National Institutes of Health U.S. Department of Health and Human Services NIEHS SRP Annual Meeting November 18 – 20, 2015 George Tucker Chief, Grants Management Branch

National Institutes of Health U.S. Department of Health and Human Services Uniform Guidance Policy Update 2

National Institutes of Health U.S. Department of Health and Human Services Uniform Guidance Policy Update Subpart B – General Provisions : Effect on Other IssuancesRevised : Agency ImplementationRevised : OMB ResponsibilitiesRevised : InquiriesRevised : Review DateRevised : Effective DateRevised : English LanguageNew : Conflict of InterestNew : Mandatory DisclosuresNew 3

National Institutes of Health U.S. Department of Health and Human Services Uniform Guidance Policy Update Subpart C – Pre-Award Requirements : Federal Awarding Agency Review of Merit of Proposals New : Federal Awarding Agency Review of Risk Posed By Applicants New : Standard Application Requirements New : Pre-Award CostsNew : Information Contained In Federal Awards New, A : Public Access To Federal Award InformationNew 4

National Institutes of Health U.S. Department of Health and Human Services Uniform Guidance Policy Update Subpart D –Post Award Requirements Direct and Indirect (F&A) Costs : Classification of Costs New Special Considerations for Institutions of Higher Education : Cost Accounting Standards and Disclosure Statement New 5

National Institutes of Health U.S. Department of Health and Human Services Uniform Guidance Policy Update Subpart D –Post Award Requirements General Provisions For Selected Items of Cost : Commencement And Convocation CostsNew : Exchange RateNew : Intellectual PropertyNew : Taxes (Including Value Added Tax) New, A-21, A-87 6

National Institutes of Health U.S. Department of Health and Human Services : Program Income (a) Non-Federal entities are encouraged to earn income to defray program costs where appropriate. (b) Cost of generating program income. If authorized by Federal regulations or the Federal award, costs incidental to the generation of program income may be deducted from gross income to determine program income, provided these costs have not been charged to the Federal award. 7

National Institutes of Health U.S. Department of Health and Human Services (1) Deduction. Ordinarily program income must be deducted from total allowable costs to determine the net allowable costs. Program income must be used for current costs unless the Federal awarding agency authorizes otherwise. Program income that the non-Federal entity did not anticipate at the time of the Federal award must be used to reduce the Federal award and non-Federal entity contributions rather than to increase the funds committed to the project. 8 Program Income

National Institutes of Health U.S. Department of Health and Human Services (2) Addition. With prior approval of the Federal awarding agency (except for IHEs and nonprofit research institutions, as described in paragraph (e) of this section) program income may be added to the Federal award by the Federal agency and the non-Federal entity. The program income must be used for the purposes and under the conditions of the Federal award. 9 Program Income

National Institutes of Health U.S. Department of Health and Human Services (3) Cost sharing or matching. With prior approval of the Federal awarding agency, program income may be used to meet the cost sharing or matching requirement of the Federal award. The amount of the Federal award remains the same. 10 Program Income

National Institutes of Health U.S. Department of Health and Human Services Program Income Use of program income. If the Federal awarding agency does not specify in its regulations or the terms and conditions of the Federal award, or give prior approval for how program income is to be used, the Deduction must apply. For Federal awards made to IHEs and nonprofit research institutions, if the Federal awarding agency does not specify in its regulations or the terms and conditions of the Federal award how program income is to be used, the Addition must apply. 11

National Institutes of Health U.S. Department of Health and Human Services In specifying alternatives to Deduction and Addition, the Federal awarding agency may distinguish between income earned by the recipient and income earned by subrecipients and between the sources, kinds, or amounts of income. When the Federal awarding agency authorizes the Addition and Cost Sharing or Matching approaches, program income in excess of any amounts specified must also be deducted from expenditures. 12 Program Income

National Institutes of Health U.S. Department of Health and Human Services Income after the period of performance. There are no Federal requirements governing the disposition of income earned after the end of the period of performance for the Federal award, unless the Federal awarding agency regulations or the terms and conditions of the Federal award provide otherwise. The Federal awarding agency may negotiate agreements with recipients regarding appropriate uses of income earned after the period of performance as part of the grant closeout process. 13 Program Income

