This document has been archived and replaced by NSF-02-151
CHAPTER VI
Chapter VI Contents
601 Federal Cost Principles VI-1
601.1 Applicability to Grantees VI-1
601.2 Applicability to Contracts Under Grants VI-1
601.3 Conflicting Guidelines VI-1
602.3 Post-Expiration Costs VI-2
603 Prior Approval VI-2
603.1 OMB Directive VI-2
603.2 NSF Prior Approval Policy VI-2
604 Advance Understandings VI-2
610 Direct Costs VI-2
611 Salaries, Wages and Fringe Benefits VI-2
612 Equipment VI-3
612.1 Related Equipment Guidelines VI-3
612.2 Definitions VI-3
612.3 Special Purpose Equipment VI-3
612.4 General Purpose Equipment VI-4
613 Materials and Supplies VI-4
614 Travel Costs VI-4
615 Computer Costs VI-4
615.1 Automatic Data Processing Equipment (ADPE) Leasing Costs VI-4
615.2 Grantee-Owned ADPE Facilities VI-4
616.1 Outside Consultants VI-4
616.2 Intra-University Consulting VI-5
617 Publication, Documentation and Dissemination VI-5
618 Participant Support Costs VI-6
618.1 General VI-6
618.2 Stipends or Subsistence Allowances VI-6
621 Rearrangements and Alterations VI-6
623 Rental or Lease of Facilities or Special Purpose Equipment VI-7
624 Relocation Costs VI-7
625 Meetings and Conferences VI-7
630 Indirect Costs VI-8
631 Background VI-8
632.1 Basic Policy VI-8
632.2 Exceptions to Basic Policy VI-9
633 Indirect Costs in Proposals for NSF Support VI-9
633.2 Off-Campus (Off-Site) Activities VI-10
634 Indirect Costs in NSF Cost Reimbursement Grants VI-10
634.1 General VI-10
634.2 NSF Calculation of Indirect Cost Amount VI-10
634.3 Off-Campus (Off-Site) Indirect Cost Rates VI-10
634.4 Amendment for Additional Funding Support VI-11
635 Grantee Reimbursement for Indirect Costs VI-11
635.1 Approved Rates (other than Maximum Provisional) VI-11
635.2 Maximum Provisional Rate VI-11
635.3 Underrecovery of Indirect Costs VI-11
635.4 Rebudgeting of Indirect Cost Funds Provided Under NSF Grants VI-11
640 Fee Payments Under NSF Grants VI-11
This chapter covers the general applicability of Federal cost principles to NSF cost reimbursement grants, including a discussion of selected items of cost and description of NSF prior approval requirements. It consists of the following topics:
600 BASIC CONSIDERATIONS
610 DIRECT COSTS
620 OTHER DIRECT COSTS
630 INDIRECT COSTS
640 FEE PAYMENTS UNDER NSF GRANTS
601.1 Applicability to Grantees
Expenditures under NSF cost reimbursement grants are governed by the Federal cost principles applicable to specific types of grantees as follows:
a. INSTITUTIONS OF HIGHER EDUCATION. The government-wide principles for determining the costs applicable to research and development and to training and other educational services performed by colleges and universities under Federal government grants and contracts are contained in OMB Circular A-21. This circular is applicable to all NSF awards to both public and private institutions of higher education. Also see Federal Acquisition Regulations (FAR) at 48 CFR §31.3.
b. OTHER NON-PROFIT ORGANIZATIONS. The government-wide cost principles and procedures applicable to grants, contracts and other agreements with non-profit organizations are contained in OMB Circular A-122.
c. COMMERCIAL FIRMS. The government-wide cost principles and procedures for use in cost reimbursement type supply and research contracts with commercial organizations applicable to NSF grants to commercial organizations are contained in the FAR at 48 CFR §31.2.
d. STATE AND LOCAL GOVERNMENTS. The government-wide principles and standards for determining costs applicable to grants and contracts with State, local and Federally recognized Indian tribal government entities (excluding publicly financed colleges and universities and hospitals) are contained in OMB Circular A-87 and the FAR at 48 CFR §31.6.
e. HOSPITALS. For NSF purposes, the principles and procedures applicable to grants, contracts and other agreements with hospitals are contained in DHHS publication Guide for Hospitals, OASC-345 CFR Part 74, Appendix E, "Principles for Determining Costs Applicable to Research and Development Under Grants and Contracts with Hospitals."
601.2 Applicability to Contracts Under Grants
Grantees are responsible for assuring that costs of all subawards under NSF grants are subject to those cost principles and procedures appropriate to the subaward type and contractor organization or institution involved. For example, if the subaward is a cost reimbursement type with a commercial concern, FAR Subpart 31.2 would apply.
