CASRAI Dictionary

Tag: 2 CFR 200

  • NIH Grants Policy Statement: What It Requires of Institutions

    The NIH Grants Policy Statement (NIHGPS) is the master terms-and-conditions document for every NIH award: institutions that accept NIH funding are bound by its rules on cost allowability, effort reporting, prior-approval triggers and audit obligations, applied alongside the government-wide cost principles in 2 CFR Part 200. Research administrators use it as the single reference point for what a grant actually obliges a recipient organisation to do.

    The NIH Grants Policy Statement is defined by NIH as the document that “makes available, in a single document, the policy requirements that serve as the terms and conditions of NIH grant awards.” It is not optional guidance — by accepting a Notice of Award, an institution agrees to comply with it unless the notice itself states otherwise.

    What is the NIH Grants Policy Statement?

    The NIHGPS is NIH’s consolidated statement of the terms and conditions attached to every grant, cooperative agreement and, where applicable, contract-adjacent award it issues. It is organised into three parts: general information about NIH and the award lifecycle, the substantive terms and conditions that bind recipients, and a directory of NIH contacts for compliance questions. Institutions do not negotiate these terms award-by-award; the current NIHGPS edition applies by reference from the date on the Notice of Award.

    Because the NIHGPS is revised periodically rather than rewritten from scratch, most institutional research offices track it as a living reference — checking each Notice of Award against the edition in force, since older awards can remain subject to the NIHGPS version current on the date they were issued.

    How does the NIHGPS relate to 2 CFR 200?

    The NIHGPS does not operate in isolation. It sits beneath, and explicitly incorporates, the Office of Management and Budget’s Uniform Guidance at 2 CFR Part 200 — the government-wide cost principles, administrative requirements and audit rules that apply to all US federal grants, not just NIH’s. The NIHGPS then layers NIH-specific interpretation and additional conditions on top of that baseline.

    There is also a departmental layer in between: the HHS Grants Policy Statement, issued by the Department of Health and Human Services, sets terms common to all HHS operating divisions. NIH’s own document tells recipients to consult the HHS Grants Policy Statement for department-wide matters and the NIHGPS for anything NIH-specific — the two are complementary, not duplicative.

    Document Issuing body Scope
    2 CFR Part 200 (Uniform Guidance) Office of Management and Budget Government-wide cost principles and audit requirements for all federal awards
    HHS Grants Policy Statement Department of Health and Human Services Department-wide terms across all HHS operating divisions
    NIH Grants Policy Statement National Institutes of Health NIH-specific terms and conditions layered on the two frameworks above

    What must institutions do to comply?

    Three compliance areas generate the most work for research administration offices: cost allowability, effort reporting, and the award terms that trigger prior approval.

    Cost allowability

    Costs charged to an NIH award must be allowable, allocable, reasonable and consistently treated, per the cost principles in 2 CFR 200 Subpart E, as applied through the NIHGPS. Institutions are expected to maintain financial management systems capable of tracking costs at the individual-award level and reconciling them through periodic Federal Financial Reports.

    Effort reporting

    Where NIH funds pay any part of a researcher’s salary, the institution must certify that the proportion of effort charged reflects the effort actually devoted to the project, consistent with the compensation-for-personal-services standard at 2 CFR 200.430. NIH also applies an annual salary cap, set against Executive Level II of the federal executive pay scale, that limits the salary rate chargeable to NIH awards regardless of an individual’s actual institutional salary.

    Award terms and prior approval

    The NIHGPS lists specific actions that require NIH’s prior written approval before an institution can proceed — commonly a significant change in project scope, a change of principal investigator, a no-cost extension beyond the automatic first extension, or the addition of a foreign component. Institutions that expend federal awards above the Single Audit threshold — raised to $1,000,000 under OMB’s 2 CFR 200 revision effective for fiscal years beginning on or after 1 October 2024 — must also arrange an annual Single Audit.

    • Maintain auditable, award-level financial records under 2 CFR 200 cost principles
    • Certify effort for NIH-funded personnel and apply the current salary cap
    • Seek prior approval for scope changes, PI changes, extensions and foreign components
    • Comply with human subjects, animal welfare, research misconduct and conflict-of-interest policies
    • Report inventions arising from NIH funding under Bayh-Dole Act procedures
    • Meet NIH data-sharing and public-access requirements for funded research outputs

    What changed for FY2026?

    NIH published a revised NIHGPS effective March 2026, applicable to awards issued for Fiscal Year 2026. Research offices should treat each Notice of Award as the definitive marker of which NIHGPS edition governs that specific award, since NIH does not retroactively apply every revision to awards already in force. Comparing the March 2026 edition against the prior version — rather than assuming continuity — is the safest institutional practice each cycle.

    Answer-first Q&A

    Who can apply for an NIH grant?

    Most NIH programmes do not require applicants to hold a specific degree or US citizenship; eligibility is set at the level of the individual funding opportunity. Institutions, not individuals, are the formal recipients of NIH awards, and it is the institution that assumes NIHGPS compliance obligations on behalf of its research staff.

    Can non-US citizens apply for NIH grants?

    Yes. Non-US institutions and researchers can serve as recipients or principal investigators for most NIH mechanisms, though some programmes impose citizenship or residency conditions stated explicitly in the funding opportunity notice. The NIHGPS applies equally to foreign and domestic recipient organisations once an award is made.

    What are the NIH guidelines referenced in grant compliance?

    “NIH guidelines” typically refers to specific technical policies — such as those governing recombinant DNA research — that sit alongside, but are distinct from, the NIHGPS. The NIHGPS is the umbrella terms-and-conditions document; specialised guidelines are incorporated into it by reference where relevant to a given award.

