process 

application forms ................................................................................................................................. I-17 

application receipt points and deadlines .............................................................................................. I-26 

application submission......................................................................................................................... I-26 

eligibility.............................................................................................................................................. I-11 

Grants.gov............................................................................................................................................ I-26 

Also see specific types of grants, recipients

Application review process 

disposition of applications ................................................................................................................... I-31 

objective review................................................................................................................I-30 et seq., B-7 

review criteria ...................................................................................................................................... I-30 

review responsibilities ........................................................................................................................... I-6 

peer review .................................................................................................................................. I-30, B-8 

use of application information ............................................................................................................. I-28 

Approved budget, definition......................................................................................................................B-2 

Architectural Barriers Act ...............................................................................................................II-4, II-21 

Assistant Secretary for Planning and Evaluation ....................................................................................... I-1 

Assurances 

animals........................................................................................................................... I-33, II-12, II-13 

civil rights .......................................................................................................................................... I-32 

definition.............................................................................................................................................B-2 

general...............................................................................................................................I-12, I-18, I-19 

human subjects....................................................................................................... I-33, II-9, II-10, II-11 

subrecipients .....................................................................................................................................II-81 

Audiovisual activities, allowability .........................................................................................................II-32 

Audit costs...............................................................................................................................................II-32 

Audit requirements ..................................................................................................................................II-90 

for-profit organizations...........................................................................................................II-90, II-124 

foreign organizations, international organizations, and domestic grants with 

foreign components.....................................................................................................II-90, II-117 

recipients, domestic, non-profit ..........................................................................................................II-90 

subawards (including consortium agreements)...................................................................................II-82 

Authorized organizational representative (AOR) role and responsibilities................................................I-6 

Award, definition.......................................................................................................................................B-2 

Award instruments, types of......................................................................................................................... ii 

Awarding office, definition .......................................................................................................................B-2 

B 

Bad debts, costs .......................................................................................................................................II-32 

Bayh-Dole Act of 1980 ......................................................................................................II-71, II-74 et seq. 

Also see Inventions and patents 

Bid and proposal costs.............................................................................................................................II-32 

Bonding, costs .........................................................................................................................................II-32 

Bonus payments ......................................................................................................................................II-41 

Books and journals, costs ........................................................................................................................II-32 

Budget 

changes in ...............................................................................................................................II-50, II-105 

approved budget, definition ..................................................................................................................B-2 

NoA and............................................................................................................................................... I-36 

significant rebudgeting .....................................................................................................II-55, II-57, B-9 

 C-2 
Budget periods 

about ................................................................................................................................I-15, I-35, I-36 

definition...............................................................................................................................................B-2 

Also see Funding 

Building acquisition 

costs................................................................................................................II-36 

prior-approval requirements....................................................................................II-51 

Business management review..........................................................................................I-32 

C 

Career awards 

eligibility.............................................................................................................................................. I-12 

facilities and administrative costs and ................................................................................................. I-24 

prior-approval requirements for retention of funds ............................................................................II-52 

Carryover of unobligated balances 

definition............................................................................................................B-2 

expanded authority and..........................................................................................II-60 

prior-approval of..................................................................................................II-52 

requests for.........................................................................................................II-58 

Cash requests................................................................................................................................... I-37, I-38 

CASHLINE/ACH..................................................................................................................................... I-38 

Catalog of Federal Domestic Assistance.................................................................................................... I-9 

Centers for Disease Control and Prevention...................................................I-2, I-3, II-6, II-9, II-13n, II-16 

Centers for Medicare and Medicaid Services............................................................................................. I-2 

Central Contractor Registration................................................................................................................ I-26 

Certificates of confidentiality..........................................................................................................II-3, II-19 

Change of grantee organization 

definition............................................................................................................B-3 

prior-approval for.................................................................................II-51, II-53 et seq. 

foreign or international organizations and.....................................................................I-119 

relinquishing statement.................................................................................II-53, II-54, II-55, II-83, II-84 

Changes in project and budget 

See Prior approval; Expanded authorities 

Child-care costs .......................................................................................................................................II-32 

Children 

human subjects treatment.................................................................................II-10, II-12 

inclusion as subjects in clinical research ............................................................................................. I-19 

Pro-Children Act........................................................................................................................II-5, II-23 

toys and nursery items, costs ..............................................................................................................II-43 

Citizenship requirements.......................................................................................................................... I-12 

Civil False Claims Act ............................................................................................................................... I-8 

Civil rights 

foreign organizations and......................................................................................II-117 

Office for...........................................................................................................III-2 

pre-award requirements............................................................................................I-32 

Civil Rights Act of 1964 .................................................................................................................II-3, II-8 

Also see Limited English Proficiency 

Clean Air and Clean Water Act...............................................................................................................II-21 

 C-3 
Clinical research 

drugs used in, costs.............................................................................................................................II-34 

inclusion of children as subjects in...................................................................................................... I-19 

inclusion of women and minorities as subjects in ...............................................................................I-19 

investigational new drug applications and..........................................................................................II-19 

recombinant DNA and human gene transfer ......................................................................................II-16 

transplantation of human fetal tissue ..................................................................................................II-18 

Cloning. See Human embryonic stem cell research and cloning 

Closeout 

about...............................................................................................................II-94 

definition............................................................................................................B-3 

reporting requirements.....................................................................................II-94 et seq.

