SELECTED ITEMS OF COST
Advertising: Allowable only for recruitment of staff or
trainees, procurement of goods and services, disposal of scrap
or surplus materials, and other specific purposes necessary to
meet the requirements of the grant-supported project or activity.
Alcoholic Beverages: Unallowable as an entertainment expense,
but allowable if within the scope of an approved research project.
Alteration and Renovation: Alteration and renovation (A&R),
also termed "rearrangement and alteration," is defined
as work required to change the interior arrangements or other
physical characteristics of an existing facility or of installed
equipment so that it may be more effectively utilized for its
currently designated purpose or adapted to an alternative use
to meet a programmatic requirement.
Under NIH grants, individual A&R projects that are treated
as direct costs and that will not exceed $500,000 will be subject
to the A&R policies specified in this subsection and in the
section of Part III, as applicable.
Individual A&R projects exceeding $500,000 will be subject
to the requirements in Part III.
Routine maintenance and repair of the organization's physical
plant or its equipment, which is allowable and is ordinarily treated
as an F&A cost, is not considered A&R for purposes of
this policy. Certain allowable costs of installing equipment,
such as the temporary removal and replacement of wall sections
and door frames in order 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 grantee's
A&R costs are not allowable under grants to individuals, foreign
grants, and grants in support of scientific meetings (conference
grants). In all other cases, these costs are allowable unless
the program legislation, implementing regulations, program guidelines
or other terms and conditions of the award specifically exclude
such activity. The 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
- The space involved will be occupied by the project;
- 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; and
- 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.
Work necessary to obtain an initial occupancy permit for the intended
use is not an allowable A&R cost.
A grantee may rebudget up to 25 percent of the total approved
budget for a budget period into A&R costs without NIH prior
approval unless such rebudgeting would constitute a change in
scope. If the rebudgeting results in an A&R project exceeding
$300,000, NIH will consider the budgeting to be a change in scope
and the grantee must submit to the NIH IC the documentation specified
in "Construction Grants"
in Part III for approval of
A&R projects above that dollar level.
Animals: Allowable for the acquisition, care, and use of
experimental animals. If the grantee 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 (NIH Pub. No. 80-2006, October
1979), available from the National Center for Research Resources,
6705 Rockledge Drive, Bethesda, MD 20892-7965.
Audiovisual Activities: Allowable for the production of
an audiovisual. "Audiovisual" means any product containing
visual imagery or 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 or
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 having 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 general public audiences (i.e.,
persons who are not researchers or health professions personnel
and/or who are not directly involved in project activities either
as employees, trainees, or participants such as volunteers or
patients) is produced under an NIH grant-supported project, the
grantee must submit two prints or tapes of the finished product
along with its annual or final progress report (see "Administrative
The costs of such prints or tapes are allowable project costs.
Audiovisuals produced under an NIH grant-supported project must
bear an acknowledgment and disclaimer, such as:
The production of this motion picture (television program, etc.)
was supported by Grant No.____________ from (name of NIH awarding
office). Its contents are solely the responsibility of (name of
grantee organization) and do not necessarily represent the official
views of (name of NIH awarding office).
Audit Costs: Allowable (see
and section 230 of OMB Circular A-133). The charges may be considered
a direct cost when the audit's scope is limited to a single NIH
grant-supported project or program, as specified in 45 CFR 74.26(d),
or includes more than one project, but the costs can be specifically
identified with, and allocated to, each project on a proportionate
basis, and this practice is followed consistently by the grantee;
otherwise, charges for audits should be treated as F&A costs.
Bad Debts: Unallowable.
Bid and Proposal Costs: Allowable as an F&A 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, 74.47(c) and 92.36
for policies and requirements concerning bonding.
Books and Journals: Allowable. If an organization has a
library, books and journals should generally be provided as part
of normal library services and treated as F&A costs rather
than being directly charged.