In the event of any discrepancy between the summary information contained in this chapter and any specific provision of the applicable Federal cost principles, the cost principles in effect as of the effective date of the NSF grant will govern. In case of a discrepancy between the special provisions of an NSF grant and the standards of the applicable cost principles, the special provisions of the grant will govern.
The maximum obligation of NSF for support of the project will not exceed the amount specified in the grant instrument, as amended. NSF does not amend grants to provide additional funds for such purposes as reimbursement for unrecovered indirect costs resulting from the establishment of final negotiated rates or for increases in salaries, fringe benefits and other costs.
a. Grantees may incur pre-award costs within the 90 day period immediately preceding the effective date of the grant providing:
1. the approval of pre-award spending is made and documented in accordance with the grantee's procedures;
2. the advanced funding is necessary for the effective and economical conduct of the project; and
3. the costs are otherwise allowable.
b. Pre-award expenditures are made at the grantee's risk. Grantee authority to approve pre-award costs does not impose any obligation on NSF prior to the availability of appropriations.
c. Requests for pre-award costs for periods exceeding 90 calendar days must be submitted in writing to the cognizant Grants Officer. Pre-award expenditures prior to funding of an increment within a continuing grant are not subject to this limitation or approval requirement, but are subject to paragraph b. above.
NSF funds may not be expended subsequent to the expiration date of the grant except to liquidate valid commitments which were made on or before the expiration date. (See GPM 452, "Final Disbursement Reporting," and GPM 617, "Publication, Documentation and Dissemination".) For example, commitment of project funds is valid when made prior to the expiration date for specialized (research) equipment ordered well in advance of the expiration date but where, due to unusual or unforeseen circumstances, receipt of such equipment is delayed beyond the expiration date. The costs of equipment ordered after the expiration date may not, in any case, be charged to the project.
Consistent with OMB Circular A-110, NSF has waived most cost related and administrative prior approvals required by OMB Circulars A-21 and A- 110.
603.2 NSF Prior Approval Policy
a. If an expenditure item is proposed in the budget and justified in the narrative, and unless otherwise specified in the grant, provision for it in the grant constitutes NSF authorization to charge these costs, if otherwise allowable under the cost principles.
b. Types of grantee requests for NSF approval for certain categories of expenditures are highlighted in Exhibit III-1.
a. The allowability of the selected items of cost covered in the various cost principles applies broadly to many accounting systems in varying situations. In some cases (e.g., professional and consultant services costs) the various cost principles prescribe specific factors or conditions to be considered in determining the allowability of such costs in specific situations. In such cases, it is important that the stated conditions or factors be adhered to and documented in order to avoid possible subsequent disallowance.
b. In the event a grantee anticipates charging the NSF grant for an item of direct cost which, in light of the above, might subsequently be disputed, the Authorized Organizational Representative should discuss the matter with the cognizant NSF Grants Officer.
The following subsections summarize the allowability of frequently encountered direct cost items in the order in which they appear in the grant budget.
611 Salaries, Wages and Fringe Benefits
a. All Grantees. All remuneration paid currently or accrued by the organization for employees working on the NSF-supported project during the grant period is allowable to the extent that:
1. total compensation to individual employees is reasonable for the work performed and conforms to the established policy of the organization consistently applied to both government and non-government activities; and
2. the charges for work performed directly under NSF grants and for other work allocable as indirect costs are determined and documented as provided in the applicable Federal cost principles.
b. Colleges and Universities. Section J.8 of OMB Circular A-21 establishes special criteria for work performed on government projects by faculty members during and outside the academic year. In summary these are:
1. Academic Year Salaries. To be based on the individual faculty member's regular compensation for the continuous period which, under the policy of the institution concerned, constitutes the basis of his/her salary. Except as provided in GPM 616.2, "Intra-University Consulting," charges to Federal grants, irrespective of the basis of computation, will not exceed the proportionate share of the base salary for that period.
2. Periods Outside the Academic Year. During the summer months or other periods not included in the period for which the base salary is paid, salary is to be at a monthly rate not in excess of the base salary divided by the number of months in the period for which the base salary is paid. NSF policy on funding of summer salaries (known as NSF's two-ninths rule) remains unchanged: proposal budgets submitted should not request, and NSF- approved budgets will not include, funding for an individual investigator which exceeds two-ninths of the academic year salary.
3. Extra Compensation Above Base Salary. Requests may be included in proposals for salary payments for extra compensation only for science and engineering education projects when the particular program guide for preparation of proposals specifically provides that extra compensation for the Project Director (or staff members) may be requested and approved by NSF for situations such as teaching evening or weekend classes, or for administrative work done as overload prior to or following a project; and provided further that the extra compensation is computed at a rate not in excess of the monthly rate of the base academic year salary, and is consistent with institutional policy.