Cognizant agency ..................................................................................................................B-3, II-40, II-50 

Communications, costs............................................................................................................................II-33 

Compensation 

consultants ..........................................................................................................................................II-33 

Federal employees .......................................................................................................II-35, II-123 et seq. 

fringe benefits and ..............................................................................................................................II-35 

general .....................................................................................................................................II-40 et seq. 

fellows ..............................................................................................................................................II-113 

sabbatical leave and............................................................................................................................II-40 

students.....................................................................................................................................II-35, II-42 

Also see Salaries and wages 

Competing continuation application 

additional funding and.........................................................................................................................II-56 

description.............................................................................................................................................I-16 

pre-award costs and.........................................................................................................II-38, II-51, II-60 

reporting in relation to................................................................................................................I-88, II-95 

Competitive segment, definition ...............................................................................................................B-3 

Concurrent benefits ...............................................................................................................................II-113 

Conference grants 

about ...................................................................................................................................................II-98 

acknowledgment of support and disclaimer .......................................................................................II-99 

allowable costs...................................................................................................II-35, II-37, II-100 et seq. 

funding................................................................................................................................................II-99 

intellectual property, use of ...................................................................................................II-101 et seq. 

representation requirements................................................................................................................II-99 

unallowable costs................................................................................................. I-23, II-31, II-35, II-101 

use of logos.........................................................................................................................................II-99 

Confidentiality 

certificates of ..............................................................................................................................II-3, II-19 

of patient/client records ..............................................................................................................II-4, II-22 

of subjects’ identity.....................................................................................................................II-5, II-12 

Conflict of interest, 

consultant payments and......................................................................................................................II-33 

financial............................................................................................................................II-4, II-14 et seq. 

financial and SBIR/STTR Phase I.....................................................................................................II-130 

financial and subawards.......................................................................................................................II-82 

payments to or on behalf of Federal employees....................................................................II-123, II-124

Conformance test, allowability of costs and............................................................................................II-27 

Consistency test, allowability of costs and..............................................................................................II-27 

 C-4 
Consortium agreement 

allowability of.....................................................................................................................................II-42 

applicability of HHS GPS to....................................................................................................................iii 

definition...............................................................................................................................................B-4 

recipient responsibilities for...............................................................I-14, II-14, II-15, II-78, II-81 et seq. 

SBIR/STTR and................................................................................................................................II-129 

Also see Subawards; Subrecipients 

Construction. Also see Construction grants 

allowability of costs............................................................................................................................II-33 

definition...............................................................................................................................................B-4 

Construction grants 

about ..............................................................................................................................................II-102 

allowable costs and activities.......................................................................................II-34, II-103 et seq.

equal employment opportunity, labor standards, and other requirements .............................II-106 et seq.

funding..............................................................................................................................................II-103 

prior-approval requirements ...............................................................................II-52, II-53, II-55, II-105 

procurement requirements for services under...................................................................................II-106 

public policy requirements ................................................................. I-20, I-21 et seq., II-3 et seq., II-21 

reporting under............................................................................................................................II-88, B-5 

unallowable costs and activities...............................................................................................I-23, II-105 

use and disposition of facility .................................................................................................II-69, II-109 

Consultant, definition ................................................................................................................................B-4 

Consultant services, costs..................................................................................................II-33–II-34, II-100 

Consumer/provider boards, costs of participation...................................................................................II-34 

Contingency funds, costs.............................................................................................................II-34, II-104 

Contract under a grant 

costs ................................................................................................................................................II-42 

definition...............................................................................................................................................B-4 

flowdown of requirements.............................................................................................. iii, II-2, II-3, B-6 

prior-approval requirements ................................................................................II-59, II-60, II-79 et seq. 

requirements for written agreement....................................................................................................II-79 

Contract Work Hours and Safety Standards Act...................................................................................II-107 

Controlled substances......................................................................................................................II-4, II-20 

Cooperative agreement 

definition.......................................................................................................................................... ii, B-4 

usage .................................................................................................................................................... iii 

Copyright. Also see intangible property 

definition...............................................................................................................................................B-4 

conference grants and .......................................................................................................................II-101 

fellowships..........................................................................................................................................II-74 

publications.........................................................................................................................................II-73 

data, rights in ......................................................................................................................................II-72 

royalties and licensing fees/program income from........................................................II-62 et seq., II-74 

SBIR/STTR grants and.....................................................................................................................II-131 

Cost analysis..................................................................................................................................... I-33, B-4 

Cost considerations 

accelerated expenditures...........................................................................................................II-45, II-62 

affiliated organization services ...........................................................................................................II-46 

allocation of costs ...............................................................................................................................II-45 

allowability of costs..................................................................................................................II-26, II-30 

applicable credits ................................................................................................................................II-30 

 C-5 
cost overruns.......................................................................................................................................II-45 

cost principles .....................................................................................................................................II-25 

cost transfers .............................................................................................................................II-44, II-62 

delayed expenditures ................................................................................................................II-45, II-62 

direct costs ..........................................................................................................................................II-27 

indirect costs, reimbursement of..............................................................................................II-27 et seq. 

selected items of cost (Exhibit)................................................................................................II-30 et seq. 

Also see specific types of grants, recipients

Cost principles for 

educational institutions (OMB Circular A-21)..................................II-25, II-28, II-29, II-35, II-41, II-42 

for-profit organizations (48 CFR subpart 31.2).................................................................................II-125 

hospitals (45 CFR part 74, Appendix E).................................................................................II-25, II-125 

non-profit institutions (OMB Circular A-122)..........................................II-25, II-25n; II-32, II-34, II-40 

State, local, and Indian tribal governments 

(OMB Circular A-87).................................................I-24, II-25, II-25n, II-27, II-27n, II-34, II-121 

Cost sharing. See Matching or cost sharing 

Cost transfers.................................................................................................................................II-44, II-62 

Criminal False Claims Act ......................................................................................................................... I-8 

Customs and import duties, costs ............................................................................................................II-34 

D 

Data. See Copyright; Research data and results 

Deadlines. See Application process 

Debarment.............................................................................................................................I-13 et seq., II-94 

drug-free workplace and.......................................................................................................................II-22 

foreign organizations..........................................................................................................................II-117 

labor standards and.............................................................................................................................II-108 

research misconduct and.......................................................................................................................II-14 

Also see Suspension and debarment 

Debt 

bad debts, costs ...................................................................................................................................II-32 

delinquency on Federal debt................................................................................................................ I-14 

collection as enforcement action.........................................................................................................II-96 

instruments..........................................................................................................................................II-68 

Degree requirements..............................................................................................................................II-110 

Delayed expenditures ....................................................................................................................II-45, II-62 

Depreciation or use allowances...............................................................................................................II-34 

land or building acquisition and..........................................................................................................II-36 

rental or lease of facilities or equipment and.......................................................................................II-39 

valuation of donated supplies, equipment, space, or land....................................................................II-48 

