GIM 18
Attachment B

Effective October 1, 1994, the National Institutes of Health (NIH) has revised its implementation of Expanded Authorities (PHS Grants Policy Statement Section 8 pages 5-8). The implementation is based on recent revisions to OMB Circular A-110 and Department of Health and Human Services Regulations at 45 CFR Part 74, Administration of Grants, which waive the following prior approval requirements (expanded authorities) for awards that support research unless the Federal awarding agency provides otherwise in the award notice or in the agency's regulations:

1. Incur preaward costs 90 calendar days prior to award. Preaward costs more than 90 calendar days prior to award requires the prior approval of the Federal awarding agency. All preaward costs are incurred at the recipient's risk (i.e., the Federal awarding agency is under no obligation to reimburse such costs if for any reason the recipient does not receive an award or if the award is less than anticipated and inadequate to cover such costs).

2. Initiate a one-time extension of the expiration date of the award of up to 12 months unless one or more of the following conditions apply. For one-time extensions, the recipient must notify the Federal awarding agency in writing with the supporting reasons and revised expiration date at least 10 days before the expiration date (project period end date) specified in the award. This one-time extension may not be exercised merely for the purpose of using unobligated balances, nor may grantees extend project periods previously extended by the NIH awarding office. Such extensions are not permitted where:

1. The terms and conditions of award prohibit the extension.

2. The extension requires additional Federal funds.

3. The extension involves any change in the approved objectives or scope of the project.

3. Carry forward unobligated balances to subsequent funding periods.

4. Waives cost-related (rebudgeting) and administrative prior written approvals required by OMB Circulars A-21 and A-122.

5. Authorizes program income earned during the project period to be added to funds committed to the project by the Federal awarding agency and recipient and used to further eligible project or program objectives.

The application of expanded authorities is intended to eliminate unnecessary administrative burdens of sponsored research for both grantee and awarding office staff. Consistent with the revised Circular and HHS Regulations, the new NIH implementation expands the routine coverage of grants awarded under expanded authorities to include Program Project grants (PO1s), Research Career Awards (Ks), Minority High School Student Research Apprentice Program awards (SO3s), and all Research Project grants (Rs), except Phase I Small Business Innovation Research (R43) and Small Business Technology Transfer (R41) awards.

Individual awards may be excluded from the routine inclusion under expanded authorities based on the following criteria:

• Grants that require close project monitoring or technical assistance, e.g., clinical trials, exceptional grantees, or certain large multi-project grants, may be excluded.

• Grantees that have a consistent pattern of failure to adhere to appropriate reporting or notification deadlines may be excluded.

• In accordance with 45 CFR Part 74, except for awards issued under the Small Business Innovation Research or Small Business Technology Transfer programs, awards to for-profit organizations are excluded from the additional cost alternative for general program income (item 5 above). on individual awards to non-profit institutions, awarding office discretion may be used to specify an alternative disposition for general program income, i.e., the deductive or combination alternative.

Although the Circular authorizes all NIH grant activities as eligible for expanded authorities, NIH staff have determined that certain grant activities, e.g., centers and training grants, should not automatically receive expanded authorities, in whole or in part, due to the routine requirement for close project monitoring or technical assistance. In addition, because of substantial programmatic involvement, cooperative agreements will also be routinely excluded from expanded authorities. However, awarding office discretion may be used to authorize expanded authorities for these grant activities and cooperative agreements on an individual or group award basis.

With recent revisions to the PHS Grants Policy Statement (April 1, 1994) and OMB Circular A-110, grants awarded with the expanded authorities described above will be subject to NIH Institute or Center (IC) staff review under the following conditions:

• PHS policy (PHS Grants Policy Statement page 8-6) requires that when a grantee reports on the annual Financial Status Report a balance of unobligated funds in excess of 25 percent of the total amount awarded, or $250,000, whichever is less, IC staff shall review the circumstances resulting in such balances to assure that the funds are necessary to complete the project. Based on the outcome of the review, the Grants Management Officer may take appropriate action, e.g., authorize approval of the unobligated balance as carryover; restrict on future Notices of Grant Award the authority to automatically carryover unobligated balances; use the balance as an offset against a subsequent award; or allow the carryover, but reduce the next budget period award level.

• PHS policy (PHS Grants Policy Statement pages 8-1 and 8-7) requires that when significant rebudgeting occurs, the grantee shall consult with the awarding IC Grants Management Officer and Program Official for a decision as to whether the rebudgeting constitutes a change of scope. As a guideline, significant rebudgeting as defined by PHS occurs when the cumulative amount of transfers among direct cost categories for the current budget period exceeds 25 percent of the total amount awarded, or $250,000, whichever is less.

• OMB Circular A-110 requires grantees to seek prior approval from the awarding agency when anticipating a 25 percent reduction in time (e.g., percent effort reduction from 40 to 30 percent) devoted to the project by the approved project director or principal investigator.

Each Notice of Grant Award issued with budget period begin dates after October 1, 1994, will carry a term and condition to indicate whether or not the award is subject to expanded authorities. Questions concerning the new NIH implementation should be addressed to the NIH IC grants management staff identified on the Notice of Grant Award.