4. Sabbatical Leave. Unless there are special conditions in an applicable NSF program guide or in the grant instrument, charges to an NSF grant for services rendered to the project by an individual during his/her sabbatical period are allowable provided that such compensation is:
(a) proportional to the service rendered;
(b) in accordance with established institutional sabbatical policies regardless of source of funds (Section .40 of OMB Circular A-21); and
(c) at a rate which, when added to the individual's sabbatical salary rate, does not exceed the individual's base salary rate for the individual's most recent academic year or equivalent prior period.
Thus, NSF salary support during sabbatical periods is only intended to make up the difference between sabbatical rate of pay and the individual's base salary rate for periods during which the individual is performing work on an NSF-sponsored project.
Fringe benefits are allowable as a direct cost (if not included as an indirect cost) in proportion to the salary charged to the grant, to the extent that such payments are made under formally established and consistently applied organizational policies.
612.1 Related Equipment Guidelines
Additional NSF guidelines on equipment are found in GPM 540, "Property Management Standards."
The following definitions, derived from OMB Circulars A-110 and A-21, apply to all NSF grants (or amendments thereto):
a. ACQUISITION COST OF EQUIPMENT means the net invoice price of the equipment, 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 or protective in-transit insurance, shall be included or excluded from the unit acquisition cost in accordance with the recipient's regular accounting practices.
b. EQUIPMENT means tangible nonexpendable personal property including exempt property charged directly to the grant having a useful life of more than one year and an acquisition cost of $5,000 or more per unit. However, consistent with recipient policy, lower limits may be established.
c. GENERAL PURPOSE EQUIPMENT means permanent equipment (as defined in b., above) which is usable for other than research, medical, scientific or technical activities, whether or not special modifications are needed to make it suitable for a particular purpose. Examples of general purpose equipment include office equipment and furnishings, air conditioning equipment, reproduction and printing equipment, motor vehicles and automatic data processing equipment.
d. SPECIAL PURPOSE EQUIPMENT means permanent equipment (as defined in b., above) which is usable only for research, medical, scientific or technical activities. Examples of special purpose equipment include microscopes, x-ray machines, surgical instruments and spectrometers, and may include diamond knives.
612.3 Special Purpose Equipment
Expenditures for special purpose equipment are allowable as direct costs provided the acquisition of items with a unit cost of $5,000 or more is:
a. necessary for the research or activity supported by the grant;
b. not otherwise reasonably available and accessible;
c. of the type normally charged as a direct cost to sponsored agreements; and
d. acquired in accordance with organizational practice.
Authority to review and approve acquisition of equipment is not extended to small business or other commercial organizations (as defined in GPM 501.2). NSF review and approval is required for all equipment purchases by such organizations.
612.4 General Purpose Equipment
Expenditures for general purpose equipment are normally unallowable unless the equipment is primarily or exclusively used in the actual conduct of research. Authority to review and approve acquisition of equipment is not extended to small business or other commercial organizations. NSF review and approval is required for all equipment purchases by such organizations.
The costs of materials and supplies (tangible personal property other than equipment), costing less than $5,000 (or other lower threshold consistent with grantee policy), necessary to carry out the project are allowable as prescribed in the governing cost principles.
a. Expenses for transportation, lodging, subsistence and related items incurred by project personnel and by outside consultants employed on the project (GPM 616.1, "Outside Consultants") who are in travel status on business related to an NSF-supported project are allowable as prescribed in the governing costs principles. The requirements for prior approval detailed in the governing cost principles are waived.
b. Except as provided in the governing cost principles, the difference in cost between first-class air accommodations and less than first-class air accommodations is unallowable. A train, bus or other surface carrier may be used in lieu of or as a supplement to air travel at the lowest first- class rate by the transportation facility used. However, if such travel could have been performed by air, the allowance will not normally exceed that for jet economy air fare.
c. Foreign travel costs of dependents of key project personnel is allowable provided:
1. the individual is a key person who is essential to the research on a full-time basis;
2. the individual's residence away from home and in a foreign country is for a continuous period of six months or more and is essential to the effective performance of the project; and
3. the dependent's travel allowance is consistent with the policies of the organization administering the grant.
615.1 Automatic Data Processing Equipment (ADPE) Leasing Costs
The costs of leasing ADPE are allowable, up to the amount that the grantee would be allowed had it purchased the ADPE, and to the extent that the rates are reasonable in light of factors such as those described in FAR Subpart 31.205-36.
