NIH Grants Management Policies

1. NIH Grants Management Policies DOM Weekly Fund Management Training

2. OMB Circulars • OMB Circular A-21 • Purpose: Establishes the principles for determining costs applicable to grants, contracts, and other agreements with educational institutions • OMB Circular A-110 • Purpose: Sets forth standards for obtaining consistency and uniformity among Federal agencies in the administration of grants to and agreements with institutions of higher education, hospitals, and other non-profit organizations

3. Factors Affecting Allowability of Costs (A21) • The tests of allowability of costs under these principles are: (a) they must be reasonable; (b) they must be allocable to sponsored agreements under the principles and methods provided herein; (c) they must be given the consistent treatments through application of those generally accepted accounting principles appropriate to the circumstances; and (d) they must conform to any limitations or exclusions set forth in these principles or in the sponsored agreement as to types or amounts of cost items.

4. Reasonable Costs (A21) • A cost may be considered reasonable if the nature of the goods or services acquired or applied, and the amount involved therefore, reflect the action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made.

5. Allocable Costs (A21) • A cost is allocable to a particular cost objective (i.e. specific function, project, sponsored agreement, department, or the like) if the goods or services involved are chargeable or assignable to such cost objective in accordance with relative benefits received or other equitable relationship. A cost is allocable to a sponsored agreement if: • (1) it is incurred solely to advance the work under the sponsored agreement • (2) it benefits both the sponsored agreement and other work at the institution, in proportions that can be approximated through use of reasonable methods • (3) it is necessary to the overall operation of the institution and is deemed to be assignable in part to sponsored projects

6. Consistency (NIH GPS, page IIA-53) • Grantees must be consistent in assigning costs to cost objectives. Therefore, under NIH grants, although costs may be charged as either direct costs or F&A costs, depending on their identifiable benefit to a particular project or program. 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.

7. Direct Costs and Facilities & Administrative Costs (GPS, page IIA-54) • Direct Cost: 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 benefitting the grant-supported project or activity.

8. Direct Costs and Facilities and Administrative Costs (GPS, page IIA-54) • F&A: costs that are incurred for common or joint objectives and, therefore, cannot be identified readily and specifically with a particular sponsored project, and instructional activity, or any other institutional activity. Facilities operation and maintenance costs, depreciation, and administrative expenses are examples of costs that are usually treated as F&A costs.

9. Questions to Ask to Determine Allowability • Reasonable: Would a prudent person purchase this good or service under the same circumstances? • Allocable: Is this good or service being charged to the sponsored agreement in accordance with relative benefit received? • Consistently Treated: Is this good or service normally treated as a direct cost or an F&A cost under similar circumstances?

10. Questions to Ask to Determine Allowability • It is also important to ask if the item being purchased is a general purpose item. General purpose items (e.g. office supplies, telephones, office computers, etc), are treated as F&A costs, and should be charged to an unrestricted fund. • Would the item still need to be purchased if the grant being charged did not exist? • If the answer is YES, then it is probably NOT an allowable expense to the grant.

11. Documentation & Justification • If a PI requests to purchase an item that may be considered unallowable (e.g. computer, project related office supplies, etc.), you should request a justification from the PI to explain how the item directly benefits the grant being charged, and is not a general purpose item. If the justification is appropriate, and you determine the item is allowable on the grant, be sure to include the justification with the order documentation, AND with your grant folder in case of an audit.

12. It’s in the Proposal Budget & Justification, So It’s Allowable, Right? • Not necessarily!!! • The individuals responsible for reviewing proposals for award issuance are not necessarily reviewing for allowable vs. unallowable expenses. This is really a post-award issue. • The auditors who review post-award expenses will not base allowability on inclusion in the proposal budget, but rather, they will base allowability on the policies contained within the OMB circulars and Grants Policy Statement.

13. NIH Grants Policy Statement (NIH GPS, version dated 10/01/2013) • Purpose: The NIH GPS is intended to make available to NIH grantees, in a single document, the policy requirements that serve as the terms and conditions of NIH grant awards.

14. GPS Policy Highlights • Cost Transfers (GPS, page IIA-57-58) - Cost transfers to NIH grants that represent corrections of clerical or bookkeeping errors should be accomplished within 90 daysof when the error was discovered. The transfers must be supported by documentation that fully explains how the error occurredand a certification of the correctness of the new charge by a responsible organizational official. An explanation merely stating that the transfer was “to correct error” or “to transfer to correct project” is not sufficient. Transfers of costs from one project to another or from one competitive segment to the next solely to cover cost overruns are not allowable.