Direct costs, definition ....................................................................................................................II-27, B-4 

Discretionary grants contrasted with mandatory grants ............................................................................. I-3 

Domestic conference, definition..............................................................................................................II-98 

Domestic organization 

civil rights assurance and..................................................................................................................... I-32 

definition...............................................................................................................................................B-4 

payment for fellows at ......................................................................................................................II-110 

prior-approval requirements for foreign component added to grant.......................................II-51, II-119 

Donor costs..............................................................................................................................................II-34 

Drug-free workplace........................................................................................................................II-4, II-22 

foreign organizations and..................................................................................................................II-118 

 C-6 
Drugs 

costs.....................................................................................................................................................II-34 

investigational new drug applications.................................................................................................II-19 

controlled substances and Drug Enforcement Administration............................................................II-20 

Dues or membership fees 

conference grants and........................................................................................................................II-101 

costs of.................................................................................................................................................II-34 

DUNS number ...............................................................................................................................I-26, II-83 

E 

Education Amendments of 1972, Title IX.........................................................................................II-4, II-8 

Educational institutions, cost principles for ............................................................................................II-25 

Educational loans or GI bill...................................................................................................................II-113 

Eligibility 

citizenship and......................................................................................................................................I-11 

general.......................................................................................................................................I-11 et seq. 

grants to Federal institutions.............................................................................................................II-120 

matching or cost sharing and ............................................................................................................... I-24 

non-profit organizations........................................................................................................................I-11 

SBIR and STTR....................................................................................................................II-127, II-128 

voluntary exclusion from..................................................................................................................... I-13 

Enforcement actions 

about ...................................................................................................................................................II-92 

debt collection.....................................................................................................................................II-96 

modification of award terms...............................................................................................................II-92 

suspension or termination ...................................................................................................................II-93 

withholding a non-competing continuation award .............................................................................II-93 

Entertainment costs .................................................................................................................................II-34 

Entity Identification Number (EIN) ................................................................................................II-83, B-5 

Environmental impact 

construction grants and.............................................................................................................I-19 et seq. 

costs related to ........................................................................................................................II-37, II-105 

Equal employment opportunity requirements, construction grants.......................................................II-106 

Equipment. Also see Alteration and renovation; Property; Supplies 

accountability....................................................................................................................................II-121 

change of grantee and ..............................................................................................................II-54 et seq. 

costs.........................................................................................II-35, II-100, II-101, II-102, II-103, II-105 

definition...............................................................................................................................................B-5 

insurance on........................................................................................................................................II-36 

management system for ...........................................................................................................II-66 et seq. 

prior-approval for purchase of ........................................................................................II-51, II-56, II-60 

rental, costs of...........................................................................................................................II-39, II-79 

sale of property acquired and proceeds from sale.................................................II-63, II-64, II-67, II-69 

tax on purchase of, allowability..........................................................................................................II-42 

trailers and modular units ...................................................................................................................II-43 

valuation of donated ................................................................................................................II-47 et seq. 

Executive Order 12372............................................................................................................................. I-27 

Exempt property ..............................................................................................................................II-66, B-5 

 C-7 
Expanded authorities 

about ...................................................................................................................................................II-59 

carryover of unobligated balances ......................................................................................................II-60 

cost-related prior approvals ................................................................................................................II-60 

definition...............................................................................................................................................B-5 

extension of final budget period of project period..............................................................................II-60 

foreign organizations and .................................................................................................................II-119 

pre-award costs ...................................................................................................................................II-60 

transfer of performance to third party.................................................................................................II-60 

Expenditures 

accelerated and delayed ............................................................................................................II-45, II-62 

financial management requirements and .................................................................................II-61 et seq. 

outlays or, definition.............................................................................................................................B-8 

reports of......................................................................................................................II-86 et seq., II-102 

Schedule of Expenditures of Federal Awards.....................................................................................II-91 

Extensions 

additional OPDIV funding and.................................................................................................II-51, II-56 

final budget period without additional OPDIV funding .................................................II-51, II-57, II-60 

F 

Facilities acquisition, alteration and renovation, and construction. See Alteration and renovation; Building 

acquisition; Construction; Construction grants 

Facilities and administrative costs. See Indirect costs 

Federal employees 

copyright and ...................................................................................................................................II-101 

inventions and...................................................................................................................................II-122 

payments to/on behalf of .................................................................................II-35, II-121, II-122 et seq. 

Federal institution, grants to 

allowable costs...................................................................................................................................II-121 

definition................................................................................................................................................B-5 

eligibility and certification.................................................................................................................II-120 

equipment accountability...................................................................................................................II-121 

inventions...........................................................................................................................................II-122 

payment..............................................................................................................................................II-120 

procurement requirements..................................................................................................................II-122 

reporting requirements.......................................................................................................................II-122 

Fee (or profit)...................................................................................................I-36, II-30, II-125, II-130, B-5 

Fellowships (Ruth L. Kirschstein National Research Service Awards) 

Activation Notice..............................................................................................................................II-114 

allowable costs.......................................................................................................................II-111 et seq. 

award notice......................................................................................................................................II-110 

changes in project/activity ................................................................................................................II-115 

compensation ....................................................................................................................................II-113 

concurrent benefits............................................................................................................................II-113 

consecutive support ..........................................................................................................................II-116 

copyright of material.........................................................................................................................II-116 

degree requirements..........................................................................................................................II-110 

disposition of professional fees ........................................................................................................II-117 

educational loans or GI bill...............................................................................................................II-113 

eligibility.............................................................................................................................................. I-12 

employee benefits .............................................................................................................................II-112 

 C-8 
Federal laboratories, individuals training at .....................................................................................II-110 

financial reporting.............................................................................................................................II-115 

Form 1099.........................................................................................................................................II-114 

indirect costs ........................................................................................................................................ I-23 

initiation of support...........................................................................................................................II-110 

institutional allowance.............................................................II-110, II-111 et seq.II-115, II-116, II-121 

inventions and patents.......................................................................................................................II-116 

Payback Agreement..............................................................................................................II-110, II-115 

payment ............................................................................................................................................II-110 

period of support...............................................................................................................................II-110 

professional fees ...............................................................................................................................II-117 

progress reports.................................................................................................................................II-115 

reporting requirements......................................................................................................................II-114 

stipend supplementation ...................................................................................................................II-112 

stipends, taxability of........................................................................................................................II-113 

Termination Notice...........................................................................................................................II-115 

termination of award.........................................................................................................................II-116 

transfers ............................................................................................................................................II-115 

travel to foreign training sites ...........................................................................................................II-112 

tuition and fees...................................................................................................................................II-112 

Final Invention Statement and Certification............................................................................................II-96 

Financial conflict of interest 

general.......................................................................................................................II-4, II-7, II-14 et seq. 