615.2 Grantee-Owned ADPE Facilities
The costs of services involving the use of highly complex or specialized facilities operated by the organization, such as computing facilities, are allowable provided the charges meet the conditions of the governing cost principles.
a. Grantees normally are expected to utilize the services of their own officers or employees to the maximum extent in managing and performing the activities supported by NSF grants. Where it is necessary for a grantee to enter into a subaward for the services of persons who are not its officers or employees, it is expected to do so in accordance with written organizational standards which provide for consideration of the factors outlined in the governing cost principles.
b. If the need for consultant services is anticipated, the proposal narrative should provide appropriate rationale, and the summary proposal budget should estimate the amount of funds which may be required for this purpose. To the extent possible, consultant rates should show separate amounts for actual services and each of the components of the rate.
c. Costs of professional and consultant services rendered by persons who are members of a particular profession or possess a special skill and who are not officers or employees of the performing organization are allowable when reasonable in relation to the services rendered and when not contingent upon recovery of the costs from the government. However, payment for a consultant's services may not exceed the daily equivalent of the then current maximum rate paid to an Executive Schedule Level IV Federal employee (exclusive of indirect cost, travel, per diem, clerical services, fringe benefits and supplies), unless specifically authorized by law.
d. In determining the allowability of costs in a particular case, no single factor or any special combination of factors is necessarily determinative. However, the following factors, among others, are relevant:
1. the nature and scope of the service rendered in relation to the service required;
2. the necessity of issuing a subaward for the service considering the organization's capability in the particular area;
3. the past pattern of such costs, particularly in the years prior to the award of government contracts and grants;
4. the impact of government contracts and grants on the organization's total activity (e.g., what new problems have arisen);
5. whether the proportion of government work to the organization's total activity is such as to influence the organization in favor of incurring the cost, particularly where the services rendered are not of a continuing nature and have little relationship to work under government contracts and grants;
6. whether the service can be performed more economically by employment rather than by consulting;
7. the qualifications of the individual or concern rendering the service and the normal/customary fees charged and received by the individual for comparable services, especially on non-government contracts and grants; and
8. adequacy of the contractual agreement for the service (e.g., description of the service, estimate of time required, rate of compensation and termination provisions).
e. In addition, retainer fees to be allowable must be supported by evidence of bona fide services available or rendered.
f. Costs of legal, accounting and consulting services and related costs incurred in connection with organization and reorganization, defense of antitrust suits and the prosecution of claims against the government are unallowable. Costs of legal, accounting and consulting services and related costs incurred in connection with patent infringement litigation are unallowable unless otherwise provided for in the grant.
g. Grantees may hire consultants not identified in the grant proposal or
award, provided:
1. it is in accordance with written organizational standards;
2. grant funds are reallocated in accordance with the grantee's policies which are consistent with the governing cost principles; and
3. it is within the limits of the grant funding.
616.2 Intra-University Consulting
Since intra-university consulting is assumed to be undertaken as a university obligation requiring no compensation in addition to full-time salary, the principles summarized in GPM 611.1, "Salaries, Wages and Fringe Benefits," also apply to those who function as consultants or otherwise contribute to a project conducted by another faculty member of the same institution. However, in unusual cases where consultation is across departmental lines or involves a separate or remote operation, and the work performed by the consultant is in addition to his/her regular appointment, any charges for such work representing extra compensation above the salary are allowable if consistent with the applicable cost principles.
Employees of the Federal government (other than NSF) may be utilized as lecturers or staff members on a project and may receive compensation and/or expenses if they obtain prior approval from their agencies to participate, and if services to the project are performed outside their regular working hours or while they are on leave status from official duties. Under no circumstances may NSF employees receive compensation from an NSF-supported project.
617 Publication, Documentation and Dissemination
a. Costs of documenting, preparing, publishing, disseminating and sharing research findings and supporting material are allowable charges against the grant.
b. Page charges for scientific journal publication are allowable as a necessary part of research costs, where:
1. the research papers report work supported by NSF; and
2. the charges are levied impartially on all research papers published by the journal, whether by non-government or by government authors.
c. GPM 452, "Final Disbursement Reporting," permits a grantee to transfer from the grant account to an institutional account an amount equal to commitments for other types of costs, including publication and sharing. Therefore, in the event that valid commitments for publication or sharing have been incurred and it is not possible to effect an actual payment for such charges by the time the final disbursements are due and obligations must be charged against the NSF cash advance and reported on the SF 272, the grantee may transfer from the grant account to an institutional account an amount equal to the commitment and retain such funds for payment of publication charges and sharing expenses. If actual publication charges and sharing expenses are less than the commitment, the excess funds should be returned to NSF. However, if the excess is less than $300, it may be used by the grantee for general research. If actual publication charges and sharing expenses are more than the commitment, any excess will not be reimbursed by NSF. See GPM 734, "Dissemination and Sharing of Research Results," and GPM 740, "Publication/Distribution of Grant Materials".
a. Participant support costs are direct costs for items such as stipends or subsistence allowances, travel allowances and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with meetings, conferences, symposia or training projects.
b. Funds provided for participant support may not be used by grantees for other categories of expense without the specific prior approval of the cognizant NSF Program Officer.
c. Participant support allowances may not be paid to trainees who are receiving compensation, either directly or indirectly, from other Federal government sources while participating in the project. Recipients of educational benefits from the Veterans Administration and retirement or disability compensation are exempt from this restriction. A non-NSF Federal employee may receive participant support allowances from grant funds provided there is no duplication of funding of items and provided no single item of participant cost is divided between his/her parent agency and NSF grant funds.
