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National Science Foundation
PAPPG
Significant Changes and Clarifications
PAPPG - Introduction
A. About the NSF
B. Foreword
C. Acronym List
D. Definitions
E. NSF Organizations
F. NSF Electronic Capabilities Modernization Status
Table of Contents
Part I: Proposal Preparation and Submission Guidelines
I. Pre-Submission Information
II. Proposal Preparation Instructions
III. NSF Proposal Processing and Review
IV. Non-Award Decisions and Transactions
V. Renewal Proposals
Part II: Award, Administration and Monitoring of Grants and Cooperative Agreements
VI. NSF Awards
VII. Grant Administration
VIII. Financial Requirements and Payments
IX. Grantee Standards
X. Allowability of Costs
XI. Other Post Award Requirements and Considerations
XII. Grant Administration Disputes and Misconduct
Subject Index
Privacy Act and Public Burden Statements
 


NSF 17-1 January 30, 2017
Chapter X - Allowability of Costs

A. Basic Considerations

Expenditures under NSF cost reimbursement grants are governed by the Federal cost principles and must conform with NSF policies where articulated in the grant terms and conditions, grant special provisions and grantee internal policies. While grantees are encouraged to seek advice regarding the treatment of costs from the NSF Grants Officer identified in the award notice, it is the grantee that is ultimately responsible for ensuring that all costs charged to NSF awards meet the requirements of the cost principles contained in 2 CFR § 200, Subpart E52, grant terms and conditions, and any other specific requirements of both the award notice and the applicable program solicitation. In addition, grantees should ensure that their own internal policies and procedures and other requirements are met for all charges to NSF grants. Otherwise such costs may be disallowed during audit resolution or by specific determination of an NSF Grants Officer.

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. If the NSF Grants Officer determines that such costs are appropriate considering the special requirements of a particular NSF sponsored activity, this should be documented through an advance agreement or understanding. Advance agreements regarding the treatment of such costs may be incorporated by specific language in the award notice, or by other written correspondence.

1. Conflicting Guidelines

It is NSF’s intent that the following guidance on cost allowability be consistent with the Federal cost principles. However, in the event of any discrepancy between the summary information contained in this Chapter and any specific provision of the cost principles contained in 2 CFR § 200, Subpart E, the cost principles in effect as of the start 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 cost principles, the special provisions of the grant will govern.

2. Other Considerations

a. 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.

b. Pre-Award (Pre-Start Date) Costs

(1) Grantees may incur allowable pre-award costs within the 90-day period immediately preceding the start date of the grant providing:

(a) the approval of pre-award spending is made and documented in accordance with the grantee's procedures; and

(b) the advanced funding is necessary for the effective and economical conduct of the project.53

(2) Pre-award expenditures are made at the grantee's risk. Grantee authority to approve pre-award costs does not impose an obligation on NSF: (a) in the absence of appropriations; (b) if an award is not subsequently made; or (c) if an award is made for a lesser amount than the grantee anticipated.

(3) Requests for pre-award costs for periods exceeding 90 days must be submitted to NSF via use of NSF’s electronic systems. 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 (2) above.

Additional information on pre-award costs is available at 2 CFR §§ 200.308(d)(1) & (d)(4).

c. Post-End Date Costs

NSF funds may not be expended subsequent to the end date of the grant, except to liquidate valid commitments that were made on or before the end date, e.g., commitment of project funds for subrecipient or contractor for services rendered during that award period but not billed to the grantee until after the grant expired. (See Chapter VIII.E.2.) Generally, the costs of equipment or materials and supplies ordered after the end date may not be charged to the project.

In addition, the grantee typically should not purchase items of equipment, computing devices, or restock materials and supplies in anticipation of grant expiration where there is little or no time left for such items to be utilized in the actual conduct of the research.

However, in accordance with 2 CFR § 200.461, Publication and Printing costs, grantees may charge the NSF award before closeout for the costs of publication or sharing of research results, if the costs are not incurred during the period of performance of the award.

3. Prior Written Approvals

a. General

The funding of items identified in the NSF award 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, allocable, and reasonable in accordance with the cost principles contained in 2 CFR § 200, Subpart E.

If required in furtherance of the project, the grantee is authorized to transfer funds from one budget category to another for allowable expenditures. Grantees should refer to the applicable grant terms and conditions referenced in the grant, and the prior approval requirements summarized in paragraph b. below for cost-related NSF-required prior approvals. Exhibit VII-1 provides a consolidated listing of programmatic and cost-related grantee notifications to, and requests for approval from, NSF. While the listing is not intended to be all-inclusive, it does highlight the most frequent areas where specific notifications and requests for approval are called for.

When a change requires NSF approval, the request must be submitted electronically via use of NSF’s electronic systems. The request should clearly state which budget items, if any, are to be changed and by what amounts, and should explain the reasons for any changes.

