Division of Grants Compliance and Oversight (DGCO)

Office of Policy for Extramural Research Administration (OPERA), OERNational Institutes of Health (NIH), DHHS

19th Annual SBIR/STTR Conference Milwaukee, Wisconsin – November 2017

Kathy Hancock, Assistant Grants Compliance Officer,DGCO, OPERA, Office of Extramural Research, NIH, HHS

This Division is responsible for managing internal and external compliance activities, both proactive and for-cause.

Michelle BullsDirector, OPERA

Diane DeanDirector, Division of GrantsCompliance and Oversight

Kathy Hancock, Sahar Rais, Joel Snyderman and Samantha Tempchin

Assistant Grants Compliance Officers

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• Compliance Basics

• Compliance Requirements

• Cost Information• Grant Award

Basics

• Prior Approval Requirements

• Recipient Authorities

• NIH Reporting Requirements

• Special Award Conditions and Remedies for Noncompliance

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• The effective management of public funds to maximize research outcomes

• The avoidance of fraud, institutional mismanagement, and poor management of Federal funds

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• Unallowable costs• Misallocation of costs• Excessive cost transfers• Inaccurate effort reporting• Inadequate subrecipient monitoring• Noncompliance with Assurances and

special terms and conditions of award• Delinquent financial reporting• Delinquent closeout reporting

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• Nonexistent or outdated policies and procedures• Inadequate internal controls• Perception that internal control systems are not

necessary• Inadequate management systems

(e.g., effort reporting, financial management) Perception that small institutions do not need to

comply Inadequate resources Inadequate staff training and education

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• At NIHo Grants Management Officer/Specialisto Program Officialo Scientific Review Officer

• At Institutiono Authorized Organization Representative (AOR)o Project Director/Principal Investigator (PD/PI)

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• Safeguarding all assets• Spending funds in accordance with the

authorized purpose• Developing and implementing policies and

systems to ensure proper stewardship of fundso Financial management systemso Procurement systemso Payroll Distribution systemo Monitoring activitieso Adherence to terms & conditions of award

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Develop and Maintain Written Policies and Procedures

• Organizational Structure• Purchasing • Accounting/Budgetary Controls • Time and Effort Reporting• Travel• Consulting • Property Management• Ethics/Conflict of Interest

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Federal Requirements

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• 45 CFR Part 75 – Public Welfare, Uniform Administrative Requirements, Cost Principles and Audit Requirements for HHS Awards o Effective for all HHS awards made on or after December

26, 2014o http://www.ecfr.gov/cgi-bin/text-

idx?node=pt45.1.75&rgn=div5

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Special Provisions for SBIR/STTR Awards:

• HHS funds may be paid as profit in excess of allowable direct and indirect costs

• Program income can be used to further eligible project or program objectives

• Audit requirements include two options

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• 45 CFR Part 75 - Subpart C – Pre-Federal Award Requirements and Contents of Federal Awards(§ 75.200 – § 75.217)

• 45 CFR Part 75 - Subpart D – Post Federal Award Requirements (§ 75.300 – § 75.391)- Standards for Financial and Program Management- Property Standards- Procurement Standards- Performance and Financial Monitoring and Reporting- Subrecipient Monitoring and Management- Record Retention and Access- Remedies and Noncompliance- Closeout- Post-Closeout Adjustments and Continuing Responsibilities- Collection and Amounts Due

These include pre-award and post-award requirements13

Cost Principles:

o 45 CFR Part 75, Subpart E (§ 75.400- § 75.476)o Institutions of Higher Education (IHE), State, Local

Governments and Indian Tribes, and Non-profit Organizations

o 45 CFR Part 75, Appendix IX o Hospitals

Allowable costs are reasonable, allocable, conform with any limitations or exclusions set for in the Federal cost principles or in the NoA, and are consistently applied regardless of source of funding.

