Federal Grants Management Compliance for NIH SBIRSTTR

1
National Institutes of Health
Federal Grants Management Compliance for NIH
SBIR/STTR
Avoiding Risky Business Kathleen J. Shino,
M.B.A. NIH SBIR/STTR Specialist NIH SBIR/STTR
Conference, Las Vegas Nevada February 26, 2007
2
Overview

• Roles and Responsibilities
• Eligibility for SBIR and STTR
• Application Process
• Award Actions
• Post Award Requirements
• Compliance Basics

3
NIH Staff Roles

• Grants Management Officer
• - awards, compliance, prior approvals
• Grants Management Specialist
• Day to day grants portfolio management
• Program Official
• scientific, and/or technical aspects of grant
• Scientific Review Administrator (SRAs)
• Manage the activities of Scientific Review Groups
  (aka, peer reviewers)

4
NIH Staff - Resource to Grantees

• Prior approval items (when required)
• Grants Management - review for compliance with
  policies and regulations
• Program Official - change in scientific scope
• Noncompetitive applications (Annual progress
  report)
• Grants Management - review for compliance
• Program Official - review scientific progress
• Closeout for projects (Final reports)
• Grants Management - all close-out documents
• Program Official - review final scientific
  progress report

5
Grantee Institution

• The award is made to the institution, not an
  individual/PI
• The Institution Official (IO)
• Is legally responsible for the proper conduct and
  execution of the project
• Provides fiscal management of the project
• Provides oversight on allocation decisions
• Ensures compliance with Federal laws and
  regulations, and policies and procedures

6
Principal Investigator (PI)

• Works with Institution Official
• Responsible for the scientific and/or technical
  aspects of the grant
• Day-to-day management of the project
• Responsible for the scientific conduct of the
  project and to provide the required progress
  reports

7
SBIR and STTR

• See NIH SBIR/STTR website
• http//grants1.nih.gov/grants/funding/sbir.htm
• Phase I Feasibility/design (R43/R41)
• Normally 6 months (SBIR) to 1 year (STTR)
• Normally 100,000 Total Award (Direct costs
  Indirect costs Fee)
• Phase II Full RD continuation of Phase I
  (R44/R42)
• Only Phase I awardees eligible for for Phase II
• Normally Two Years and 750,000 Total Award
  (Direct Indirect costs Fee)
• Phase III Commercialization
• No SBIR or STTR funding

8
SBIR/STTR Eligibility

• For-profit U.S. business firm
• 51 U.S. owned by individuals independently
  operated
• Small Business Concern (SBC) located in the U.S.
• 500 or fewer employees, including affiliates
• See SBA regulations for SBIR STTR ownership

9
SBIR and STTR

• Eligibility determined at time of award
• All project activities in United States
• Normally Not-To-Exceed Funding Levels
• Project period
• SBIR Phase I - request 12 months budget period
  if project has
• Vertebrate Animals research
• Human subjects involvement
• Third party (consortium/contracts)

10
SBIR and STTR

• Electronic Application through Grants.gov
• Use Parent FOA and SF424RR forms
• New Applicant Organizations need
• Tax Identification Number
• DUNS
• Human Subjects FWA for grantee (SBC)
• Animal Assurance for grantee (SBC)
• Required for SF424RR submission

• Annual Reporting required Misconduct in
  Science to the Office of Research Integrity (ORI)

11
SBIR Requirements

• P.I. primarily employed by SBC gt50
• Dont confuse employment w/Time and Effort
• PI employment is rarely negotiable
• Phase I (R43) - third party involvement
• Normally NTE 33 of total award amount
• Includes consultants consortia
• Does not include fee for service contracts
• May exceed 33 if requested, justified, and
  approved by reviewers and program
• Justify deviations from SBA guidelines in funding
  levels project period in the application

12
SBIR Requirements Phase II

• Commercialization Plan required for All Phase II
  applications and Fast-Track
• Phase II (R44)
• PI employment 51 by SBC
• Third party costs normally NTE 50
• Total amount awarded normally NTE 750,000 (D.C.,
  FA fee) for two years

13
STTR Phase I (R41) II (R42)

• Single, partnering Research Institution Minimum
  30 effort/budget
• STTR subaward budget page and letter from RI
  required in application (Small Business Minimum
  40)
• Principal Investigator
• Minimum 10 time effort
• Must have formal agreement with SBC
• Commercialization Plan for Phase II