If a grantee rebudgets funds to support a postdoctoral researcher and the original proposal included a mentoring plan, no further documentation is necessary. If the original proposal did not include a mentoring plan, then the grantee must send the cognizant NSF Program Officer the requisite mentoring plan, as described in Chapter II.C.2.j. If supplemental funding is requested to support a postdoctoral researcher, the guidance in Chapter VI.E.4.f should be followed. In all cases, the PI must report on the mentoring activities provided to the individual in the annual and final project reports.

b. NSF Prior Approval Policy

In accordance with Article 2 of the NSF Grant General Conditions, written prior approval from the NSF Grants Officer is required for:

1. Preaward Costs in Excess of 90 days;

2 Salaries of Administrative or Clerical Staff;

3. Rearrangements/Alterations aggregating $25,000 or greater (Construction);

4. Additional categories of participant support costs other than those described in 2 CFR § 200.75 (such as incentives, gifts, souvenirs, t-shirts and/or memorabilia); and

5. Adjustments to cost sharing commitments reflected on Line M of the NSF award budget.

Written prior approval from the cognizant NSF Program Officer is required for reallocation of funds provided for participant support costs.

B. Direct Costs

The following subsections summarize the allowability of frequently encountered direct cost items:

1. Compensation - Personal Services

a. Salaries and Wages

Compensation paid or accrued by the organization for employees working on the NSF-supported project during the grant period is allowable, in accordance with 2 CFR § 200.430.

b. Fringe Benefits

If the proposer's usual accounting practices provide that its contributions to employee benefits (leave, employee insurance, social security, retirement, other payroll-related taxes, etc.) be treated as direct costs, NSF grant funds may be requested to fund fringe benefits as a direct cost. These are typically determined by application of a calculated fringe benefit rate for a particular class of employee (full time or part-time) applied to the salaries and wages requested. They also may be paid based on actual costs for individual employees, if that institutional policy has been approved by the cognizant Federal agency for Indirect Costs.

Fringe benefits that are not accrued but are charged as direct costs and incurred under "pay as you go plans" may be subject to reasonableness determination where the benefits are earned under other work and charged to the last activity on which the employee was working. This is of particular concern for large lump sum payments for leave, disability, pregnancy or other employee fringe benefits. See 2 CFR § 200.431 for the definition and allowability of fringe benefits.

2. Administrative and Clerical Salaries and Wages

In accordance with 2 CFR § 200.413, the salaries of administrative and clerical staff should normally be treated as indirect costs (F&A). Direct charging of these may be appropriate only if all the conditions identified below are met:

(1) Administrative or clerical services are integral to a project or activity;

(2) Individuals involved can be specifically identified with the project or activity;

(3) Such costs are explicitly included in the approved budget or have the prior written approval of the cognizant NSF Grants Officer; and

(4) The costs are not also recovered as indirect costs.

If an awardee would like to rebudget to direct charge salaries of administrative or clerical staff (in accordance with 2 CFR § 200.413) after an award has been made, the AOR should initiate the request via NSF’s electronic systems. If approved by NSF, an e-mail notification will be automatically sent notifying the organization of NSF’s decision.

3. Intra-University (IHE) 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 Chapter X.B.1, 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. If anticipated, any compensation for such consulting services should be disclosed in the proposal budget, justified in the budget justification, and included in the NSF award budget. See 2 CFR § 200.430(h)(3) for additional information.

4. 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.

C. Other Direct Costs

1. Rearrangements and Alterations (Construction)

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:

(i) grantee is not an individual or a foreign organization;

(ii) building has a usable life consistent with project purposes and is architecturally suitable for conversion;

(iii) rearrangement and alteration are essential to the project supported by the grant; and

(iv) 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 Chapter X.C.3.)

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 NSF’s electronic systems. Otherwise, any plans for such rearrangement or alteration should be clearly set forth in the proposal. If approved by NSF, such approval must be indicated in the award notice. Note that 2 CFR § 200, Appendix II contains provisions that must be included in contracts made by the grantee.

See 2 CFR § 200.462 for additional information on rearrangement and reconversion costs.

2. News Release Costs

Costs of communicating with the public and press to announce the results and accomplishments of an NSF-supported project are allowable. Grantees should be aware of the restrictions on advertising, organizational promotion, and lobbying costs as outlined in the applicable cost principles. See 2 CFR § 200.421 for additional information on advertising and public relations.

In the event the performing organization wishes to collaborate 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.

3. Rental or Lease of Facilities or Special Purpose Equipment

On occasion, it may be necessary to use facilities or equipment not under the control of the grantee. See 2 CFR § 200.465 for additional information on rental costs of real property and equipment.

4. Relocation Costs

Relocation costs may be charged to an NSF grant as other direct costs in accordance with the cost principles contained in 2 CFR § 200, Subpart E. See 2 CFR § 200.464 for additional information on relocation costs.