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Cost Principles for For-Profit Organizations (SBIR/STTRs):

o 48 CFR Subpart 31.2 (Federal Acquisition Regulation)

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• Establishes principles for determining costs applicable to grants, contracts, and other agreements

• Direct costs

• F&A/indirect costs

• Selected items of costo Allowable/unallowable costso Compensation for personal services

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o 45 CFR 75.216: Commercial Organizations (SBIR/STTR Program)

oNIH Grants Policy Statement: See 18.4.5 Audit

o 45 CFR 75.501(h) through (k): For-Profits (commercial), including For-Profit Hospitals

o 45 CFR 75.501: Institutions of Higher Education, States and Local Governments, and Non-Profit Organizations, including Non-Profit Hospitals

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A non-Federal audit is required if the for-profit organization expends $750,000 or more under one or more HHS award as a direct recipient or consortium participant.

• Audit options include:o A financial-related audit (as defined in, and in accordance

with, the Generally Accepted Government Auditing Standards (commonly known as the "Yellow Book"), of all the HHS awards; or

o An audit that meets the requirements of 45 CFR 75.50118

• Submit audits to the National External Audit Review Center

• Audits are due within the earlier of 30 days after receipt of the auditor’s report(s) or 9 months after the end of the recipient’s audit period, i.e., the end of the organization's fiscal year, whichever is earlier.

• Recipients delinquent in submitting audits risk the imposition of sanctions and potential loss of Federal funds.

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• 42 CFR Part 50 Subpart F (grants and cooperative agreements)

• 45 CFR Part 94 (contracts)

Applies to Phase II SBIRs and STTRs applicants/awardees

(Phase I SBIR/STTRs are exempt)

Revised Final Rule published on 8-25-11http://www.gpo.gov/fdsys/pkg/FR-2011-08-25/pdf/2011-21633.pdf

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This regulation promotes objectivity in research by establishing standards that provide a reasonable expectation that the design, conduct, or reporting of research funded under NIH grants and cooperative agreements will be free from bias resulting from Investigator financial conflicts of interest.

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• Applies to the PD/PI and any individual defined as an “Investigator” under the regulation - see 45 CFR 50.603

• Investigators disclose to the Institution “Significant Financial Interests” (SFIs) that are related to the Investigator’s “Institutional responsibilities” (e.g., research activities) - see 45 CFR 50.603

• SFI exclusions include:• Salary, royalties, or other remuneration paid by the

Institution (i.e., SBIR/STTR awardee) to the Investigator if the Investigator is currently employed or otherwise appointed by the Institution, and

• Any ownership interest in the Institution (i.e., SBIR/STTR awardee) held by the Investigator 22

• FCOI is an SFI that could directly and significantly affect the design, conduct, or reporting of Public Health Service (e.g., NIH) funded research.

• Institutions must, among other things:o Have a policy that complies with the regulation at the

time of application and post it on your public websiteo Train Investigators prior to engaging in NIH-funded

researcho Solicit financial disclosures from Investigators and

review disclosureso Identify, manage and report identified FCOIs to NIH prior

to expenditure of funds, within 60 days of identifying a conflict during the period of award, annually, and at time of extension, if applicable. 23

• Mailbox for FCOI-related inquirieso FCOICompliance@mail.nih.gov

• Office of Extramural Research FCOI webpageo http://grants.nih.gov/grants/policy/coi/index.htm

Resources include a Tutorial, Webinars, Checklist for Policy Development, FAQs, PowerPoint presentations with case studies, etc.

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Other Compliance Requirements

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• NIH Grants Policy Statement (GPS) http://grants.nih.gov/policy/nihgps/index.htm

• Notice of Award (NoA)

• NIH Guide to Grants and Contracts (for new requirements)http://grants.nih.gov/grants/guide/index.html

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A legally binding agreement with the government

Official notice that an award has been made

NoA includes: Funding level (amount available for project) Periods of Performance

(Project and budget period dates) Terms and Conditions of Award

(Section III and IV) NIH contact information

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• Grant awards are made to institutions/organizations

• Recipients of NIH grant funds must comply with all applicable Federal statutes, regulations and policies

• By drawing down funds from the HHS Payment Management System (PMS), recipients agree to the terms and conditions of the grant award.

DHHS Division of Payment Managementhttp://www.dpm.psc.gov

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• Terms and Conditions – Section III o 45 CFR Part 75 - HHS rules and requirements

that govern the administration of grantso NIH Grants Policy Statement – policy

requirements that serve as the terms and conditions of all NIH awards

• NIH Institute and/or Center Special Terms and Conditions – Section IV

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• Only applied to a particular grant for cause

• Shown on the Notice of Award (NoA) after Section III – Institute and/or Center specific terms of award

• Funds usually are not restricted in the PMS

• Restricted funds must be tracked by recipient to ensure complianceo EXAMPLE of Award Restriction: Funds may not be

used to purchase equipment without the written prior approval of the NIH awarding component.