618.2 Stipends or Subsistence Allowances
To help defray the costs of personal maintenance while participating in a conference or training activity, participants may be paid a stipend, per diem or subsistence allowance, based on the type and duration of the activity, as outlined in the pertinent program announcement and in the grant instrument. Such allowances must be reasonable, in conformance with the usual policy of the grantee organization and limited to the days of attendance at the conference plus the actual travel time required to reach the conference location by the most direct route available. Where meals or lodgings are furnished without charge or at a nominal cost (e.g., as part of the registration fee), the per diem or subsistence allowance will be correspondingly reduced. Although local participants may participate in conference meals and coffee breaks as provided for in GPM 625, "Meetings and Conferences," grant funds may not be used to pay per diem or similar expenses for local participants in the conference.
a. Travel costs of participants may be allowable as outlined in the pertinent program announcement and in the grant instrument. If so, the restrictions regarding class of accommodations (see GPM 614, "Travel Costs") and use of U.S.-flag air carriers (see GPM 761, "Travel to Foreign Countries") are applicable.
b. In training activities which involve field trips, costs of transportation of participants are allowable.
621 Rearrangements and Alterations
a. Except under certain programs, NSF does not normally make grants for construction or facility improvements. However, rearrangement and alteration costs that do not constitute construction (i.e., rearrangements and alterations aggregating less than $10,000) may be allowable under NSF grants to adapt space or utilities within a completed structure to accomplish the objective of the NSF-supported activity, provided that:
1. the grantee is not an individual or a foreign institution;
2. the building has a usable life consistent with project purposes and is architecturally suitable for conversion;
3. the rearrangement and alteration are essential to the project supported by the grant; and
4. the space involved will actually be occupied by the project. In situations where the space is rented, in order for the costs of the rearrangement and alteration to be allowable, the grantee must secure a lease for the length of the project. (See GPM 623, "Rental or Lease of Facilities or Special Purpose Equipment".)
b. Rearrangements and alterations under $10,000 may be approved by grantees. For expenditures exceeding $10,000, written prior approval must be obtained from the NSF Grants Officer. Otherwise, any plans for such rearrangement or alteration should be clearly set forth in the proposal. If approved by NSF, such approval will be indicated in the grant instrument. Note that Appendix A, Contract Provisions, of OMB Circular A-110 contains various requirements concerning contracts for construction or repair in excess of $2,000.
In amplification of the provisions of the various cost principles regarding public information service costs, the cost of news releases announcing the results of an NSF-supported project is allowable. In the event the performing organization wishes to join with NSF in a simultaneous news release, arrangements may be made through the NSF's Office of Legislative and Public Affairs, Public Affairs Group, telephone (703) 306-1070 (see GPM 812.2, "Press Releases").
623 Rental or Lease of Facilities or Special Purpose Equipment
a. Normally the grantee is expected to make appropriate facilities available without direct charge to grant funds. However, on occasion, it is necessary to use facilities not under the control of the grantee. Rental of space off-site may be allowed, for example, for a research project if laboratory facilities or other work areas of a type or coverage not normally available to the grantee are required. Rental charges may be made in conformance with the organization's policies and in the same manner that similar charges are made to any account, provided that such rental costs are reasonable and otherwise conform to the governing cost principles.
b. Rental of special purpose equipment is allowable. See also GPM 615.1, "Automatic Data Processing Equipment (ADPE) Leasing Costs."
a. Relocation costs may be charged to an NSF grant as an other direct cost in accordance with the applicable governing cost principles provided that:
1. a proposal for NSF support specifically indicates that the grantee intends to hire a named individual for full-time work on the project;
2. such recruitment action is not disapproved by the grant terms; and
3. the prospective employee or visiting staff member:
(a) is essential to the project on a full-time basis for a continuous period of at least twelve months; and
(b) is regularly located at a place sufficiently removed from the project site that his/her employment necessitates the change.
b. The amount of actual reimbursement should be in accordance with grantee's established policy or practice which:
1. is in conformance with the applicable governing cost principles;
2. has been approved by the cognizant governing audit agency; and
3. is consistently applied.