Building Acquisition: Unallowable unless building acquisition
or construction is specifically authorized by program legislation
and is provided for in the grant award. Those NIH programs that
have such statutory construction authority are generally intended
to enhance research infrastructure through the establishment of
new or modified facilities; therefore, lease-versus-purchase considerations
are not normally associated with these awards. (See "
or Lease of Facilities and Equipment" in this subsection.)
For real property acquired with NIH 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 for recording
the Federal interest in the real property in appropriate records
of the applicable jurisdiction may also be charged to the grant.
(See also "Construction
Grants" in Part III.)
Child Care Costs: Allowable if incurred to assist patients
to participate as subjects in research projects. Such costs may
also be allowable as a fringe benefit for individuals working
on a grant-supported project (see "Fringe
in this subsection).
Communications: Allowable. Such costs include local and
long-distance telephone calls, telephone surveys, telegrams, and
postage, and are usually treated as F&A costs.
Conference Grant Costs: See "
Support of Scientific
Meetings (Conference Grants)" in Part III for NIH policies
for support of scientific meetings (conferences).
Consortium Agreements/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 require NIH approval as specified in "Administrative
Project and Budget
". (See "Administrative
Requirements Management Systems and
System Standards and Requirements" for policies that apply
to the acquisition of routine goods and services, and Part III
for policies for consortium agreements.)
Construction: Allowable only when program legislation specifically
authorizes new construction, modernization, or A&R, and NIH
specifically authorizes such costs in the NGA. 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 (see "
Grants" in Part III).
Consultant Services: Allowable. A consultant is an individual
retained to provide professional advice or services for a fee
but not as an employee of the requiring organization. The term
"consultant" also includes a firm that provides paid
professional advice or services. Grantees must have written policies
governing their use of consultants that are consistently applied
regardless of the source of support. 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. In
order to prevent apparent or actual conflicts of interest, grantees,
consortium participants, and contractors under grants must establish
written guidelines indicating the conditions, if any, under which
the payment of consulting fees to employees is proper.
In unusual cases and with authorization as indicated below, consulting
fees paid by an educational institution to a salaried faculty
member that represent 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. In all other cases, consulting
fees paid to employees of a grantee, a consortium participant,
or a contractor in addition to salary may be charged to NIH grant-supported
projects only when all of the following conditions exist:
- The policies of the grantee, consortium participant, or contractor
permit such consulting fee payments to its own employees regardless
of whether Federal grant funds are received;
- The consulting services are clearly outside the scope of the
individual's salaried employment;
- It would be inappropriate or not feasible to compensate the
individual for those services through payment of additional salary;
- Approval is obtained as specified below.
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
organization, consortium participant, or contractor incurring
the costs, or his or her designee. If the designee is personally
involved in the project, the authorization may be given only by
the head of the recipient organization, consortium participant,
or contractor. This authorization must include a determination
that the required conditions are present and that there is no
apparent or actual conflict of interest.
Grantees, consortium participants, 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(s); 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.
See "Grants to Federal Institutions
and Payments to (or on
Behalf of) Federal Employees under Grants" in Part III for
allowable costs associated with consultant payments to Federal
employees as well as the circumstances of allowability.
Contingency Funds: Unallowable. 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 (see
also "Reserve Funds" in this subsection).
Grants" in Part III concerning contingency funds under construction
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. (See
III for allowability of these costs under grants to foreign institutions,
international organizations, and domestic organizations performing
projects with a substantial foreign component.)
Depreciation or Use Allowances: Allowable. Such costs are
usually treated as F&A 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 research
Project funds may not be used to purchase drugs classified by
the Food and Drug Administration 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.
Dues or Membership Fees: Allowable as an F&A 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 institutional policy consistently applied regardless
of the source of funds.
Entertainment Costs: Unallowable. This includes the cost
of amusements, social activities, and related incidental costs.
Equipment: Allowable for purchase of new, used, or replacement
equipment as a direct cost or as part of F&A costs, depending
on the intended use of the equipment. NIH prior approval may be
required as specified in "Administrative Requirements
in Project and Budget".
In accordance with the requirements of NIH appropriations acts,
American-made items should be purchased to the extent possible.