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NIH Prior Approval Requirements

(NIH GPS 8.1.2)

What are some actions that require NIH prior approval?

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• Change in scope or objective of a project• Change in PD/PI or Senior/Key personnel

identified by NIH and specifically named in the Notice of Award (NoA)o Must notify NIH if the PD/PI or other Senior/key

personnel named in the NoA will:• withdraw from the project entirely• be absent for 3 months or more• reduce time devoted to the project by 25% or

moreo See NIH GPS for changes in a multiple PD/PI model.

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• Preaward costs > 90 days prior to the effective date of the initial budget period of a project period for a new or competing continuation award

• Deviation from award terms and conditions, including restrictions

• Activities disapproved or restricted as a condition of the award

• Change of recipient organization

• Second extension without additional funds

• Change of Recipient Organizational Statuso Mergero Successor-in-interesto Name change

For a complete list of prior approval items see NIH Grants Policy Statement Section 8.1.2 Prior Approval Requirements 34

• Most requests for NIH awarding office prior approval must be:

o made in writing (includes submissions by e-mail)o sent to the designated GMO identified on the NoAo made no later than 30 days before the proposed changeo signed by the Authorized Organization Representative

Note: Approval must be obtained from the GMO through a revised NoAor other written communication

See Extramural Nexus for information on submitting extension requests and PD/PI change requests electronically in eRA Commons at https://nexus.od.nih.gov/all/2017/03/06/new-features-in-era-commons/.

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What authorities do recipients have?

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Carryover of funds from one budget period to the next. Authority is provided as a term on the Notice of Award under Section III.

Phase I SBIR/STTR awards – carryover does not apply Phase II SBIR/STTR awards - carryover authority generally

applies

Cost-related prior approvals – Allows the rebudgeting of funds for any direct cost item provided there is no change in scope A rebudgeting action greater than 25% of the total cost

awarded is a potential indicator of a change in scope37

Recipient may extend (without additional funds) the final budget period of the project up to 12 monthsvia the eRA Commons up to 90 days prior to the end date of the award under certain conditions.

Transfer performance of substantive programmatic work to a third party by means of a consortium agreement.

For more information see NIH Grants Policy Statement, Section 8.1.1 NIH Standard Terms of Award under Section 8 Administrative Requirements

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Progress Reporting

Requirements

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RPPR Webpage: http://grants.nih.gov/grants/rppr/

Includes links tooRPPR Application GuideoRPPR Guide NoticesoFrequently Asked QuestionsoTrainingoContacts

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• All type 5 progress reports must be submitted using the RPPR module in eRA Commons

• Failure to submit complete and timely progress reports may affect future funding to the organization

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• Due dates:• Non-SNAP - approximately 60 days before the start of

the next budget period• SNAP - approximately 45 days before the start of the next

budget period• Multi-year funded - on or before anniversary date

• Searchable list to determine which progress reports are due: https://public.era.nih.gov/chl/public/search/progressReportByIpf.era

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Financial Reporting

Requirements

• Federal Financial Report (FFR) (SF-425)

• FFRs are expected to be submitted timely and accurately

• Two types of financial reports:

• Federal Cash Transaction Report • Federal Expenditure Report

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• Federal Cash Transaction Report• Submitted quarterly to the Payment

Management System (PMS), HHS

• Federal Expenditure Report • Submitted annually (non-SNAP) or at

the end of the project (SNAP) to NIH through eRA Commons

Refer to Notice of Award for determination of SNAP vs Non-SNAP

(SNAP – Streamlined Non-competing Award Process) 45

FFR Expenditure Data Report (to NIH)

• Timely - Must adhere to submission deadlines:

o Annual – (Non-SNAP Awards) FFR submitted no later than 90 days after the end of the

calendar quarter (CQ) in which the budget period ended.