SBIR/STTR and.................................................................................................................................II-130 

subawards and......................................................................................................................................II-82 

Financial management system......................................................................................................II-61 et seq. 

Financial reporting 

Financial Status Report..........................................................................................II-86 et seq., II-94, B-6 

conference grants..............................................................................................................................II-102 

fellowships........................................................................................................................................II-115 

foreign organizations ........................................................................................................................II-118 

Fines and penalties ..................................................................................................................................II-35 

Flood Disaster Protection Act of 1973, flood insurance and...........................................................II-4, II-21 

Food and Drug Administration........................................................................... I-2, I-3, II-13n, II-18 et seq.

For-profit organization, grants to 

about.................................................................................................................................................II-124 

allowable costs..................................................................................................................................II-125 

audit ..............................................................................................................................................II-125 

definition...............................................................................................................................................B-6 

intellectual property..........................................................................................................................II-125 

profit or fee under .............................................................................................................................II-125 

Also see SBIR and STTR programs 

Foreign component....................................................................................................................................B-6 

Foreign countries, activities in.............................................................................................II-3, II-24, II-101 

Foreign organization..................................................................................................................................B-6 

Also see Grants to foreign organizations, international organizations, and domestic grants with foreign 

components 

Freedom of Information Act (FOIA)........................................................................................................ I-29 

Fringe benefits, costs.........................................................................................................II-35, II-49, II-123 

Full-time appointment ...............................................................................................................................B-6 

 C-9 
Funding 

acknowledgment of Federal funding/support ...................................................................II-3, II-24, II-99 

availability of information about ......................................................................................................... I-10 

budget period and project period ..............................................................................................I-35 et seq.

fellowships........................................................................................................................................II-110 

conference grants................................................................................................................................II-99 

construction grants............................................................................................................................II-103 

grants to foreign organizations, international organizations, and domestic grants with 

foreign components...............................................................................................................II-118 

needing for additional...............................................................................................................II-51, II-56 

NoA and............................................................................................................................................... I-34 

prior-approval requirements .............................................................................................................II-105 

Funding opportunity announcement 

about..............................................................................................................................................I-10, B-6 

EO 12372..............................................................................................................................................I-27 

matching or cost sharing 

review criteria.......................................................................................................................................I-31 

Fundraising costs.....................................................................................................................................II-35 

G 

GI Bill. See Educational loans or GI bill 

Grant 

definition...............................................................................................................................................B-6 

usage....................................................................................................................................................... iii 

Grant appeals procedures. See Appeals procedures 

Grant-supported project or activity ...........................................................................................................B-6 

Grantee. See Recipient 

Grants.gov 

Grants.gov FIND............................................................................................................................I-9, I-10 

Grants.gov APPLY......................................................................................................................I-17, I-26 

Grants Management Officer (GMO) role and responsibilities....................................................................I-5 

Grants Management Specialist (GMS) role and responsibilities............................................................... .I-5

Grants to foreign institutions, international organizations, and domestic grants with foreign components 

about ..............................................................................................................................................II-117 

allowable costs..................................................................................................................................II-118 

audit ..............................................................................................................................................II-119 

eligibility...........................................................................................................................................II-120 

indirect costs ........................................................................................................................................ I-24 

funding..............................................................................................................................................II-118 

payment ............................................................................................................................................II-118 

prior-approval requirements .............................................................................................................II-119 

public policy and requirements.........................................................................................................II-117 

subawards .........................................................................................................................................II-119 

H 

Handicapped individuals 

facility accessibility standards ............................................................................................................II-21 

Rehabilitation Act of 1973....................................................................................................................II-8 

Hatch Act...........................................................................................................................................II-4, II-8 

Hazardous waste disposal, costs..............................................................................................................II-35 

 C-10 
Health and Human Services, Department of (HHS) 

points of contact....................................................................................................................... III-1 et seq. 

roles and responsibilities........................................................................................................................ I-6 

Health and safety standards and regulations............................................................................................II-23 

Health insurance for fellows..................................................................................................................II-112 

Also see Institutional allowance for fellowships 

Health Insurance Portability and Accountability Act (HIPAA)......................................................II-4, II-22 

Health Resources and Services Administration.............................................................................. I-2, II-13n

Historic properties and archeological sites 

allowable costs.........................................................................................................................II-34, II-104 

protection of.......................................................................................................................I-21 et seq., II-4 

Honoraria.....................................................................................................................................II-35, II-101 

Hospitals 

allowable costs.................................................................................................................II-36, II-37, II-40 

cost principles..........................................................................................................................II-25, II-125 

Also see Research patient care costs 

Human embryonic stem cell research and cloning..........................................................................II-4, II-16 

Human fetal tissue 

research on...................................................................................................................................II-6, II-17 

transplantation of.................................................................................................................................II-18 

Human gene transfer research .........................................................................................................II-5, II-16 

Human Research Protections, Office for...............................................................I-6, I-33, II-9 et seq., III-1 

Human subjects 

definition...............................................................................................................................................B-6 

grants to for-profit organizations and ...............................................................................................II-125 

protection of.......................................................................................................................II-5, II-9 et seq. 

