02-151 July 2002
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
Type of Organization
Applicable Federal Cost Principles
OMB Circular A-21
OMB Circular A-122
OMB Circular A-87
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
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.
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
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
603.2 NSF Prior Approval Policy
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.
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
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;
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.
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
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
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:
proportional to the service rendered;
in accordance with established
institutional sabbatical policies regardless of source of funds (Section
J.40 of OMB Circular A-21); and
- 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
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.
612.1 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):
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.
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.
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.
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:
necessary for the research or activity supported by the grant;
reasonably available and accessible;
of the type normally charged as a direct
cost to sponsored agreements; and
acquired in accordance with organizational
NSF review and approval is required for all equipment purchases by small business or other
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
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.
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
Foreign travel costs of dependents of key project personnel is allowable
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
travel allowance is consistent with the policies of the organization
administering the grant.
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
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.
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).
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).
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
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;
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
the contractual agreement for the service (e.g., description of the
service, estimate of time required, rate of compensation and termination
In addition, retainer fees to be allowable must be supported
by evidence of bona fide services available or rendered.
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.
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
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
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
Costs of documenting, preparing, publishing, disseminating and sharing
research findings and supporting material are allowable charges against
Page charges for scientific and engineering journal publication
are allowable where:
the research papers report work supported by NSF;
the charges are levied impartially on all research papers published
by the journal, whether by non-government or by government authors.
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
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.
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.
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.
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
618.3 Travel Allowances
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
In training activities that involve field trips, costs of transportation
of participants are allowable.
620 OTHER DIRECT COSTS
621 Rearrangements and Alterations
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;
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".)
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
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.
Rental of special purpose equipment is allowable.
See also GPM 615, "Computer Costs."
624 Relocation Costs
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:
is essential to
the project on a full-time basis for a continuous period
of at least twelve months; and
is regularly located at a place sufficiently
removed from the project site that his/her employment necessitates
The amount of actual reimbursement should be
in accordance with the grantee's established policy or practice
is in conformance with the applicable governing cost principles;
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.
Conference Facilities. Rental of facilities and necessary equipment
is allowable. (See GPM 623, "Rental or Lease
of Facilities or Special Purpose Equipment".)
Supplies. Purchase of expendable materials and supplies
necessary for the meeting is allowable.
Conference Services. Costs of
translation services and of recording and transcribing the proceedings
Publication Costs. Costs of publishing the proceedings are
allowable if approved in the grant.
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.
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."
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.
Costs. Participant support costs allowable as prescribed in GPM
618, "Participant Support Costs." (See
also GPM 633.2, "Exceptions to Basic Policy.")
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
Alcoholic Beverages. No federal funds may be spent on alcoholic
630 INDIRECT COSTS
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.jsp. 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
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).
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 require 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:
reduce or adversely affect the scope of the
result in increased costs over the NSF award amount
during the award period;
decrease the period of support as contemplated
in the award; or
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.
NSF will not amend a grant
solely to provide additional funds for changes in indirect
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.")
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.
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.
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
633.2 Exceptions to Basic Policy
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
grants in which NSF support is exclusively in the form of
fellowships, traineeships or other fixed amounts such as cost-of-education
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).
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:
- 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.
- 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
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
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.