14
Types of Costs

• Indirect Costs/FA Costs
• Not Easily Identified With A Specific Project
• Fringe Benefits, Overhead, Exec. salaries
• Direct Costs
• Easily Identified With A Specific Project
• Direct Salaries Wages
• Materials Supplies
• Consultants Subcontracts
• Unallowable Costs -- Government will not
  reimburse! http//www.arnet.gov/far/loadmainre.htm
  l

15
Percentage Calculations

• Work Performance (Research Activities)
• Normally based on total award amount
• Explain in budget justification for exceptions
• Fee/profit (NTE 7)
• ONLY for SBIR/STTR grantee (SBC)
• May be based on total DC FA
• Grantee justified in application?
• All other mechanisms prohibited from fee/profit
  on grants

16
SBIR STTR Fee/Profit

• Only allowable for SBIR and STTR grants
• Fee must be requested in application
• May not exceed 7 of total costs (direct and
  indirect) requested for NIH grants
• Fee must be justified in the application
• Based on profit margin consistent with all
  projects of similar scope, regardless of source
  of funding at the small business concern

17
Phase I and Indirect Cost Rates

• If you have a current negotiated ICR agreement
  with NIH or another Federal Agency, request the
  ICR stated in the agreement
• PHASE I If no current negotiated rate
  agreement, indirect costs funded cannot exceed
  40 of total direct costs.
• NIH does not negotiate rates for Phase I SBIR or
  STTR awards.

18
Phase II - Indirect Cost Rates

• If you have a current negotiated rate agreement
  use the ICR stated in the agreement.
• If you do not have a current negotiated ICR
  agreement and your proposed indirect costs
  exceed 25 of total direct costs, rates must be
  reviewed by NIH/DFAS. Award will restrict
  indirect cost recovery to 10 of Salaries Wages
  until DFAS negotiation is complete.
• If proposed indirect costs are 25 or less of
  total direct costs, you do not need to provide
  supporting documentation or negotiate the rate

19
Questions about Indirect Costs?

• NIH Division of Financial Advisory Services
  (DFAS)
• http//oamp.od.nih.gov/dfas/rates.asp
• Ruth Bishop, Branch Chief
• Ph [phone]
• Attend the IDC Workshop at the Conference!!

20

• Award Actions
• Federally funded Research
• Science with Strings Attached

21
Notice of Grant Award (NGA)

• A legally binding contract with the government
• Official notice that an award has been made
• NGA includes
• Funding level (amount available for project)
• Periods of support (Project and budget period
• Terms and conditions (Restrictions/requirements)
• NIH contact information Who to call first?
• Program Official for Scientific issues
• Grants Management Specialist for administrative
  issues

22
Standard Terms and Conditions

• Expanded Authorities
• Carryover
• The authority to expend funds from the previous
  budget period
• Streamlined Non-competing Award Process (SNAP
  uses PHS 2590 forms) (Phase II)
• Eliminates need for annual submission of budget
  with progress report and annual submission of
  Financial Status Report (FSR)

23
Expanded Authorities

• NIH awards are under EA, which means
• 90 day pre-award cost authority at grantees own
  risk
• Reasonable rebudgeting authority
• gt 25 of total award may be unreasonable
• Grantees under expanded authorities may
• Change consortium participant
• Extend project period through the NIH Commons for
  additional 12 months

24
No-cost Extensions

• Grantee may extend (without additional funds) the
  final budget period of the project up to 12
  months (one-time only).
• If registered in Commons grantees can enter a
  first NCE through the NIH Commons (up to 90 days
  before the end date of the award).
• No revised NGA for first, on-time extension

25
Other Terms and Conditions

• Restrictive terms - may specify required action
  on the part of the grantee to remove restriction
  (e.g., IDC rate negotiation, human subjects)
• Close-out reporting requirements
• Included in the Final year Notice of Grant Award
  (NGA)
• Financial, invention and final progress reports
• Strings see Section IV of your NGA

26
Grantee Acceptance

• The grantee indicates acceptance of the terms
  and conditions of the award by drawing down funds
  against the grant from the Payment Management
  System.
• DHHS Division of Payment Management
• http//www.dpm.psc.gov