I 

Incentive payments, costs..............................................................................................................II-35, II-41 

Inclusiveness in research design, requirements for .................................................................................. I-19 

Indemnification of third parties.....................................................................................................II-35, II-51 

Independent research and development costs......................................................II-36, II-125, II-130, II-131 

Indian Health Service .............................................................................................................. I-2, I-3, II-120 

Indian tribal governments 

administrative requirements for..............................................................................................................I-4 

allowable costs and...........................................................................................................I-24, II-37, II-40 

cost principles for................................................................................................................................II-35 

Executive order 12372 and...................................................................................................................I-27 

federally recognized, definition.............................................................................................................B-5 

interest accountability..........................................................................................................................II-64 

Indirect costs 

about..................................................................................................................I-23, I-24, I-36, I-37, II-27 

definition...............................................................................................................................................B-6 

conference grants..................................................................................................................... I-23, II-101 

construction grants............................................................................................................................... I-23 

Federal institutions................................................................................................................... I-23, II-121 

foreign and international organizations ................................................................................... I-24, II-119 

fellowships........................................................................................................................................... I-23 

prior approval .....................................................................................................................................II-50 

reimbursement .........................................................................................................................II-27 et seq.

SBIR and STTR programs.....................................................................................................II-130 et seq.

 C-11 
training awards..................................................................................................................................... I-24 

Information availability 

access to research data....................................................................................... II-72 et seq., II-77 et seq. 

Freedom of Information Act................................................................................................................ I-28 

Privacy Act and.................................................................................................................................... I-30 

Information sources, general ...................................................................................................................... I-9 

Initiation of support, fellowships...........................................................................................................II-110 

In-kind contributions. See Third-party in-kind contributions 

Institutional allowance, fellowships ...........................................................................................II-111 et seq.

Institutional Animal Care and Use Committee (IACUC) ............................................. I-19, I-33, II-3, II-12 

Institutional Review Board (IRB) 

financial conflict of interest and .........................................................................................................II-15 

human subjects protection and ...........................................................................................................II-11 

just-in-time procedures and ................................................................................................................. I-33 

Insurance 

construction grants............................................................................................................................II-104 

costs ................................................................................................................................................II-36 

flood insurance............................................................................................................................II-4, II-21 

health insurance ................................................................................................................................II-112 

real property........................................................................................................................................II-70 

Intangible property ....................................................................................................................................B-7 

Intellectual property 

conference grants..............................................................................................................................II-101 

fellowships........................................................................................................................................II-116 

for-profit organizations.....................................................................................................................II-125 

Federal institutions............................................................................................................................II-122 

general .....................................................................................................................................II-71 et seq. 

SBIR and STTR programs................................................................................................................II-131 

subawards and.....................................................................................................................................II-82 

Also see Intangible property 

Interest 

costs ................................................................................................................................................II-36 

earned on advances of grant funds......................................................................................................II-64 

International conference, definition.........................................................................................................II-98 

International organization..........................................................................................................................B-7 

Also see Grants to foreign organizations, international organizations, and domestic grants with foreign 

components 

Inventions and patents. Also see Bayh-Dole Act of 1980 

costs ................................................................................................................................................II-36 

invention reporting compliance responsibilities (exhibit) .......................................................II-75 et seq. 

fellowships........................................................................................................................................II-116 

Final Invention Statement and Certification...................................................................II-53, II-77, II-96 

royalties and licensing fees from ........................................................................................................II-74 

Investigational new drug (INDs) applications/investigational device exceptions (IDEs).....II-5, II-18, II-19 

J 

Just-in-time procedures, in pre-award process ........................................................................I-19, I-32, I-33 

 C-12 
K 

Key personnel 

definition................................................................................................................................................B-7 

prior approval...........................................................................................................II-7, II-14, II-51, II-56 

L 

Labor standards, construction grants.....................................................................................................II-107 

Laboratory Animal Welfare, Office of (OLAW) ................................................................ II-12, II-13, III-1 

Land acquisition, costs ................................................................................................................II-36, II-105 

Leave costs ....................................................................................................................................II-36, II-40 

Legal services, costs ................................................................................................................................II-36 

Letters of intent ........................................................................................................................................ I-16 

Library services, costs .............................................................................................................................II-36 

Licensing 

costs ................................................................................................................................................II-36 

fees from copyrights, inventions, and patents.....................................................................................II-74 

Limited English proficiency, nondiscrimination.............................................................................II-5, II-24 

Liquidated damages provisions, construction grants.............................................................................II-108 

Lobbying 

appropriated funds and ........................................................................................................................ I-15 

certification.......................................................................................................................................... I-15 

costs ................................................................................................................................................II-36 

disclosure statement............................................................................................................................II-86 

M 

Management systems and procedures 

assessment in pre-award process ......................................................................................................... I-32 

financial management system..................................................................................................II-61 et seq.

procurement system.................................................................................................................II-78 et seq. 

property management system .................................................................................................II-65 et seq. 

Matching or cost sharing 

about.................................................................................................................................I-24 et seq., II-47 

definition...............................................................................................................................................B-7 

program income and .................................................................................................................II-49, II-63 

valuation of contributions........................................................................................................II-47 et seq. 

Meals, costs .................................................................................................................................II-37, II-100 

Membership fees. See Dues or membership fees 

Minorities 

conferences and representation in.......................................................................................................II-99 

contracting with minority-owned firms for goods and services .........................................................II-80 

inclusion as subjects in clinical research ............................................................................................. I-19 

Modernization ...................................................................................................................I-33, II-102 et seq. 