o Final – (SNAP and Non-SNAP Awards) FFR submitted within 120 days following the end of the

period of performance end date

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• IMPORTANT Information and NIH Guide Notices related to financial reporting:

See FFR (SF425) Instructions for NIH Recipients available at http://grants.nih.gov/grants/forms.htm

NOT-OD-15-136 at http://grants.nih.gov/grants/guide/notice-files/NOT-OD-15-136.html

NOT-OD-15-135 at http://grants.nih.gov/grants/guide/notice-files/NOT-OD-15-135.html

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Closeout Requirements

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Recipients must submit the following documents, when required, within 120 calendar days of the end of the period

of performance:

o Final Federal Financial Report (FFR) SF-425 Expenditure Data (submitted through eRA Commons)

o Final Research Performance Progress Report (F-RPPR)o Final Inventions Statement & Certification

Timely and accurate closeout reporting is a recipient responsibility

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The Final Research Performance Progress Report (F-RPPR) has replaced the Final Progress Report (FPR) for closeout

o Effective June 30, 2017 for SBIR/STTR Phase I/II final reports.

o Effective January 1, 2017 for all grants except SBIR/STTR grants

o The general format is the same as the interim/annual RPPR

o Recipients are required to report on Project Outcomes.

o Due dates have not changed.

See NOT-OD-17-022 and NOT-OD-17-085 for additional information

NIH requires that organizations submit an “Interim-RPPR” while their renewal application (Type 2/Phase II/IIB) is under consideration.

o In the event that the Type 2/Phase II/IIB is funded, NIH will treat the Interim-RPPR as the annual performance report for the final year of the previous competitive segment.

o If the Type 2/Phase II/IIB is not funded, NIH will treat the Interim-RPPR as the institution’s Final-RPPR.

As with the Final-RPPR, recipients are required to report on Project outcomes in the Interim-RPPR.

To reduce burden NIH will not require recipients to submit an additional Final-RPPR if the renewal application is not funded

See NOT-OD-17-037 and NOT-17-085 for additional information

• NIH recipients must file the HHS 568 at the conclusion of an NIH award

• All subject inventions reported on the HHS 568 must be reported in iEdison.

• Failure to report all inventions may result in your organization’s loss of rights in the invention or other actions as appropriate.

See NOT-OD-16-066 for additional information and resources

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At time of Closeout:

• Ensure there are no discrepancies in reporting between:

o Final FFR expenditure data (in eRA Commons) and

o FFR cash transaction data (in PMS)

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• Failure to submit an acceptable final FFR in a timely manner may result in disallowed costs or federal debto If a recipient fails to submit a final FFR expenditure data report:

• NIH must use the last recorded quarterly cash disbursement level

o If the final FFR expenditure data does not match the amount reported on last FFR cash disbursement report to PMS:• NIH must use the lower amount - results in federal debt

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• NIH must initiate unilateral closeout as an action of last resort if a recipient does not:

o provide timely, accurate closeout reports; or o respond to NIH requests within 270 days after the

end date of the period of performance to reconcile discrepancies in grant records

• Unilateral Closeout emphasizes the need for TIMELY and ACCURATE reporting

See NOT-OD-14-084 for additional information

• NIH Centralized closeout office still accepts receipt of the HHS 568 Final Invention Statement and Certification via emailed PDF attachment, fax, or mail:NIH Centralized Processing Center6705 Rockledge Drive, Suite 5016, MSC 7986 Bethesda, MD 20892-7986 (for regular or US Postal Service Express mail) Bethesda, MD 20817 (for other courier/express mail only) NIHCloseoutCenter@mail.nih.govFax: 301-480-2304

Recipients are required to submit the Final/Interim RPPR and the Final FFR electronically through the Closeout feature in the eRA

Commons.

Recipients are strongly encouraged to submit the HHS 568 Final Invention Statement & Certification electronically through the

Closeout Feature in the eRA Commons.

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Progress Reports, financial and final reports should be submitted on time to avoid consequences.

• Failure to submit timely reports may adversely affect future NIH funding to:o The Recipient Institutiono The Principal Investigator

• NIH may take action(s) when these reporting requirements are not met, including:o Enforcement actiono Special award conditionso Corrective actions

See NOT-OD-17-074 for additional information

• Loss of carryover authority• Cost disallowances• Special or More Frequent Reporting• Suspension, termination, and withholding of

support

NIH generally affords the recipient an opportunity to correct deficiencies before taking action unless public health or welfare concerns require immediate action.

