U.S. Department of Health and Human Services
Office of the Assistant Secretary for Resources and Technology Office of Grants
January 1, 2007
Circular A-21, the rate in effect at the beginning of a competitive segment will be used to determine indirect cost funding levels for the entire segment. If the rate agreement in effect at the outset of the competitive segment does not cover the entire competitive segment, then the rate in effect for the last year of the negotiated agreement will be used to determine indirect cost funding for the duration of the competitive segment. For all recipients, if the rate in effect at the beginning of the competitive segment or budget period, as applicable, was provisional and is superseded by a permanent rate, whether higher or lower, the latter rate will be used to determine indirect cost reimbursement. The award will not be adjusted downward, based on a lower permanent indirect cost rate than a provisional rate used in calculating the award, unless the indirect cost proposal that served as the basis for the negotiation included unallowable costs. The OPDIV also is not required to provide any additional funding to accommodate this situation but may do so if an error was made in computing the award as indicated above. The recipient is responsible for establishing indirect cost rates for its subrecipients if those subrecipients do not have a current, applicable rate negotiated by a cognizant Federal agency.
The term "applicable credits" refers to those receipt or negative expenditure types of transactions that operate to offset or reduce direct or indirect cost items. Typical examples are purchase discounts, rebates or allowances, recoveries or indemnities on losses, and adjustments for overpayments or erroneous charges. Additional information concerning applicable credits is included in the cost principles. Applicable credits to direct charges made to HHS grants must be treated as an adjustment on the recipient's FSR, whether those credits accrue during or after the period of grant support. The awarding office will notify the recipient of any additional actions that may be necessary.
Allowable Costs and Activities
The governing cost principles address selected items of cost, some of which are mentioned in this subsection for emphasis. This subsection is not intended to be all- inclusive. The cost principles should be consulted for the complete explanation of the allowability or unallowability of costs they address. The allowability of costs under individual OPDIV awards also may be governed by requirements specified in the program legislation, regulations, or the specific terms and conditions of the award, which will take precedence over the general discussion provided here (see 'Overview of Terms and Conditions of Award-Effect and Order of Precedence"). Recipients that have questions concerning the allowability of costs should contact the GM0.
If a cost is allowable, it is allocable as either a direct cost or an indirect cost, depending on the recipient's accounting system. For some costs addressed in this subsection, the text specifies whether the cost is usually a direct cost or an indirect cost.
Unless otherwise indicated in the NoA, an award based on an application that includes specific information concerning any direct costs or activities that require OPDIV prior approval constitutes the prior approval for those costs or activities, The recipient is not required to obtain any additional approval for those costs/activities. If a cost or activity requiring OPDIV prior approval is not included or fully described in the approved application, the recipient must obtain post-award prior approval as described in "Prior Approval Requirements-OPDIV Prior-Approval").
Subrecipients and contractors under grants are subject to the requirements of the cost principles otherwise applicable to their type of organization and to any requirements placed on them by the recipient to be able to comply with the terms and conditions of the award.
The cost principles do not address profit or fee. HHS policy allows the payment of fee on SBIR/STTR grants, but HHS will not provide profit or fee to any other type of recipient under any other grant program. A fee may not be paid by a recipient to a subrecipient/consortium participant, including a for-profit organization, However, a fee (profit) may be paid to a contractor providing routine goods or services under a grant in accordance with normal commercial practice.