27
Post Award

• NIH prior approval requirements
• Close-out (termination)
• More Strings

28
Prior NIH Approval Required

• Change of PI and other Key personnel named in
  Notice of Grant Award
• Change of Grantee Organization
• Change of Scope

29
Change in Scope

• Change in the specific aims from those approved
  in the competing application
• Substitution of one animal model for another
• Any change from the approved use of animals or
  human subjects
• Shifting the research emphasis from one disease
  area to another
• Adding a new subcontract

30
Prior Approval Required!

• Notify the NIH (Grants Management Specialist)
  immediately if any of these apply or will apply
  to your business
• Successor-in-interest
• Name change
• Merger or acquisition

31
Prior Approval Required!

• The following changes involving the Principal
  Investigator or other key personnel should also
  be promptly reported
• Withdrawal from the project entirely
• An absence of three months or more
• Reduced time devoted to the project by 25 or
  more
• Key personnel named in the NGA Terms of Award

32
Submitting prior approval

• Requests for project changes that require NIH
  approval must be submitted in writing and signed
  by the Institution Official (IO) to the Grants
  Management Officer (GMO)
• An e-mail request is acceptable
• Sent through the IO to the awarding institute
  GMO and Program Official

33
Close Out Requirements

• Due within 90 days of the end of the project
  period to the awarding Institute/Commons
• Final Progress Report (no form, format included
  in final Notice of Grant Award terms!)
• Final Invention Statement - Form HHS 568
• Final Financial Status Report SF 269A or SF 269
• Refer to the terms and conditions on the
  final Notice of Grant Award (Section IV)

34
Compliance

• Internal Controls
• Close-out
• Compliance Basics

35
Why is Compliance Important?

• It strengthens the relationship of trust that
  exists between federal sponsor and grant
  recipient
• It suggests a presence of the stewardship
  necessary to properly safeguard the Federal
  investment in biomedical research
• Compliance Program Guidance
• for Recipients of NIH Research Grants
• http//grants.nih.gov/grants/compliance/complianc
  e.htm

36
Compliance is

• The effective management of public funds to
  maximize research outcomes
• The avoidance of fraud, institutional
  mismanagement, and poor management of Federal
  funds

37
Internal Controls

• Are budgetary controls in effect to preclude
  incurred expenses/obligations from exceeding
  total awarded funds or budget cost categories?
• Is there a separation of duties (record keeping/
  cash receipts/ cash payments)?
• Are all accounting entries adequately documented?
  (Journal Chart of Accounts?)

38
Internal Controls Capability

• The grantee organization must have
• a job cost accounting system,
• an adequate timekeeping system,
• must segregate direct and indirect costs.
• Must have written policies procedures
• Federal Financial and Business Management Systems
  - Sample Policies and Procedures
• http//www2.niddk.nih.gov/Funding/Grants/ffbms.htm
  

39
Compliance Basics

• Do the right thingfrom the start!
• Keep your policies current with Federal
  requirements
• Develop a continuing training program
• Perform risk assessments and implement
  appropriate internal controls
• COMMUNICATE, COMMUNICATE, COMMUNICATE!
• With your employees and with NIH

40
Who is Accountable?

• The Company is accountable for the finances and
  the administration of the grant
• The PI is accountable for the research
• The PI makes budget allocation decisions
• The Company exercises oversight on
• budget allocation decisions

41
Compliance Issues

• Misuse of funds
• Unallowable costs
• Allocation of costs
• Accelerated expenditures
• Large unobligated balances
• Cost transfers
• Financial Conflict of interest

42
Compliance Problems
Common Contributors

• Lack of understanding of roles and
  responsibilities of institutional staff
• Inadequate resources
• Outdated or nonexistent policies and procedures
• Inadequate staff training and education
• Inadequate systems
• Perception that internal control systems are not
  necessary

43
NIH Compliance Activities

• Institutional compliance process
• Technical assistance
• Corrective action process
• Settlement process
• Outreach
• Educational seminars
• National and regional meetings
• NIH Regional Seminars
• Proactive Compliance Site Visits
• Targeted Site Reviews (FCOI)