Conference grant funds may not be used for the purchase of equipment.
For policies governing the classification, use, management, and
disposition of equipment, see "Administrative Requirements
Systems and Procedures Property
System Standards". For policies governing the allowability
of costs for rental of equipment, see "Rental or
Facilities and Equipment" in this subsection.
Federal (U.S. Government) Employees: See
Part III for the
allowability of payments made to, or on behalf of, Federal employees
under NIH grants, including grants to Federal institutions.
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 when incurred as
a result of compliance with specific provisions of an award, or
when such payments are authorized in advance in writing by the
Fringe Benefits: Allowable as part of
to employees in proportion to the amount of time or effort employees
devote to the grant-supported project, provided such costs are
incurred under formally established and consistently applied policies
of the organization (see "Salaries and Wages
" in this
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 as of the organization's fiscal year that starts
after September 30, 1998. For policies applicable to tuition remission
for students working on grant-supported projects, see "Salaries
and Wages" in this subsection. See "
Service Awards" in Part III for the allowability of tuition
trainees and fellows.
Fundraising Costs: Unallowable.
Hazardous Waste Disposal: Allowable. Usually treated as
an F&A 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 subsection.
Independent Research and Development Costs: Unallowable,
including their proportionate share of F&A costs.
Insurance: Allowable. Insurance is usually treated as an
F&A cost. In certain situations, however, where special insurance
is required as a condition of the grant because of risks peculiar
to the project, the premium may be charged as a direct cost if
doing so is consistent with organizational policy. Medical liability
(malpractice) insurance is an allowable cost of research programs
at educational institutions only if the research involves human
subjects. If so, it 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.
The costs of insuring equipment, whether purchased with project
funds or furnished as Government-owned property, should normally
be included in F&A costs but may be allowable as a direct
cost if this manner of charging is the normal organizational policy.
Medical insurance for trainees and
fellows is addressed in "National
Research Service Awards" in Part III.
Interest: Allowable as an F&A cost for certain assets
as specified in the applicable cost principles. Unallowable for
Leave: Allowable for employees as an employee fringe benefit
(see "Fringe Benefits" in this
subsection). See "National
Research Service Awards" in Part III for NIH policy on leave
for trainees and fellows.
Legal Services: Allowable. Generally treated as an F&A
cost but may be treated as a direct cost, subject to the limitations
described in the applicable cost principles, for legal services
provided by individuals who are not employees of the grantee organization.
Before a grantee incurs legal costs that are extraordinary or
unusual in nature, the grantee should make an advance agreement
regarding the appropriateness and reasonableness of such costs
with the awarding office GMO.
Legal costs incurred in defending or prosecuting claims, whether
equitable or monetary, including administrative grant appeals,
are unallowable charges to NIH grant-supported projects, 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 the grantee's F&A
pool. However, such 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
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 grantee should obtain an advance
understanding with the awarding office GMO if it intends to engage
in these activities. (See also "Public Policy Requirements
Ethical and Safe Conduct in Science
and Organizational Operations
and "Administrative Requirements Monitoring
concerning lobbying restrictions and required certification and
Meals: Allowable for subjects and patients under study
only, or where specifically approved as part of the project activity,
provided that such charges are not duplicated in participants'
per diem or subsistence allowances, if any.
Moving: See "Recruitment Costs,"
and "Transportation of Property" in this
Nursery Items: Allowable for the purchase of toys, games,
etc. to allow patients to participate in research protocols.
Overtime: See "Salaries and Wages"
in this subsection.
Pension Plan Costs: Allowable. For institutions of higher
education and non-profit organizations, 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; and 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 grantee directly to, or on behalf of,
retired former employees or their beneficiaries) in lieu of the
method described above. Under this method, the benefits may be
charged in the grantee's fiscal year in which the payments are
made to, or on behalf of, retired former employees or their beneficiaries,
provided that the grantee 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.
Preaward (Preagreement) Costs: Allowable.