National Institutes of Health U.S. Department of Health and Human Services Income after the period of performance. Unless the Federal statute, regulations, or terms and conditions for the Federal award provide otherwise, the non- Federal entity has no obligation to the Federal awarding agency with respect to program income earned from license fees and royalties for copyrighted material, patents, patent applications, trademarks, and inventions made under a Federal award to which 37 CFR part 401,“Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Awards, Contracts and Cooperative Agreements” is applicable. 14 Program Income

National Institutes of Health U.S. Department of Health and Human Services : Indirect (F&A) Costs Predetermined Rates for Indirect (F&A) Costs Public Law (76 Stat. 437) as amended (41 U.S.C. 4708) authorizes the use of predetermined rates in determining the “indirect costs” (indirect (F&A) costs) applicable under research agreements with educational institutions. 15

National Institutes of Health U.S. Department of Health and Human Services Indirect (F&A) Costs Predetermined Rates for Indirect (F&A) Costs The stated objectives of the law are to simplify the administration of cost-type research and development contracts (including grants) with educational institutions, to facilitate the preparation of their budgets, and to permit more expeditious closeout of such contracts when the work is completed. 16

National Institutes of Health U.S. Department of Health and Human Services Indirect (F&A) Costs An indirect (F&A) cost rate is not binding upon the Federal Government if the most recent required proposal from the institution has not been certified. 17

National Institutes of Health U.S. Department of Health and Human Services : Vendor vs Contractor and Generally Accepted Accounting Principles (GAAP) Does the elimination of the term "vendor" in favor of "contractor" require non-Federal entities (such as states) to change their longstanding practice of awarding "contracts" to nonprofits which they treat substantively as "subawards" for purposes of this guidance? Would continuing this practice be contrary to GAAP? 18

National Institutes of Health U.S. Department of Health and Human Services Vendor vs Contractor and Generally Accepted Accounting Principles (GAAP) No, this policy does not require such a change, nor would it be in conflict with GAAP. States may call an agreement with a nonprofit however they like, so long as the agreement is audited according to the appropriate policies under the Uniform Guidance. A subaward may be provided through any form of legal agreement, including an agreement that the pass-through entity considers a contract. 19

National Institutes of Health U.S. Department of Health and Human Services : Pass-through Entities and Indirect Cost Rate Negotiation Pass-through entities are expected to honor a subrecipient’s negotiated F&A rate agreement, or use a 10% MTDC de minimis rate, or negotiate an F&A rate with the subrecipient. Is it acceptable to require a subrecipient to accept a rate lower than 10% MTDC via negotiation, or in lieu of their negotiated F&A rate? If a subrecipient requests to establish a rate via negotiation, does the pass-through entity have to establish the rate via negotiation? 20

National Institutes of Health U.S. Department of Health and Human Services Pass-through Entities and Indirect Cost Rate Negotiation If the subrecipient already has a negotiated F&A rate with the Federal government, the negotiated rate must be used. It also is not permissible for pass-through entities to force or entice a proposed subrecipient without a negotiated rate to accept less than the de minimis rate. The cost principles are designed to provide that the Federal awards pay their fair share of the costs recognized under these principals. Pass-through entities may, but are not required, to negotiate a rate with a proposed subrecipient who asks to do so. 21

National Institutes of Health U.S. Department of Health and Human Services : De Minimis Rate and Governments Is the 10 percent de minimis rate for new organizations which have never negotiated an IDC rate available to governmental organizations or tribal government entities which have never negotiated an IDC rate? 22

National Institutes of Health U.S. Department of Health and Human Services De Minimis Rate and Governments Yes. Provision of the 10 percent de minimis indirect cost rate is conditioned on the non- Federal entity meeting the requirements specified. Factors affecting allowability of costs, costs must be consistently charged as either indirect or direct costs, but may not be double charged or inconsistently charged as both. 23

National Institutes of Health U.S. Department of Health and Human Services De Minimis Rate and Governments If chosen, this methodology once elected must be used consistently for all Federal awards until such time as a non-Federal entity chooses to negotiate for a rate, which the non-Federal entity may apply to do at any time. 24

National Institutes of Health U.S. Department of Health and Human Services Questions or Comments? 25