15. GPS Policy Highlights • Closely Related Work (GPS, page IIA-58) – when salaries or other activities are supported by two or more sources, issues arise as to how the direct cost should be allocated among the sources of support. In general, a cost that benefits 2 or more projects in proportions that can be determined without undue effort should be allocated to the projects on the basis of the proportional benefit.

16. GPS Policy Highlights • Select Items of Cost (GPS, page IIA-60 – IIA-76) – 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 all-inclusive. The cost principles should be consulted for the complete explanation of the allowability or unallowability of these costs.

17. GPS Policy Highlights • Financial Management Standards (GPS, page IIA-100-101) – NIH cannot support the research unless it has assurance that its funds will be used appropriately, adequate documentation of transactions will be maintained, and assets will be safeguarded. Grantees must have in place accounting and internal control systems that provide for appropriate monitoring of grant accounts to ensure obligations and expenditures are reasonable, allocable, and allowable. The system must be able to identify large unobligated balances, accelerated expenditures, inappropriate cost transfers, and other inappropriate obligation and expenditure of funds.

18. GPS Policy Highlights • Prior-Approval Requirements (GPS, page IIA-80 – IIA-92) • Final Reports (GPS, page IIA-120-122) – Unless the GMO grants an extension, grantees must submit: • Final FFR • Final Progress Report • Final Invention Statement • All 3 reports are due within 90 days of the end of the grant support. • Failure to submit timely and accurate final reports may affect future funding!

19. NIH Salary Cap • The Consolidated Appropriations Act restricts the amount of direct salary of an individual under an NIH grant to Executive Level 2 of the Federal Executive Pay scale. • Effective Jan. 12, 2014 = $181,500/yr • Oct 1, 2013 – Jan 11, 2014 = $179,700/yr

20. NIH Salary Cap • Q:Am I required to use new EL 2 NIH Salary Cap on my current NIH grants? • A: Maybe. Scenarios: • FY 2011 awards (and prior) can continue to use EL 1. • FY 2012 awards issued prior to Dec. 23, 2011 can continue to use EL 1 • Any FY 2012 award issued after Dec 23, 2011 MUST use EL 2. • NCTE on FY 2011 awards (and prior) can continue to use EL 1.

21. NIH Notice of Award (NOA) • The NOA is a legal document issued to notify the grantee that an award has been made and that funds may be requested from the designated HHS payment system or office. • Once the award is accepted by the grantee, the contents of the NOA are binding on the grantee unless and until modified by a revised NOA signed by the GMO

22. NIH Notice of Award (NOA) • The NOA sets forth pertinent information about the grant, including, but not limited to, the following: • Application/grant identification number • Name of grantee organization • Name of the PI • Approved project period & budget period start and end dates • Amount of funds authorized for obligation by the grantee • Names of the cognizant IC PO, GMO & GMS • Applicable terms and conditions of award, either by reference or inclusion

23. NIH Notice of Award (NOA) • Pay special attention to Section IV of the NOA: Special Terms and Conditions. • This is where the NIH will include any special restrictions that are specific to the grant. • It is also where the NIH may include their own list of who they determine to be Key Personnel. This list supercedes the PIs list.

24. Notice of Award • NIH NOA Searchable Database • Search for all NIH NOAs issued to UCLA • Sort by Date Issued or PI Name • UCLA’s IPF # = 577505

25. UCLA Policy Websites • UCLA Admin Policies & Procedures • Drop down list by policy #, e.g. 900 Principal Investigator Eligibility • UCLA Policies & Delegations • Admin & Operations • Gifts & Rewards to Individuals • Whistleblower • Business & Finance • Accounting Policy, Moving Expense, Travel, etcl • Research & Academic Affairs • UC Contract & Grant Manual

26. LINKS from Today’s Class • OMB Circulars • http://www.whitehouse.gov/omb/circulars/ • NIH Grants Policy Statement • http://grants.nih.gov/grants/policy/policy.htm#gps • OCGA Prior Approval Request • http://www.research.ucla.edu/ocga/forms/Email_Approval_d2.htm • NIH Report of Issued NOAs (UCLA IPF # 577505) • http://era.nih.gov/userreports/email_awards.cfm • NIH Salary Cap • http://grants.nih.gov/grants/guide/notice-files/NOT-OD-12-035.html