A grantee may,
at its own risk and without NIH prior approval, incur obligations
and expenditures to cover costs up to 90 days prior to the effective
date of a new or competing continuation award if such costs:
- Are necessary to conduct the project, and
- Would be allowable under a potential award without prior approval.
If specific expenditures or activities would otherwise require
prior approval, the grantee must obtain NIH approval prior to
incurrence of the cost. NIH prior approval is required for any
costs to be incurred more than 90 days prior to the beginning
date of a new or competing continuation award.
Grantees may incur preaward costs prior to the beginning date of a noncompeting
continuation award without regard to the time parameters stated
The incurrence of preaward costs in anticipation of a competing
or noncompeting award imposes no obligation on NIH 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 preaward costs incurred.
NIH expects the grantee to be fully aware that preaward costs
result in borrowing against future support and that such borrowing
must not impair the grantee's ability to accomplish the project
objectives in the approved time frame or in any way adversely
affect the conduct of the project.
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 project or other appropriate matters
of public concern. Such costs may be treated as either direct
costs or F&A costs, if they benefit more than one sponsored
agreement or if they benefit the grant and other work of the institution.
Publications: Allowable. Page charges for publication in
professional journals may be paid from project funds 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 are also allowable.
Publications, journal articles, etc. produced under an NIH grant-supported
project must bear an acknowledgment and disclaimer, as appropriate,
as provided in "Administrative Requirements
of Research Results: Publications and Intellectual Property Rights,
Including Unique Research Resources".
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 to and from pre-employment interviews, and
travel costs of employees while engaged in recruiting personnel.
Project funds may not be used for a prospective trainee's travel
costs to or from the grantee 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 (see also "Travel" and "
in this subsection and "National Research Service Awards
NRSA (Training Grants)" in Part III).
Registration Fees (for Symposiums and Seminars): Allowable
if necessary to accomplish project objectives.
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 grantee's
benefit rather than the individual's, and 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 F&A cost, and the employee
resigns for reasons within his or her control within 12 months
after hire, the grantee must credit the grant account for the
full cost of the relocation charged to the grant.
In change of grantee organization situations, the personal relocation
expenses of the PI and others moving from the original grantee
to the new grantee are not allowable charges to NIH grants (see
Project and Budget").
Rental or Lease of Facilities and Equipment:
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, grantees are
encouraged to consult the GMO before entering into leases that
will result in direct charges to the grant project.
In general, the rental costs for facilities and equipment applicable
to each budget period should be charged to that period. However,
see "Administrative Requirements
System Standards and Requirements" for an exception to this
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 grantee purchased the property on the date the lease agreement
was executed. This would include depreciation or use allowances,
maintenance, taxes, insurance, etc. but would exclude unallowable
When a grantee transfers property to a third party through sale,
lease, or otherwise and then leases the property back from that
third party, the lease cost that may be charged to NIH projects
generally may not exceed the amount that would be allowed if the
grantee 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 grantee.
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),
either 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 patients participating in research
programs are allowable if the grantee has obtained NIH prior approval
to incur patient care costs either as part of an approved grant
application or through a postaward prior approval request. In
addition, except for grants subject to expanded authorities (see
Project and Budget"), NIH prior approval is always required
to rebudget additional funds into or to rebudget funds out of
the research patient care costs category.
"Routine services" include the regular room, dietary
and nursing 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 are customarily made in addition
to routine services; e.g., x-ray, operating room, laboratory,
pharmacy, blood bank, and pathology. See "
Care Costs" in Part III for NIH 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 patients, including inpatients, outpatients,
subjects, volunteers, and donors. Such costs are considered to
be in the "Other Expenses" category of the grant budget.
Reserve Funds: Contributions to a reserve fund for self-insurance
are allowable as specified in the governing cost principles (see
also "Contingency Funds" in this subsection).
Sabbatical Leave Costs: Sabbatical leave costs may
be included in a fringe benefit rate or in the organization's
F&A rate. Salary may be charged directly to a project for
services rendered the project by individuals while they are on
sabbatical leave, provided the salary is proportional to the service
rendered and is paid according to established organizational policies
applicable to all employees regardless of the source of funds.