Also see Construction 

Monitoring........................................................................................................................................II-85, B-7 

Moving, costs. See Recruitment costs; Relocation costs; Transportation of property 

Multiple Project Assurances (MPAs)..................................................................................................II-110n

 C-13 
N 

National Environmental Policy Act (NEPA).............................................................. I-20, II-5, II-37, II-105

National External Audit Review Center..................................................................................................II-91 

National Historic Preservation Act..................................................................I-21 et seq., II-4, II-32, II-104 

National Institutes of Health...................................................................................... ii, I-2, I-3, II-6n, II-13n

National Register of Historic Places............................................................................................... I-21, II-31 

New application........................................................................................................................................ I-15 

NIH Guidelines for Research Involving Recombinant 

DNA Molecules............................................................................................................II-5, II-9, II-16 

Non-competing continuation 

application..........................................................................................................................I-16, I-36, II-88 

award.........................................................................................I-36, II-38, II-86, II-88, II-89, II-93, II-97 

Also see Withholding of support 

Non-Competing Grant Progress Report (PHS 2590) 

See Non-competing continuation application; Progress report 

Non-profit institutions, cost principles for ..............................................................................................II-25 

Nonexempt property, administrative requirements .......................................................................II-66, II-67 

Non-segregated facilities requirement, construction grants ..................................................................II-107 

Notice of Award (NoA) 

about ......................................................................................................................................I-34 et seq. 

acceptance............................................................................................................................................ I-35 

budget and funding .............................................................................................................................. I-36 

budget period and project period ..............................................................................................I-35 et seq. 

fellowship .........................................................................................................................................II-110 

terms and conditions...........................................................................................................I-34, I-35, I-37 

Notice of Federal Interest ............................................................................................................II-70, II-104 

Nursery items, costs ................................................................................................................................II-43 

O 

Objective review..........................................................................................................I-30 et seq., II-54, B-7 

Office of the Inspector General ...............................................................................................I-7, II-92, III-1 

Office of Management and Budget (OMB) Circulars 

A-21...................................................................................................II-25, II-28, II-29, II-35, II-41, II-42 

A-87........................................................................................................................I-24, II-25, II-27, II-34 

A-102......................................................................................................................................................I-4 

A-110......................................................................................................................................................I-4 

A-122.....................................................................................................................II-25, II-32, II-34, II-40 

A-133.....................................................................II-32, II-90 et seq., II-119, II-120, II-125 et seq., III-1 

Office of Public Health and Science .................................................................................... I-3, II-6n, II-13n

Order of precedence ..................................................................................................................................II-1 

Overtime. See Salaries and wages 

P 

Paperwork Reduction Act......................................................................................................I-8, II-84 et seq.

Patents. See Inventions and patents 

Patient records, confidentiality of....................................................................................................II-4, II-22 

PATRIOT Act....................................................................................................................................II-6, II-9 

Payback Agreement, fellowships...........................................................................................................II-115 

 C-14 
Payment 

about ......................................................................................................................................I-37 et seq. 

cash requests ........................................................................................................................................ I-38 

CASHLINE/ACH................................................................................................................................ I-38 

Federal institutions............................................................................................................................II-121 

fellowships........................................................................................................................................II-110 

foreign institutions............................................................................................................................II-118 

interest earned on advances of grant funds.........................................................................................II-64 

reimbursement .................................................................................................................... I-37, I-38, B-8 

SMARTLINK II/ACH......................................................................................................................... I-38 

Payroll distribution.......................................................................................................................II-40 et seq.

Peer review. See Objective review 

Pension plan costs ...................................................................................................................................II-37 

PHS Policy on Humane Care and Use of Laboratory Animals ........................................... I-33, II-12, II-31 

Physical destruction insurance, real property..............................................................................II-70, II-104 

Pre-applications........................................................................................................................................ I-16 

Pre-award activities 

cost analysis................................................................................................................................. I-33, B-4 

just-in-time procedures ............................................................................................................... I-19, I-33 

management systems assessment......................................................................................................... I-33 

Pre-award costs.....................................................................................................................II-38, II-104, B-7 

prior approval and......................................................................................................................II-51, II-60 

Preservation of Open Competition and Government Neutrality toward Government Contractors’ Labor 

Relations on Federal and Federally Funded Construction Projects (EO 13202) .......................II-107 

Principal Investigator (PI)/Program or Project Director 

change in status and prior approval ....................................................................................................II-56 

roles and responsibilities........................................................................................................................ I-6 

Principles for Determining Costs Applicable to Research and Development under Grants and Contracts 

with Hospitals..............................................................................................................................II-25 

Prior-approval requirements 

about .....................................................................................................................................II-49 et seq. 

additional funding...............................................................................................................................II-56 

alteration and renovation ....................................................................................................................II-31 

application approval and...........................................................................................................II-30, II-49 

capital expenditures ............................................................................................................................II-60 

carryover of unobligated balances ......................................................................................................II-52 

change in grantee organizational status ....................................................................................II-53–II-55 

change in scope...................................................................................................................................II-55 

change of grantee organization................................................................................................II-53 et seq.

changes in status of PI/PD and key personnel ....................................................................................II-56 

conference grants and .........................................................................................................................II-99 

construction grants.....................................................................................................II-105 et seq., II-108 

definition...............................................................................................................................................B-8 

expanded authorities ........................................................................................................II-59 et seq., B-5 

extension of project period .......................................................................................................II-57, II-60 

foreign grants and .............................................................................................................................II-119 

OPDIV prior approval, summary of actions requiring (exhibit)..............................................II-50 et seq. 

pre-award costs .........................................................................................................................II-51, II-60 

prior approval, definition ..............................................................................................II-50, II-58 

requests for .........................................................................................................................................II-58 

research patient care .................................................................................................................II-39, II-51 

 C-15 
significant rebudgeting .............................................................................................................II-55, II-57 

transfer of substantive programmatic work ........................................................................................II-57 

Also see Cost considerations 

Privacy Act............................................................................................................................................... I-30 

Pro-Children Act .............................................................................................................................II-5, II-23 

Procurement requirements 

construction grants............................................................................................................................II-106 

for grants to Federal institutions .......................................................................................................II-122 

system standards .................................................................................................................................II-78 

Professional fees, disposition of fellowships........................................................................ II-117

Profit. See Fee 

Program Director. See Principal Investigator/Program or Project Director 

Program Fraud and Civil Remedies Act..................................................................................................... I-8 

Program income 

accountability and use of .........................................................................................................II-62 et seq. 

definition...............................................................................................................................................B-8 

grants to for-profit organizations ........................................................................................................II-64 

reporting..............................................................................................................................................II-64 

Project Officer/Program Official (PO) role and responsibilities ................................................................I-5 

Progress reports 

conference grants..............................................................................................................................II-102 

definition...............................................................................................................................................B-8 

Federal institutions............................................................................................................................II-122 

fellowships........................................................................................................................................II-115 

final progress report............................................................................................................................II-95 

requirements .................................................................................................................... I-36, II-86, II-88 

Project Director. See Principal Investigator/Program or Project Director 

Project period ............................................................................................................... I-15, I-35 et seq., B-8 

extensions of..............................................................................................................................II-57, II-60 

conference grants.................................................................................................................................II-99 

construction grants.............................................................................................................................II-103 

Property management requirements .............................................................................................II-65 et seq. 

