Chapter VI - Allowability of Costs
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
600 BASIC CONSIDERATIONS
Expenditures under NSF cost reimbursement grants are governed by the Federal cost
principles and must conform with NSF policies, grant special provisions and grantee internal
policies. Grantees should ensure that costs claimed under NSF grants are allowable,
allocable, and reasonable. In the event a grantee anticipates charging an item of direct
cost that might subsequently be disputed, an authorized official of the grantee organization
should discuss the matter with the cognizant NSF Grants Officer and document the conditions
or factors surrounding the item in order to avoid possible subsequent disallowance.
601 Federal Cost Principles
601.1 Applicability to Grantees
The governing Federal cost principles applicable to specific types of grantees are as
follows:
Type of Organization |
Applicable Federal Cost Principles |
Educational Institutions |
OMB Circular A-21 |
Non-Profit Organizations |
OMB Circular A-122 |
State/Local Governments |
OMB Circular A-87 |
Commercial Firms |
Federal Acquisition Regulation (FAR), Part 31 |
601.2 Applicability to Subrecipients
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
organization involved. For example, if the subaward is a cost reimbursement type with a
commercial concern, FAR Subpart 31.2 would apply.
601.3 Conflicting Guidelines
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 the 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.
602 Other Considerations
602.1 Maximum Obligation
The maximum obligation of NSF for support of the project will not exceed the amount
specified in the grant, 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.
602.2 Pre-Award Costs
a. Grantees may incur allowable pre-award costs within the 90 day period immediately
preceding the effective date of the grant providing:
the approval of pre-award spending is made and documented in
accordance with the grantee's procedures; and
the advanced funding is necessary for the effective and economical conduct of the
project.
b. Pre-award expenditures are made at the grantee's risk. Grantee authority to approve
pre-award costs does not impose an obligation on NSF: (1) in the absence of appropriations;
(2) if an award is not subsequently made; or (3) if an award is made for a lesser amount than
the grantee anticipated.
c. Requests for pre-award costs for periods exceeding 90 calendar days must be submitted
electronically via use of the Notification and Request module in FastLane. 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.
602.3 Post-Expiration Costs
NSF funds may not be expended subsequent to the expiration date of the grant except to
liquidate valid commitments that 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 specialized (research) equipment is ordered well in advance of the
expiration date but where, due to unusual or unforeseen circumstances, delivery of such
equipment is delayed beyond the expiration date. The costs of equipment ordered after the
expiration date, however, may not be charged to the project.
603 Prior Approval
603.1 OMB Directive
NSF has waived most cost related and administrative prior approvals required by OMB
Circulars A-21 and A-110. Grantees should refer to the general conditions referenced in the
grant, and GPM Exhibit III-1 for information on NSF required
prior approvals.
603.2 NSF Prior Approval Policy
a. The funding of items identified in budget constitutes NSF's authorization for the
grantee to incur these costs, provided there is not a specific limitation in the grant
language and the costs are otherwise allowable under the cost principles.
b. Costs not specifically budgeted in an NSF award may be allowable provided that prior
approval is not required and costs are incurred consistently with the applicable cost
principle.
610 DIRECT COSTS
The following subsections summarize the allowability of frequently encountered direct cost
items in the order they appear in the grant budget.
611 Salaries, Wages and Fringe Benefits
611.1 Salaries and Wages
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:
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
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:
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.
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 paid 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. This limit includes summer salary received from all NSF-funded
grants.
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 solicitation specifically provides that extra compensation may be
requested. This extra compensation above the base salary must be approved by NSF. Generally
this is done in situations such as teaching evening or weekend classes, or for administrative
work done as overload prior to or following a project. Further, the extra compensation shall
be computed at a rate not in excess of the monthly rate of the base academic year salary.
Sabbatical Leave. Unless there are special conditions in an applicable NSF program
solicitation or in the grant, 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 J.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.
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.
611.2 Fringe Benefits
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 Equipment
612.1 Related Equipment Guidelines
Additional NSF guidelines on equipment are found in GPM 540,
"Property Management Standards."
612.2 Definitions
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 intransit insurance, should be
included in the unit acquisition cost consistent with the grantee'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 grantee policy, lower limits may be
established.
c. GENERAL PURPOSE EQUIPMENT means permanent equipment (as defined in b., above) that 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 computer 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, specialized drilling equipment,
spectrometers, and 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.
NSF review and approval is required for all equipment purchases by small business or other
commercial 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. NSF review and approval is
required for all equipment purchases by small business or other commercial organizations.
613 Materials and Supplies
Materials and supplies are defined as tangible personal property other than equipment,
costing less than $5,000, or other lower threshold consistent with grantee policy. Materials
and supplies that are necessary to carry out the project are allowable as prescribed in the
governing cost principles.