Sabbatical leave paid by an individual's employer, in combination
with other compensation (e.g., partial salary from an NIH grant),
may not exceed 100 percent of that individual's regular salary
from his or her organization.
Salaries and Wages: Allowable. Compensation
services covers all amounts, including fringe benefits, paid currently
or accrued by the organization for employee services rendered
to the grant-supported project. 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 NIH-funded project. As required in
its annual appropriations act, NIH will not reimburse grantees
for the direct salaries of individuals at a rate in excess of
the level specified in the appropriations language. Direct salary
is exclusive of fringe benefits and F&A costs. This limitation
does not apply to consultant payments but does apply to consortium
participants (see "Consortium
Agreements" in Part III).
Payroll Distribution: Salary and wage amounts charged to
grant-supported projects 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:
- Monthly after-the-fact reports of the distribution of time
or effort for professional staff.
- Time and attendance, and payroll distribution records for
- 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 periods covered by the reports.
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 nonprofessional employees, additional supporting reports,
indicating the total number of hours worked each day, must be
maintained in conformance with Department of Labor 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 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.
- A plan confirmation system for professorial and other professional
staff that is based on budgeted, planned, or assigned work activity,
and is updated to reflect any significant changes in work distribution,
including incorporation into the organization's official records
and identification of activity applicable to each sponsored agreement
and to each category needed to identify F&A costs and the
functions to which they are allocable. At least annually, the
employee, PI, or responsible official(s) 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; or
- A system, supported by after-the-fact activity reports, that
reflects the distribution of covered employees' activity allocable
to each NIH grant and includes identification and recording of
significant changes in work activity when initial charges were
based on estimates. The system must also identify each category
of activity needed to identify F&A costs and the functions
to which they are allocable. For professorial and other professional
staff, the activity reports will be prepared each academic term,
but no less frequently than every 6 months. For other employees,
unless NIH agrees to alternate arrangements, the reports will
be prepared no less frequently than monthly and will coincide
with one or more pay periods; or
- A multiple confirmation records system for professorial and
other professional staff supported by records certifying costs
separately for direct costs and F&A costs, with reports prepared
each academic term, but no less often than every 6 months, that
confirm the activities as allocable to direct or F&A costs;
- By mutual agreement, any other method meeting the criteria
specified in paragraph J.8.b.(2) of OMB Circular A-21.
- Charges for work performed by faculty members on NIH grants
during the summer months or other periods not included in the
base salary period will be determined for each faculty member
at a rate not exceeding the base salary divided by the period
to which the base salary relates. The base salary period used
in computing charges for work performed during the summer months
will be the number of months covered by the faculty member's official
academic year appointment.
- NIH requires for-profit organizations to conform with industry
standards to support salary and wage charges to NIH grants. Therefore,
unless an alternate system is approved by the GMO, the grantee
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 institutional
official no less frequently than every pay period.
Overtime Premiums: Premiums for overtime are generally
allowable (see the applicable cost principles); however, such
payments are not allowable for faculty members at institutions
of higher education. Where 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.
Bonus Funds/Incentive Payments: Allowable as part
of a total compensation package, provided such payments are reasonable
and are made according to a formal policy of the grantee that
is consistently applied regardless of the source of funds.
Support from Multiple Grants: See "Cost
of Costs and Closely Related Work".
Compensation of Students: Tuition remission and
of compensation paid as, or in lieu of, wages to students (including
fellows and trainees) performing necessary work are allowable,
- There is a bona fide employer-employee relationship between
the student and the organization for the work performed;
- The tuition or other payments are reasonable compensation
for the work performed and are conditioned explicitly upon the
performance of necessary work; and
- It is the organization's practice to compensate students similarly
in non-sponsored as well as sponsored activities. However, compensation
may not be paid from an NIH research grant that supports the same
research that is part of the trainee's/fellow's approved training
NIH will determine the allowability and reasonableness of such
compensation under a grant on the basis of its current operating
guidelines. 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.8. of OMB Circular
A-21 and should be treated as direct or F&A costs according
to the actual work being performed. Tuition remission may be charged
on an average rate basis.