Public disclosure 

conference materials .........................................................................................................................II-102 

environmental impact ......................................................................................................................... I-20 

intellectual property..........................................................................................................................II-101 

Public Health Security and Bioterrorism Preparedness and Response Act.......................................II-5, II-9 

Public policy requirements 

about ......................................................................................................................................... I-18, II-2 

determining applicability/inclusion (exhibit).............................................................................II-3 et seq. 

grants to for-profit organizations ......................................................................................................II-125 

grants to foreign organizations, international organizations, and domestic grants with foreign 

components ...........................................................................................................................II-117 

in pre-award process.................................................................................................................I-18 et seq. 

SBIR and STTR programs................................................................................................................II-130 

Public relations costs ...............................................................................................................................II-38 

Publication 

about ................................................................................................................................................II-73 

conference grants........................................................................................................II-99, II-101, II-102 

costs ....................................................................................................................................II-38, II-100 

fellowships........................................................................................................................................II-116 

 C-16 
R 

Real estate appraisals...............................................................................................................................II-69 

Real property 

acquisition, use, and management of.......................................................................................II-68 et seq.

definition...............................................................................................................................................B-8 

insurance requirements .......................................................................................................................II-70 

notice of Federal interest in ...............................................................................................................II-70 

disposition...........................................................................................................................................II-69 

Reasonableness test, allowability of costs and ........................................................................................II-26 

Recipient. Also see Grantee 

definition...............................................................................................................................................B-9 

staff responsibilities....................................................................................................................I-6 et seq.

usage....................................................................................................................................................... iii

Recombinant DNA ..................................................................................................................II-5, II-9, II-16 

Record retention and access ....................................................................................................................II-89 

conference grants...............................................................................................................................II-102 

construction grants.............................................................................................................................II-106 

Recruitment costs ....................................................................................................................................II-38 

Registration fees (conferences/symposiums/seminars) ...............................................................II-38, II-100

Rehabilitation Act of 1973 ................................................................................................................II-5, II-8 

Reimbursement 

of indirect costs. See Indirect costs 

method of payment....................................................................................................................... I-37, I-38 

Also see Enforcement actions 

third-party.............................................................................................................................................I-26 

Relinquishing statement. See Change of grantee 

Relocation assistance. See Uniform Relocation Assistance and Real Property Acquisition Policies Act 

Relocation costs.......................................................................................................................................II-39 

Rental or lease of facilities and equipment 

costs...............................................................................................................................II-39, II-79, II-100 

matching or cost sharing contribution......................................................................................II-47 et seq. 

Reporting requirements 

about.........................................................................................................................................II-86 et seq. 

audit..................................................................................................................II-90 et seq., II-119, II-125 

closeout and final reports....................................................................................................................II-94 

conference grants..............................................................................................................................II-102 

inventions(and exhibit)..................................................................................................II-75 et seq., II-96 

fellowships........................................................................................................................................II-114 

financial (expenditure) reports..................................................................................................II-86, II-94 

Federal institutions............................................................................................................................II-122 

lobbying disclosure.............................................................................................................................II-86 

overdue reports ...................................................................................................................................II-89 

program income........................................................................................................................II-64, II-74 

progress reports.........................................................................................................................II-88, II-95 

Public Health System............................................................................................................................I-27 

research misconduct............................................................................................................................II-13 

Research data and results 

access to..............................................................................................................................................II-72 

sharing ................................................................................................................................................II-77 

subawards and.....................................................................................................................................II-78 

 C-17 
Research design requirements, inclusiveness in....................................................................................... I-19 

Research Integrity, Office of ............................................................................................... II-13, II-14, III-1 

Research misconduct...............................................................................................................II-5, II-13, B-9 

Research patient care 

allowability of costs.................................................................................................... II-39, II-1-1, II-119 

definition...............................................................................................................................................B-9 

prior approval and...........................................................................................................II-51, II-56, II-60 

rate.........................................................................................................................................................I-25 

Research tools, sharing of........................................................................................................................II-77 

Reserve funds ..........................................................................................................................................II-39 

Resource Conservation and Recovery Act ......................................................................................II-6, II-24 

Responsibility of Applicants for Promoting Objectivity in Research for which 

PHS Funding is Sought (42 CFR part 50, Subpart F)..........................................................II-4, II-14 

Review Administrator ................................................................................................................................ I-6 

Revised (amended) application ................................................................................................................ I-16 

Revocable license agreement ..................................................................................................................II-68 

Royalties and licensing fees from copyrights, inventions, and patents ...................................................II-74 

S 

Sabbatical leave, costs.............................................................................................................................II-40 

Safe Drinking Water Act.................................................................................................................II-6, II-21 

Safety. See Health and safety standards and regulations.........................................................................II-23 

Salaries and wages 

students, compensation of...................................................................................................................II-42 

costs .....................................................................................................................................II-40 et seq. 

dual appointment payments................................................................................................................II-41 

disposition of unclaimed wages, construction grants .......................................................................II-108 

payroll distribution systems................................................................................................................II-40 

Sale 

equipment and supplies.............................................................................................................II-64, II-67 

real property........................................................................................................................................II-69 

Schedule of Expenditures of Federal Awards .........................................................................................II-91 

Scientific meetings. See Conference grants 

Scope, change in and prior approval of 

............................................. I-16, II-51, II-52, II-54, II-55 et seq., II-57, II-60, II-99, II-105, II-119 

Seat belt use.....................................................................................................................................II-6, II-24 

Service charges, costs..............................................................................................................................II-42 

Severance pay, costs................................................................................................................................II-42 

Significant rebudgeting .........................................................................................................II-55, II-57, B-9 

Single Project Assurances (SPAs).............................................................................................................59n