614 Travel Costs
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 on travel status on business related to an
NSF-supported project are allowable as prescribed in the governing cost 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 between economy
airfare and a higher-class airfare 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 the:
individual is a key person who is essential to the research on a
full-time basis;
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
dependent's travel allowance is consistent with the policies of the organization
administering the grant.
d. For restrictions concerning the use of non-US flag carriers while on foreign travel
see GPM 761, "Travel to Foreign Countries."
615 Computer Costs
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. Awardees should address lease versus
purchase factors as required by
OMB Circular A-110
Subpart C.44, "Procurement Procedures."
616 Consultant Services
616.1 Outside Consultants
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 that 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 (such as
fringe benefits, indirect costs, and other expenses).
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.
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).
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:
the nature and scope of the service rendered in relation to the service
required;
the necessity of issuing a subaward for the service considering the organization's
capability in the particular area;
the past pattern of such costs, particularly in the years prior to the award of
government contracts and grants;
the impact of government contracts and grants on the organization's total activity
(e.g., what new problems have arisen);
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;
whether the service can be performed more economically by employment rather than by
consulting;
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
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:
it is in accordance with written organizational standards;
grant funds are reallocated in accordance with the grantee's policies which are
consistent with the governing cost principles; and
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, "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 established
university policy and the applicable cost principles.
616.3 Federal Employees
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 and engineering journal publication are allowable where:
the research papers report work supported by NSF; and
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 valid unpaid
obligations outstanding at the time a grant expires. Grantees should refer to this section if
it has incurred valid commitments for the costs of publication or sharing of research results
and it is not possible to effect an actual payment for such charges by the time the final
disbursements are due.
618 Participant Support Costs
618.1 General
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 written approval of the cognizant NSF Program
Officer. Therefore, awardee organizations must account for participant support costs
separately.
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. 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.
d. Additional guidelines are found at GPM 734, "Dissemination and
Sharing of Research Results," and GPM 740, "Publication/Distribution
of Grant Materials."
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
solicitation and in the grant. 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.
618.3 Travel Allowances
a. Travel costs of participants may be allowable as outlined in the pertinent program
solicitation and in the grant. 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 that involve field trips, costs of transportation of
participants are allowable.
620 OTHER DIRECT COSTS
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 $25,000) 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:
the grantee is not an individual or a foreign institution;
the building has a usable life consistent with project purposes and is architecturally
suitable for conversion;
the rearrangement and alteration are essential to the project supported by the grant;
and
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 $25,000 may be approved by grantees. For
rearrangements and alterations expenditures exceeding $25,000, the grantee must request prior
approval from NSF via use of the Notification and Request module in FastLane. 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. 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.
622 News Release Costs
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) 292-8070 (see
GPM 812.1, "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 allowable, 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.
b. Rental of special purpose equipment is allowable. See also
GPM 615, "Computer Costs."
624 Relocation 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:
a proposal for NSF support specifically indicates that the grantee
intends to hire a named individual for full-time work on the project;
such recruitment action is not disapproved by the grant terms; and
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 the grantee's
established policy or practice which:
is in conformance with the applicable governing cost principles;
has been approved by the cognizant governing audit agency; and
is consistently applied.
625 Meetings and Conferences
The points below summarize the allowability of various items of cost associated with
conferences, symposia, workshops or other meetings supported by an NSF grant. Any costs
charged to an NSF grant also need to be reasonable and directly allocable to the supported
activity. Meeting and conference costs identified below, are only allowable if such costs
are 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.
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 if approved in
the grant.
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. Participant support costs allowable as prescribed in
GPM 618, "Participant Support Costs." (See also
GPM 633.2, "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 are not allowable. 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.
630 INDIRECT COSTS
631 Background
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 where appropriate. When NSF elects not to use predetermined fixed rates, the grant will
indicate the type of indirect cost rate applicable to the award.
632 Indirect Costs in Proposals for NSF Support
Each proposal for NSF support of a project should include a budget indicating the total
dollar amount requested from NSF with subtotals for direct and indirect costs. The amount for
indirect costs should be calculated by applying the current Federally negotiated indirect cost
rate(s) to the approved base(s). For grantees that do not have a current negotiated rate
agreement with a cognizant Federal agency, its business officer should prepare an indirect
cost proposal based on expenditures for its most recently ended fiscal year.
If the proposal is recommended for funding, the grantee will be required to provide its
indirect cost proposal to support the budgeted indirect rate. The contents and financial data
included in indirect cost proposals vary according to the make-up of the proposing
organization. Guidelines for preparing an indirect cost proposal are available
at
http://www.nsf.gov/bfa/dias/caar/indirect.htm. Grantees submitting a proposal to NSF
for the first time are encouraged to request guidance from the Cost Analysis and Audit
Resolution Branch.