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Whenever you have a question regarding compliance with Federal requirements, consult in advance:

o The Notice of Award (terms and conditions)o Your business official (if applicable)o NIH awarding component Grants Management

Officer/Specialist

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Kathy HancockAssistant Grants Compliance Officer

Division of Grants Compliance and OversightOffice of Policy for Extramural Research Administration

National Institutes of Health

Kathy.Hancock@nih.gov301.435.1962

FCOICompliance@mail.nih.govGrantsCompliance@nih.gov

E-mail: sbir@od.nih.gov

QUESTIONS?

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Summary of Audit Requirements

Recipient Type

Source of Audit Requirement (Non-

Federal Entity Fiscal Years Beginning Prior

to 12/26/2014)

Source of Audit Requirement (Non-

Federal Entity Fiscal Years Beginning

On/After 12/26/2014)

Where to Submit Audit Reports

State & Local Governments

OMB Circular A-133 45 CFR 75.501 Federal Audit Clearinghouse(See contact information in NIH GPS Part III)

Institutions of Higher Education

OMB Circular A-133 45 CFR 75.501 Federal Audit Clearinghouse(See contact information in NIH GPS Part III)

Non-Profits, including non-profit hospitals

OMB Circular A-133 45 CFR 75.501 Federal Audit Clearinghouse(See contact information in NIH GPS Part III)

For-Profits, including for-profit hospitals

45 CFR 74.26(d) 45 CFR 75.501(h) through 75.501(k) and 45 CFR 75.215

National External Audit Review Center(See contact information in NIH GPS Part III)

Foreign Organizations

NIH Grants Policy Statement(same as For-Profits)

NIH Grants Policy Statement (same as For-Profits)

National External Audit Review Center(same as For-Profits, see contact information in NIH GPS Part III)

Summary of Federal Requirement ReferencesRecipient Type Administrative

RequirementsCost Principles Audit Requirements

State & Local Governments and Indian Tribes

45 CFR Part 75, Subpart C – Pre-Federal Award Requirements and Contents of Federal Awards §75.200-§75.217

AND

45 CFR Part 75, Subpart D – Post Federal Award Requirements§75.300-§75.391

45 CFR Part 75, Subpart E

See also §75.416 and §75.417

45 CFR Part 75, Subpart F at §75.501

Also applicable to non-profit Hospitals

Institutions of Higher Education

45 CFR Part 75, Subpart E

See also §75.418 and §75.419

Non-Profits 45 CFR Part 75, Subpart E

Hospitals 45 CFR Part 75, Appendix IX 45 CFR Part 75, Subpart Fat §75.501 (h)-(k) and §75.215

Also applicable to for-profit Hospitals

For-Profits FAR 31.2(48 CFR Subpart 31.2)

Foreign Organizations Same as above depending on type of institution

Per NIH GPS use45 CFR Part 75.501 (h)-(k)

• Animal research – NIH’s Office of Laboratory Animal Welfare http://grants.nih.gov/grants/olaw/olaw.htm

• Human Subjects research – NIH’s Office of Extramural Programs – Human Subjects http://grants.nih.gov/grants/policy/hs/index.htm

• Indirect Cost Rate Negotiation -http://oamp.od.nih.gov/dfas/indirect-cost-branch and http://oamp.od.nih.gov/dfas/indirect-cost-branch/indirect-cost-submission

• Intellectual Property - Invention Reporting -http://grants.nih.gov/grants/intell-property.htm

• Grants Policy & Guidance -http://grants.nih.gov/grants/policy/policy.htm

• NIH Frequently Asked Questions -http://grants.nih.gov/grants/frequent_questions.htm 63

• NIH Public Access -http://publicaccess.nih.gov

• Research Integrity -http://grants.nih.gov/grants/research_integrity/index.htm

• SBIR/STTR Programs - https://sbir.nih.gov/• Time and Effort Reporting for Commercial

Organizations -http://oamp.od.nih.gov/dfas/indirect-cost-branch/indirect-cost-submission/time-and-effort-reporting-commercial-organizations

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