44
What do Grantees Need to know?

• Code of Federal Regulations (CFR)
• 42 CFR Part 52 Grants for Research Projects
• http//www.access.gpo.gov/nara/cfr/waisidx
  _03/42cfr52_03.html
• 45 CFR Parts 74 and 92 Public Welfare,
  Administrative Requirements
• (74) http//www.access.gpo.gov/nara/cfr/waisidx_
  04/45cfr74_04.html
• (92) http//www.access.gpo.gov/nara/cfr/waisidx_
  04/45cfr92_04.html
• 45 CFR Part 46 Public Welfare, Protection of
  Human Subjects
• http//www.access.gpo.gov/nara/cfr/waisidx_04/45c
  fr46_04.html

45
What do Grantees Need to Know?

• OMB Circulars - http//www.whitehouse.gov.ombcircu
  lars/
• Administrative Requirements or Standards
• A-102 Uniform Administrative Requirements for
  Grants and Cooperative Agreements awarded to
  State and Local Governments and Indian Tribes
• A-110 Uniform Administrative Requirements for
  Grants and Agreements awarded to Universities,
  Hospitals, and Other Non-Profit Organizations (
  for-profits at NIH)
• These include pre-award and post-award
  requirements

46
What do Grantees Need to Know?

• Cost Principles Applicable OMB Circulars and
  CFRs
• A-21 Cost Principles for Educational
  Institutions
• A-87 Cost Principles for State and Local
  Governments and Indian Tribes
• A-122 Cost Principles for Non-Profit
  Organizations
• 45 CFR Part 74, Appendix E Principles for
  Determining Costs Applicable to Hospitals
• 48 CFR Subpart 31.2 (Federal Acquisition
  Regulation) Applicable to For-profit
  organizations

47
What do Grantees Need to Know?

• Audit Requirements
• Applicable OMB Circular and Regulations
• A-133 Audits of States, Local Governments, and
  Non-Profit Organizations
• 45 CFR Part 74.26 Audits of For-Profit and
• Foreign Organizations

48
What do Grantees Need to Know?

• NIH Grants Policy Statement
• http//odoerdb2.od.nih.gov/gmac/nihgps_2003/index
  .htm
• Notice of Grant Award (Read it before you start!)
• NIH Guide to Grants and Contracts
• (Stay on top of new requirements)
• http//grants.nih.gov/grants/guide/index.html

49
NIH Enforcement Actions

• Special terms and conditions of awards
• Loss of carryover authority
• Cost disallowances
• Exclusion from Expanded Authorities
• Suspension/termination of award
• Opportunity for improved grantee systems and
  policies to assure compliance

50
Financial Conflict of Interest

• Expectation Companies must establish written
  policies and procedures to address financial
  conflict of interest for their investigators.
  These standards are designed to ensure that
  investigators maintain research objectivity in
  the design, conduct, analysis and reporting of
  research funded under grants.

51
Financial Conflict of Interest

• Identified a conflict of interest? You must
• Notify Chief GMO to assure that the conflicting
  interest is being managed, reduced, or eliminated
• Provide additional information, if requested
• FCOI must be addressed in consortium, consultant
  and employee contractual agreements
• See the NIH Guide
• http//grants2.nih.gov/grants/guide/notice-files/
  NOT-OD-OO-040.html
• FCOI regulations exclude Phase I SBIR and STTR!

52
Reminder!

• All SBIR/STTR recipients must register with SBA
  Tech-Net for reporting purposes
• http//tech-net.sba.gov
• SF424RR applications See the new forms and
  application instructions for SBIR STTR
• http//grants.nih.gov/grants/funding/424/index.htm
  
• Register NOW with Grants.gov and eRA
• http//era.nih.gov/ElectronicReceipt/preparing.htm
  4

53
NIH Information Sources
For NIH Grantees

• Notice of Grant Award (read it!)
• Provides terms of award and agency contacts
• Frequently Asked Questions
• http//www.grants.nih.gov/grants/funding/giofaq.ht
  m
• Grants Information
• grantsinfo_at_nih.gov (contact email address)
• NIH Grants Policy Information
• http//grants1.nih.gov/grants/policy/policy.htm

54
QUESTIONS??

• E-mail sbir_at_od.nih.gov
• Thank You!
• Kathleen J. Shino, M.B.A.
• NIH SBIR/STTR Program
• Voice 301 435-2689 Fax [phone]
• Email shinok_at_mail.nih.gov