Because of the frequency with which questions are raised regarding the phrase "facilities for meetings and costs incidental thereto," contained in the various sets of governing cost principles, the points below summarize the allowability of various items of cost associated with conferences, symposia, workshops or other meetings supported as the principal purpose of an NSF grant. Any costs charged to an NSF grant would also need to be reasonable and directly allocable to the supported activity.
a. Conference Facilities. Rental of facilities and necessary equipment is allowable. (See GPM 623, "Rental or Lease of Facilities or Special Purpose Equipment".)
b. Supplies. Purchase of expendable materials and supplies necessary for the meeting is allowable.
c. Conference Services. Costs of translation services and of recording and transcribing the proceedings are allowable.
d. Publication Costs. Costs of publishing the proceedings are allowable only if approved in the grant instrument or otherwise specifically approved in writing by the NSF Grants Officer.
e. Salaries. Salaries of professional personnel, editorial and clerical assistants and other staff members are allowable in accordance with GPM 611, "Salaries, Wages and Fringe Benefits," in proportion to the time or effort devoted to the preparation and conduct of the conference and summarizing its results.
f. Consultant Services and Speaker Fees. Reasonable fees and travel allowances and per diem (or meals provided in lieu of per diem) are allowable as prescribed in GPM 614, "Travel Costs," and GPM 616, "Consultant Services."
g. Meals and Coffee Breaks. When certain meals are an integral and necessary part of a conference (e.g., working meals where business is transacted), grant funds may be used for such meals. Grant funds may also be used for furnishing a reasonable amount of hot beverages or soft drinks to conference participants and attendees during periodic coffee breaks.
h. Participant Support Costs. Allowable as prescribed in GPM 618, "Participant Support Costs." (See also GPM 632.2, "Exceptions to Basic Policy.")
i. Entertainment. Costs of entertainment, amusement, diversion and social activities and any costs directly associated with such costs (such as tickets to shows or sports events, meals, lodging, rentals, transportation and gratuities) are unallowable. Expenses of awardee employees who are not on travel status, serving as hosts, or otherwise participating at meals that are primarily social occasions involving speakers or consultants are not allowable, even if the costs of the speaker or consultant are allowable under paragraph f, above. Costs of employees on travel status are limited to those allowed under the governing cost principles for travel expenses (see GPM 614, "Travel Costs").
j. Alcoholic Beverages. No federal funds may be spent on alcoholic beverages.
Special Note: Costs, such as those allowable costs identified above, are only allowable for meetings or conferences specifically and clearly identified in the proposed scope of work and budget, as modified and approved by NSF. NSF funds are not otherwise to be spent for meals or coffee breaks for intramural meetings of an organization or any of its components, including, but not limited to, laboratories, departments and centers.
As authorized by statute (41 USC §254a) and Comptroller General decision (B-157584) and recommended by governing cost principles, NSF has elected to use predetermined fixed overhead rates with all grantees in most situations. When NSF elects not to use such rates, the grant letter will indicate the type of indirect cost rate to be used. (See GPM 634.2, "NSF Calculation of Indirect Cost Amount.")
a. It is NSF policy that grantees are entitled to reimbursement from grant funds for indirect costs through the application of Federally negotiated indirect cost rates except where specifically excluded by GPM 632.2, "Exceptions to Basic Policy," or when the grantee waives entitlement to full reimbursement of indirect costs voluntarily.
b. If the grantee organization has executed an indirect cost negotiation agreement with a cognizant Federal negotiating agency, or otherwise agreed to an indirect cost rate and base with some Federal department or agency, NSF will generally use that negotiated agreement as the basis for determining an NSF-approved rate for use in funding NSF grants. In situations, where the cognizant Federal negotiating agency has issued "provisional" rates, it is NSF policy to treat provisional rates as predetermined rates for funding purposes. These rates will not be subject to later funding adjustment.
c. Delays in applying new rates to proposals is minimized since NSF staff obtain the latest rates from NSF's computer-based management information system prior to grant award. Organizations are encouraged to advise the Cost Analysis and Audit Resolution Branch of CPO, newly negotiated changes in indirect cost rates to help assure that the latest rates are used for grants being processed.
d. NSF will not amend a grant solely to provide additional funds for changes in indirect cost rates. Further, indirect costs will only be finalized on a post-audit basis for grants which contain maximum provisional rates, and then at a final rate that does not exceed the maximum provisional rate.
e. NSF provides funding for indirect costs under NSF cost reimbursement grants by:
1. application of the predetermined fixed rate principle in grants to universities and colleges and to those other organizations where the cost experience and other pertinent facts available are deemed sufficient to determine the probable level of indirect costs during the ensuing accounting period; or
2. use of the latest available approved rate based on actual past cost experience or, when appropriate, on cost projections, as a maximum provisional rate (subject to finalization and downward adjustment only), in some grants to other non-profit organizations and profit-making firms; or
3. use of other specific provisions relating to indirect costs such as a fixed lump sum amount for indirect costs or a fixed amount award with indirect cost rates used only to develop the total sum awarded. Such specific provisions will be set forth in the NSF grant document.
f. Any negotiations with respect to business and financial matters on specific grants, including the amount of indirect cost reimbursement, are conducted by the cognizant Grants Officer in DGA with the grantee's Authorized Organizational Representative.
g. NSF program staff may not negotiate indirect costs as a discrete item of a proposal budget since only the duly authorized Grants Officer has authority to negotiate indirect costs. NSF program staff are not authorized to suggest or request that PI/PDs seek reductions or waivers of indirect costs except as explicitly specified in applicable NSF program solicitations, announcements or brochures.