633 NSF Policy
633.1 Basic Policy
a. It is NSF policy that grantees are entitled to reimbursement from grant funds for
indirect costs except where specifically excluded by GPM 633.2,
"Exceptions to Basic Policy," or when the grantee waives entitlement to full reimbursement
of indirect costs voluntarily. Also, some types of awarded indirect cost rates limit full
recovery (i.e., maximum provisional rates).
b. The awarded indirect cost rate is generally based upon a grantee's current Federally
negotiated indirect cost rate agreement. When establishing an indirect rate for an award
where the grantee does not have a current negotiated rate agreement, NSF will consider the
rate proposed in the budget, the grantee's indirect cost proposal submission, the amount of
total funding requested and other pertinent financial factors. Since some types of rates
limit indirect cost recoveries and requires adjustments, grantees receiving awards should
ensure that they understand the type of indirect cost rate applicable to the award. Types
of indirect cost rates used on NSF awards are as follows:
Maximum Provisional Rate: A maximum provisional rate is a temporary
rate established for an award to permit funding and reporting of indirect costs pending
establishment of a final rate (the rate determined at the end of an accounting period using
"actual" direct and indirect cost data). This type of rate limits indirect cost recoveries
to the lower of the maximum provisional rate established at the time of award, or the final
rate established at the end of an accounting period. Grantees awarded maximum provisional
rates are required to submit indirect cost proposals to the NSF Cost Analysis and Audit
Resolution Branch within six months after the close of each fiscal year during which the
award is active.
Predetermined Fixed Rate: A predetermined fixed rate is a permanent funding rate
established for an award based on an estimate of costs for that period. Grantees may charge
NSF projects at the rate(s) stipulated in the award. 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 award, the grantee 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:
a. reduce or adversely affect the scope of the project;
b. result in increased costs over the NSF award amount during the award period;
c. decrease the period of support as contemplated in the award; or
d. be inconsistent with any special indirect cost provision of the award.
Fixed Rate: A fixed rate is similar to a predetermined fixed rate in that it is a
permanent rate established for an award based on an estimate of costs for the award period.
However, a fixed rate is fixed both for funding and reimbursement. Accordingly, when NSF
funds an award using a fixed indirect cost rate, the grantee is required to charge indirect
costs at the fixed rate. Changes to fixed rates can only be made by an amendment to the
award.
Fixed Dollar Amount: A fixed dollar amount limits grantees to the "amount" of
indirect costs specified in the approved budget. A fixed indirect dollar amount is not
subject to adjustment.
c. NSF will not amend a grant solely to provide additional funds for changes in indirect
cost rates.
d. NSF will generally fund continuing grant increments and supplemental support at the
indirect cost rate(s) approved at the time of the initial award. (See
GPM 260, "Additional Funding Support.")
e. When a project involves off-campus (off-site) activities, NSF normally will fund 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 fund 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.
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 an authorized official of the grantee's organization. The NSF Cost
Analysis and Audit Resolution Branch provides advisory assistance to the Grants Officer.
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.
633.2 Exceptions to Basic Policy
a. No Indirect or Limited Reimbursement. Program solicitations may indicate no or
limited reimbursement for indirect costs. In addition, NSF generally provides no amounts for
indirect costs for the following:
grants to individuals;
grants solely for the support of travel, equipment, construction of facilities, or
doctoral dissertation research (see GPM 333.1, "Unsolicited Research
Projects");
grants in which NSF support is exclusively in the form of fellowships, traineeships or
other fixed amounts such as cost-of-education allowances;
foreign grantees; or
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).
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:
basic research;
applied research;
development; and
systems and other concept formulation studies.
NSF's primary purpose is to support and advance independent research within the scientific
and engineering community. NSF has well recognized and established procedures for supporting
research through competitive grant awards based on merit review of proposed projects.
Reimbursement for independent research and development costs through the indirect cost
mechanism could circumvent this competitive process.
To ensure that all 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 and development projects
are not typically allowable as indirect costs under NSF grants.
c. Facilities Capital Cost of Money (FCCM). NSF does not typically fund facilities
capital cost of money under its grants. FCCM 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."
634 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 Rebudgeting of Indirect Cost Funds Provided Under NSF Grants
If the actual allowable indirect costs chargeable to a grant is 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.
636 NSF Cognizant Organizations
Organizations for which NSF is their cognizant agency for negotiation of indirect cost
rates are required to submit indirect cost proposals, reconciled to financial statements,
within six months after the close of each accounting year during which NSF has active awards.
Indirect cost proposals should be sent to the Cost Analysis and Audit Resolution Branch.
640 FEE PAYMENTS UNDER NSF GRANTS
Payment of fees (profit) are allowable only if specifically permitted by a program
solicitation and only to the extent that is does not exceed the amount negotiated by the
Grants Officer and specified in the award letter.
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