5. Travel and Temporary Dependent Care Costs

Travel, meal and hotel expenses of grantee employees who are not on travel status are unallowable. Costs of employees on travel status are limited to those specifically authorized by 2 CFR § 200.474.

Temporary dependent care costs (a dependent is defined in 26 USC 152) above and beyond regular dependent care that directly results from travel to conferences are allowable costs provided that the costs are:

a. a direct result of the individual's travel for the NSF conference award;

b. consistent with the grantee's documented travel policy for all employee travel; and

c. only temporary during the travel period.

See 2 CFR § 200.474 for additional information on travel costs.

D. Indirect Costs

1. NSF Policy

a. Except as noted in an NSF program solicitation, it is NSF policy that grantees are entitled to reimbursement from grant funds for indirect costs (F&A) allocable to the NSF share of allowable direct costs of a project. NSF program staff are not authorized to negotiate indirect costs as a discrete item of a proposal budget. NSF program staff also are not authorized to suggest or request that PI/PDs seek reductions or waivers of indirect costs.

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 domestic 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. Supporting documentation is not required for organizations that request a de minimis rate of 10% (or less) of modified total direct costs. 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, the applicable base and the type of rate used in the grant.

Foreign grantees that do not have a US Federally negotiated indirect cost rate are limited to a de minimis indirect cost rate recovery of 10% of modified total direct costs. Foreign grantees that have a negotiated rate agreement with a US Federal agency may recover indirect costs at the current negotiated rate.

Types of indirect cost rates that are most frequently used on NSF awards are as follows:

(i) Predetermined Rate – As authorized by 41 USC § 4708, and recommended by the Federal cost principles in 2 CFR § 200, Appendices III, IV, and VI, NSF has elected to use predetermined rates, where appropriate. A predetermined rate is an indirect cost rate, applicable to a specified current or future period, usually the organization's fiscal year. The rate is based on an estimate of the costs to be incurred during the period. A predetermined rate is not subject to adjustment.

Special Limitation concerning Predetermined Rates at Colleges and Universities subject to 2 CFR § 200 Appendix III, paragraph C.7 contains an additional restriction on recovery of indirect costs for colleges and universities and other organizations of higher education. These awardees are subject to a further limitation in that the negotiated rate at the time the award is made shall be used throughout the life of the award. The applicable text from 2 CFR § 200 Appendix III, paragraph C.7 is repeated below:

"7. Fixed rates for the life of the sponsored agreement.

Federal agencies must use the negotiated rates except as provided in paragraph (e) of §200.414 Indirect (F&A) costs, in effect at the time of the initial award throughout the life of the Federal award. Award levels for Federal awards may not be adjusted in future years as a result of changes in negotiated rates. "Negotiated rates" per the rate agreement include final, fixed, and predetermined rates and exclude provisional rates. "Life" for the purpose of this subsection means each competitive segment of a project. A competitive segment is a period of years approved by the Federal awarding agency at the time of the award. If negotiated rate agreements do not extend through the life of the Federal award at the time of the initial award, then the negotiated rate for the last year of the award must be extended through the end of the life of the Federal award."

Where grantees receive limited NSF funding, the Foundation may elect to set award specific rates as opposed to a formal annual negotiated indirect cost rate agreement. In these cases, the award notice will specify the rate type, and application base. If the award notice is silent on the rate type, the rate approved in the award budget will be considered a predetermined rate.

(ii) Provisional (or billing) rate – A provisional rate is a temporary indirect cost rate applicable to a specified period which is used for funding, interim reimbursement, and reporting indirect costs pending the establishment of a final rate for the period.

Grantees with provisional rates are required to submit indirect cost proposals to their cognizant Federal Agency for rate negotiation within six months after the close of each fiscal year. Adjustments to awards for amounts previously billed at provisional rates are required after final indirect cost rates are established.

(iii) Final rate – A final rate is an indirect cost rate applicable to a specified past period which is based on the actual costs of the period. A final rate 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 using the negotiated indirect cost rate(s) approved at the time of the initial award. (See Chapter VI.E.

e. 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.

2. NSF Cognizant Organizations

Organizations for which NSF is the cognizant agency for negotiation of indirect cost rates and who do not have approved award specific 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.

See http://www.nsf.gov/bfa/dias/caar/docs/idcsubmissions.pdf for indirect cost rate proposal submission requirements.

Such proposals should be sent electronically to BFACAARMPR@nsf.gov or by paper copy to Team Lead Indirect Costs, National Science Foundation, Division of Institution and Award Support, Room 485, 4201 Wilson Boulevard, Arlington, Virginia 22230.

E. Fee Payments under NSF Grants

Payment of fees (profit) is allowable only if expressly authorized by the terms and conditions of the NSF award.

52Applicable cost principles for for-profit organizations are contained in Federal Acquisition Regulation Part 31.Back to Text
53In the case of a renewal award, grantees are reminded that costs incurred under the old grant cannot be transferred to the new grant.Back to Text

 

 
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