Small Business Innovation Research and Technology Transfer Programs (SBIR and STTR) 

about ..............................................................................................................................................II-126 

data sharing requirements .................................................................................................................II-132 

differences between SBIR and STTR...............................................................................................II-127 

Fast-track application process...........................................................................................................II-127 

indirect costs .....................................................................................................................................II-130 

intellectual property..........................................................................................................................II-131 

market research.................................................................................................................................II-131 

minimum level of effort....................................................................................................................II-129 

place of performance ........................................................................................................................II-129 

profit or fee .......................................................................................................................................II-130 

 C-18 
public policy requirements ...............................................................................................................II-130 

small business concern, definition and qualification.........................................................................II-128 

SMARTLINK II/ACH ............................................................................................................................. I-38 

Smoke-free environment 

Pro-Children Act and..................................................................................................................II-6, II-23 

workplace....................................................................................................................................II-6, II-23 

Standards of conduct .................................................................................................................................II-7 

Standards of Privacy of Individuals Identifiable Health Information (HIPAA) (Privacy Rule) .....II-4, II-22 

State, local, and Indian tribal governments 

cost principles .....................................................................................................................................II-25 

payroll distribution..............................................................................................................................II-40 

pension plan, costs..............................................................................................................................II-37 

State government, definition.................................................................................................................B-9 

Uniform Administrative Requirements for Grants and Cooperative 

Agreements ................................................................................................................................ I-4 

Statement of Miscellaneous Income (IRS Form 1099) .........................................................................II-114 

Sterile needle/syringe distribution restriction..................................................................................II-6, II-22 

Stipends 

costs ........................................................................................................................................II-42, II-111 

definition...............................................................................................................................................B-9 

training allowance and prior approval ................................................................................................II-52 

supplementation................................................................................................................................II-113 

taxability ...........................................................................................................................................II-114 

Students, compensation of...........................................................................................................II-42, II-113 

Subawards (including consortium agreements) 

about .....................................................................................................................................II-81 et seq. 

approval authorities ............................................................................................................................II-59 

audit ................................................................................................................................................II-90 

cost principles .....................................................................................................................................II-25 

costs ................................................................................................................................................II-42 

definitions .....................................................................................................................................B-4, B-9 

financial conflict of interest ................................................................................................................II-15 

flowdown of requirements.............................................................................................. iii, II-2, II-3, B-6 

foreign ..............................................................................................................................................II-119 

intellectual property..................................................................................................................II-64, II-74 

public policy requirements ...............................................................................................................II-117 

personal property ................................................................................................................................II-65 

subrecipient.........................................................................................................................................B-10 

terms and conditions........................................................................................................ I-15, II-63, II-64 

transfer of performance to third party by..................................................................................II-55, II-60 

written agreement ...............................................................................................................................II-81 

Subject costs................................................................................................................................II-44, II-123 

Also see Research patient care costs 

Submission of applications 

application forms ................................................................................................................................. I-17 

confidentiality of information.............................................................................................................. I-28 

Grants.gov APPLY.............................................................................................................................. I-26 

receipt points and deadlines......................................................................................................I-26 et seq. 

Substance Abuse and Mental Health Services Administration .................................................................. I-3 

Supplemental application..........................................................................................................................I-16 

 C-19 
Supplies. Also see Equipment 

costs.........................................................................................................................................II-42, II-100 

definition.............................................................................................................................................B-10 

sale of..................................................................................................................................................II-67 

valuation of donated............................................................................................................................II-47 

Surveys.....................................................................................................................................................II-84 

Suspension (post-award). Also see Debarment and suspension 

costs ................................................................................................................................................II-43 

definition.............................................................................................................................................B-10 

enforcement actions............................................................................................................................II-93 

T 

Taxability of stipends ............................................................................................................................II-113 

Technology transfer policy. See Bayh-Dole Act of 1980; Inventions and patents 

Termination 

costs ................................................................................................................................................II-43 

definition.............................................................................................................................................B-10 

enforcement actions............................................................................................................................II-93 

Termination Notice, fellowships ...........................................................................................................II-115 

Terms and conditions of award. Also see Cost considerations; Notice of Award; Payment; Pre-award 

activities; Public policy requirements 

definition.............................................................................................................................................B-10 

modification of award terms, enforcement actions.............................................................................II-92 

overview ...........................................................................................................................................i, I-37 

prior-approval requirements for deviation from .........................................................................II-1, II-51 

Third-party in-kind contributions...............................................................................I-25, II-47 et seq., B-10 

Third-party reimbursement...........................................................................................I-26 

Title insurance .............................................................................................................................II-70, II-104 

Total project or program costs.................................................................................................................B-10 

Trailers and modular units, costs.............................................................................................................II-43 

Training allowances prior-approval requirements for transfer of amounts.....................................II-43

Transfer of funds between construction and nonconstruction work, prior-approval requirements.........II-52 

Transfers, fellowships ...........................................................................................................................II-115 

Transplantation of human fetal tissue, research on .......................................................................II-6, II-18 

Transportation of property, costs.............................................................................................................II-43 

Travel 

costs ................................................................................................................................................II-43 

to foreign training sites .......................................................................................................................II-44 

institutional allowance for ................................................................................................................II-112 

Tuition and fees 

under fellowships...............................................................................................................................II-112 

remission..............................................................................................................................................II-42 

U 

Uniform Relocation Assistance and Real Property Acquisition 

Policies Act................................................................................................................................... I-22 

Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct 

Terrorism Act (USA PATRIOT Act) ............................................................................................II-9

Unobligated balances. See Carryover of unobligated balances 

U.S. air flag carriers ........................................................................................................................II-6, II-44 

 C-20 
 C-21 

Use allowances....................................................................................................................II-34, II-39, II-48 

V 

Vertebrate animals. See Animal welfare 

W 

Wetlands protection.......................................................................................................................... I-22, II-5 

Withholding of payment......................................................................................................II-89, II-96, B-10 

Withholding of support 

definition.............................................................................................................................................B-11 

enforcement actions............................................................................................................................II-93 

Women 

contracting with women’s business enterprises for goods and services .............................................II-80 

inclusion as subjects in clinical research ................................................................................I-19