632.2 Exceptions to Basic Policy
a. No Indirect or Limited Reimbursement. NSF generally provides no amounts for indirect costs for the following:
1. grants to individuals;
2. grants solely for the support of travel, equipment, construction of facilities, or doctoral dissertation research (see GPM 333.1, "Unsolicited Research Projects");
3. grants in which NSF support is exclusively in the form of fellowships, traineeships or other fixed amounts such as cost-of-education allowances;
4. foreign grantees; or
5. participant support costs. However, an allowance for indirect costs associated with participant support costs may be established or negotiated in advance when circumstances indicate that the grantee could be expected to incur significant expenses in administering participant payments (other than salary or other direct expenses being reimbursed under the award).
In addition, in some circumstances or as may be indicated in the applicable program announcement/ solicitation, NSF may not provide full amounts for indirect costs. Also, in certain instances NSF may provide a fixed lump sum amount for indirect costs. In these situations, NSF grant letters will contain or reference appropriate provisions indicating the basis for indirect costs provided in the grant amount.
b. Independent Research and Development (IR&D). NSF does not typically fund IR&D as part of an indirect cost rate under its grants. IR&D, as defined at FAR 31.205-18(a), includes cost of effort that is not sponsored by a grant or required in performance of a contract and that consists of projects falling within the four following areas:
1. basic research;
2. applied research;
3. development; and
4. systems and other concept formulation studies.
NSF's primary purpose is to support and advance independent research within the scientific community. NSF does not generally fund development. NSF has well recognized and established procedures for stimulating and supporting this independent research through competitive selections based on merit review of proposed research projects that are deemed most worthy of support, within the constraints of its appropriations. Reimbursement through the indirect cost mechanism of independent research costs could circumvent this competitive process.
To ensure that all research projects receive similar and equal consideration, eligible organizations may compete for direct funding of independent research projects they consider worthy of support by submitting proposals for those projects to NSF. Since proposals for these projects may be submitted for direct funding, costs for independent research projects are not typically allowable as indirect costs under NSF grants.
c. Facilities Capital Cost of Money (FCCOM). NSF does not typically fund facilities capital cost of money under its grants. FCCOM is defined for commercial organizations at FAR 31.205-10 as "an imputed cost determined by applying a cost-of-money rate to facilities capital employed in contract performance."
633 Indirect Costs in Proposals for NSF Support
Each proposal for NSF support of a project should include a budget indicating the total amount requested from NSF with subtotals for direct and indirect costs. The amounts shown opposite the various line items should be the amounts requested from NSF. The amount shown for indirect costs should be calculated by applying the approved indirect cost rate to the approved base. When a submitting organization does not have a Federally approved indirect cost base and rate(s), its business officer should be prepared to submit an indirect cost proposal as required in GPG Section II. The contents and financial data included in indirect cost proposals vary according to the make-up of the proposing organization. Appropriate guidance on the financial material to be submitted to NSF may be obtained by writing to the Cost Analysis and Audit Resolution Branch, CPO. Small business organizations especially, and other organizations regardless of size, submitting a grant proposal to NSF for the first time should request guidance from the Cost Analysis and Audit Resolution Branch prior to the submission of an indirect cost rate proposal to NSF.
633.2 Off-Campus (Off-Site) Activities
If the proposed grant project contemplates work to be performed in an environment or in a manner which would generate a significantly different level of indirect costs than the normal work of the organization, such as off-campus (off-site) projects, the proposed budget should calculate the indirect cost portion of the grant on the basis of the organization's on-campus/off-campus policy, as reflected in the published negotiation agreement. Organizations lacking such a policy are encouraged to establish one, in coordination with their cognizant Federal agency. Responsibility for coordinating the establishment of indirect cost rates and auditing of Federal grants for most colleges and universities is assigned by relevant OMB guidance to the DHHS and to the Office of Naval Research (ONR).
634 Indirect Costs in NSF Cost Reimbursement Grants
Each grant letter specifies NSF's maximum obligation for its share of the total costs of a project. (See GPM 602.1, "Maximum Obligation.") The NSF budget reflects the categories of costs itemized in the final proposal budget on which NSF bases its level of support. The amount included in the budget for indirect costs will be based on the provisions included above in GPM 632.1, "Basic Policy."
634.2 NSF Calculation of Indirect Cost Amount
a. Organizations with established rates. In accordance with GPM 632.1, "Basic Policy," NSF generally implements its indirect cost policy for universities, colleges and other appropriate organizations by application of the predetermined fixed rate principle to the indirect cost rate(s) contained in the current indirect cost negotiation agreement. Such "Federally negotiated" rate(s) will be applied to the support period of each grant and extended through the expiration date as follows:
1. If the negotiation agreement specifies: (a) a "final" rate as the latest available rate; or (b) a single "predetermined", "fixed" or "provisional" rate, such rate will be the "predetermined fixed rate" used by NSF in calculating the indirect cost amount included in the NSF grant budget.