Payments made for educational assistance (e.g., scholarships,
fellowships, and student aid costs) may not be paid from NIH research
grant funds even when they would appear to benefit the research
Service Charges: Allowable. The costs to a user of institutional
services and central facilities owned by the recipient organization,
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, employer-employee agreement, established
policy constituting in effect an implied agreement on the part
of the organization, or 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
Stipends: Allowable as cost-of-living allowances for trainees
and fellows only under NIH training grants and fellowships. These
payments are made according to a preestablished schedule based
on the individual's experience and level of training. A stipend
is not a fee-for-service payment and is not subject to the cost
accounting requirements of the cost principles. Additional information,
including NIH policy on stipend supplementation, is included in
"National Research Service Awards
Part III. Stipends
are not allowable under research grants even when they appear
to benefit the research project.
Subject Costs: See "Research Patient Care"
in this subsection.
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. Grantees 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. See "
in Part III for allowability of taxes in projects involving construction.
Termination or Suspension Costs: Unallowable
provided below. If a grant is terminated or suspended, the grantee
shall not incur new obligations after the effective date of the
termination or suspension and shall cancel as many outstanding
obligations as possible (see "Administrative Requirements
Termination, and Withholding
of Support"). NIH will allow full credit to the grantee for
the Federal share of otherwise allowable costs if the obligations
were properly incurred by the grantee prior to 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)
Trailers and Modular Units: Allowable as follows. 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 NIH grant-supported projects depends on whether such units
are classified as real property or equipment. The classification
will depend on whether the grantee'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 NIH grant-supported
project unless authorizing legislation permits construction or
acquisition of real property and the specific purchase is approved
by the awarding office.
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 NIH grant-supported projects only if the terms
and conditions of the award do not prohibit the purchase of equipment
and prior approval is obtained, as appropriate.
A trailer or modular unit properly classified as real property
or as equipment at the time of acquisition shall retain 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 only under predoctoral and postdoctoral
training grants. (See "National
Research Service Awards"
in Part III for detailed information.)
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 grantee 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 (see "Administrative
Changes in Project and
Travel: Allowable as a direct cost where such travel will
provide direct benefit to the project. Consistent with the organization's
established travel policy, such costs for employees working on
the grant-supported project 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 U.S. and its possessions
and territories and also travel between the U.S. and Canada and
Foreign travel is defined as any travel outside of Canada and
the U.S. and its territories and possessions. However, for an
organization located outside Canada and the U.S. and its territories
and possessions, foreign travel means travel outside that country.
In all cases, travel costs are limited to travel allowed by formal
organizational policy and, in the case of air travel, the lowest
reasonable commercial airfares must be used. Grantees are strongly
encouraged to take advantage of discount fares for airline travel
through advance purchase of tickets where travel schedules can
be planned in advance (such as for national meetings and other
scheduled events). If the recipient organization has no formal
travel policy, the Federal Travel Regulations issued by the U.S.
General Services Administration, including maximum per diem and
subsistence rates prescribed in those regulations, shall be used
to determine the amount that may be charged for travel costs.
For-profit grantees' allowable travel costs may not exceed those
established by the Federal Travel Regulations. This information
is available at http://www.gsa.gov.
Grantees must comply with the requirement that U.S.-flag air carriers
be used by domestic grantees to the maximum extent possible when
commercial air transportation is the means of travel between the
U.S. and a foreign country or between foreign countries. This
requirement shall not be influenced by factors of cost, convenience,
or personal travel preference.
Patient Travel: If research patient care is an approved
activity of the grant-supported project, the costs of transporting
patients to the site where services are being provided, including
costs of public transportation, are allowable. The purchase of
motor vehicles for this purpose may be allowable. (See "
Patient Care Costs" in Part III.)
Applicants and grantees should consult application instructions
to determine how to budget for "travel" costs under
specific mechanisms and for certain types of travelers since they
are not all required to be budgeted as "travel."