2. If the negotiation agreement provides two or more "predetermined", "fixed", or "provisional" rates for two or more successive time frames within the NSF grant period, each such rate (used as a "predetermined fixed rate") generally will be applied to appropriate direct cost expenditures anticipated to be made during each time frame. If the effective period of the negotiation agreement ends prior to the expiration date of the grant, NSF will extend the last of the two or more rates through the expiration date of the grant under preparation.
b. Organizations without established rates. Each NSF cost reimbursement grant to an organization which does not have an established indirect cost rate agreement with NSF or another Federal agency generally will:
1. contain a maximum provisional indirect cost rate which is subject to finalization and downward adjustment only;
2. include a fixed dollar amount or percentage for indirect costs; or
3. utilize other special indirect cost provisions (e.g., specific NSF program limitations).
The grant letter will contain the appropriate clause indicating the method of providing the indirect cost amount in the grant budget and the basis for final payment of indirect costs under the grant. Grantees should submit to the Cost Analysis and Audit Resolution Branch updated indirect cost rate information on an annual basis.
634.3 Off-Campus (Off-Site) Indirect Cost Rates
When a project involves off-campus (off-site) activities, NSF normally will compute the indirect cost amount on the basis of the off-campus rate. When a project involves both on- and off-campus activities, NSF normally will compute the indirect cost amount on the basis of the on-campus/off- campus policy reflected in the most recent agreement between the organization and the cognizant Federal agency. In the absence of such an agreed policy, NSF normally will compute the indirect cost amount by applying the on-campus rate to the on-campus base costs and the off-campus rate to the off-campus base costs.
634.4 Amendment for Additional Funding Support
As indicated in GPM 260, "Additional Funding Support," NSF may grant additional funding support either during the originally contemplated support period or for a subsequent support period. An amendment for "supplemental support" to provide funds for unforeseen expenditures during the originally contemplated support period, will contain the same indirect cost rate(s) as the grant being amended. NSF will not amend grants solely to provide additional funding for indirect costs. Continuing grant increments funded after the initial grant period will include funding for indirect costs at the approved rate(s) included in the proposal budget submission approved at the time of the initial award. Subsequent changes in rates will not be reflected in continuing grant increments but grantees are authorized to charge indirect costs in accordance with GPM 635, "Grantee Reimbursement for Indirect Costs."
635 Grantee Reimbursement for Indirect Costs
635.1 Approved Rates (other than Maximum Provisional)
Grantees may charge NSF grants at the rate(s) stipulated in the grant or amendment budget unless the grant letter states that the indirect cost amount is based on a maximum provisional rate. However, should negotiations between the organization and the cognizant Federal agency result in changes in the approved indirect cost rate not reflected in the NSF grant, the organization may charge NSF projects at the newly negotiated rate in effect at the time direct cost expenditures are made, provided that this method of charging indirect costs is consistently applied and meets generally accepted accounting principles; and provided further that to do so would not:
1. reduce or adversely affect the scope of the project;
2. result in increased costs over the NSF grant amount during the grant period;
3. decrease the period of support as contemplated in the grant instrument; or
4. be inconsistent with any special indirect cost provisions of the grant.
635.2 Maximum Provisional Rate
Organizations whose grants specify a maximum provisional rate, must charge NSF grants at the lesser of: (a) the maximum provisional rate stated in the approved grant budget; or (b) the actual rate. Final rates under such grants will be the maximum provisional rate or the actual rate, whichever is less.
635.3 Underrecovery of Indirect Costs
NSF recognizes that any inability to obtain "full reimbursement" for indirect costs means the grantee must absorb the underrecovery. Any such underrecovery may be allocated as part of the organization's required cost sharing. (See GPM 330, "Cost Sharing and Matching.")
635.4 Rebudgeting of Indirect Cost Funds Provided Under NSF Grants
Should the actual allowable indirect costs chargeable to a grant prove less than those funded by NSF under the grant, the grantee may use the difference to pay additional allowable direct costs under the grant. In addition, grantees may elect to charge less than the full amount of allowable indirect costs to grants in order to pay for additional allowable direct costs.
640 FEE PAYMENTS UNDER NSF GRANTS
It is NSF policy to permit payment of fees under grants which result from formally solicited proposals (i.e., program solicitations) where so indicated in the solicitation, and only to such organizations as may legitimately and normally request and receive fees for performance of government-supported work. The amount of the fee is negotiable depending on the circumstances (grantee's level of risk, grantee's opportunity costs, type of work involved, deliverables, etc.).