    What is a Type 3 NIH award?

    A Type 3 award is an administrative supplement: additional funds provided during a current project period to cover increased costs within the existing, peer-reviewed scope of work. It cannot extend the award beyond its current end date and is governed by the same NIHGPS terms as the parent award.

    What this means for research administration offices

    For grants and contracts offices, the practical implication is that NIHGPS compliance cannot be delegated to a single reading at award setup. Cost allowability rules, effort-reporting certification cycles and prior-approval triggers recur throughout an award’s life, and each NIHGPS revision can shift specific thresholds or procedures without changing the document’s overall structure. Institutions that build compliance checklists against the current NIHGPS edition — cross-referenced to 2 CFR 200 and the HHS Grants Policy Statement — reduce the risk of disallowed costs and audit findings.

    This layered structure (OMB, HHS, NIH) is a useful model for research administrators more broadly: understanding how a funder-specific policy statement incorporates broader federal cost and audit frameworks is a transferable skill across other US federal sponsors, not just NIH. CASRAI’s research administration content covers this compliance-mapping approach across funders.

    Looking ahead

    NIH continues to revise the NIHGPS on a rolling basis rather than a fixed annual schedule, and institutions should expect further alignment with OMB’s evolving Uniform Guidance, particularly around audit thresholds and data-sharing expectations. Research administration offices that treat the NIHGPS as a living compliance map — rather than a document read once at onboarding — are best positioned to absorb each revision without disruption to active awards.

  • What Is a NICRA? Indirect Cost Rate Explained

    A NICRA (Negotiated Indirect Cost Rate Agreement) is a formal agreement between an organisation and its federal cognizant agency that fixes the percentage rate used to reimburse indirect costs — overhead such as facilities, IT and administrative salaries — on US federal grants and cooperative agreements, under the cost principles set out in 2 CFR Part 200. Once signed, that single rate applies across every federal award the organisation holds, not just the grant that triggered the negotiation.

    In plain terms: a NICRA is the rate agreement a federal cognizant agency issues after reviewing an organisation’s indirect cost rate proposal, and every federal awarding agency must thereafter honour it. For sponsored-programs offices preparing a federal grant budget, knowing whether a NICRA is on file — and what it authorises — determines how much of the award can legitimately be booked as overhead versus direct project costs.

    What Is a NICRA?

    A NICRA is a legally binding rate agreement between a non-federal entity — a university, non-profit, or other grant recipient — and the federal agency responsible for reviewing its costs. It sets the maximum percentage of a defined direct cost base that the organisation may claim as indirect costs on federal awards. It does not increase the size of a grant; it only fixes how the award splits between direct project costs and overhead recovery.

    Indirect costs support the whole organisation rather than one project — HR and finance staff salaries, office space, utilities, IT infrastructure and institutional insurance are typical examples. Because these costs cannot be assigned to a single grant, the Uniform Guidance requires a standardised, auditable recovery method, and the NICRA is that method.

    Who Negotiates a NICRA? The Cognizant Agency Explained

    A NICRA is negotiated with the organisation’s cognizant agency — the federal agency providing the largest dollar amount of direct funding to that organisation. That agency reviews the rate proposal, audits the underlying cost pool, and issues the agreement on behalf of the whole federal government.

    Cognizant responsibility is sometimes delegated: the Department of the Interior’s Interior Business Center (IBC) negotiates rates on behalf of NASA, the National Endowment for the Humanities and the National Endowment for the Arts, while the National Science Foundation negotiates directly for roughly 100 organisations it funds. Once negotiated, 2 CFR 200.414 requires every other federal agency to accept the rate — organisations do not renegotiate with each new funder.

    How Is a NICRA Rate Calculated?

    The underlying formula is simple, even though the supporting documentation is not:

    Indirect cost rate = Total allowable indirect costs ÷ Direct cost base

    The direct cost base is usually one of three options negotiated with the cognizant agency: direct salaries and wages; salaries and wages plus fringe benefits; or Modified Total Direct Costs (MTDC), the most commonly used base. Under 2 CFR 200.1, MTDC includes direct salaries, fringe benefits, materials, supplies, services, travel and the first $25,000 of each subaward, but excludes equipment, capital expenditures, rental costs, tuition remission, scholarships and patient-care charges.

    What most explainers skip is that a NICRA is not one uniform instrument — 2 CFR 200.1 defines four distinct rate types, and knowing which one an organisation holds changes how a budget should be built:

    Rate type What it means
    Provisional A temporary rate used for funding purposes until a final rate is negotiated for that period.
    Predetermined A fixed rate set in advance for a specific future period, not subject to later adjustment for that period.
    Final A rate established after an organisation’s actual costs for a completed fiscal year are known and audited.
    Fixed with carry-forward A rate based on estimated costs, with any over- or under-recovery carried forward and adjusted in a future rate.

    A first-time applicant typically submits a cost policy statement, audited financial statements, a schedule of federal awards received, and its rate calculation reconciled to those statements, then negotiates from a provisional rate toward a final or predetermined one.

    NICRA vs the De Minimis Rate: Which Applies to You?

    Organisations that have never held a federally negotiated rate need not undergo full negotiation. Under 2 CFR 200.414(f), as revised by OMB’s 2024 update to the Uniform Guidance, eligible entities may instead elect a de minimis rate of 15% of MTDC, usable indefinitely without a rate proposal. This is a frequently misreported detail: several current explainers and AI-generated summaries still cite the pre-2024 figure of 10% — administrators budgeting a new federal proposal should confirm 15% is the operative ceiling.

    Feature NICRA De minimis rate
    Rate source Negotiated with cognizant agency Fixed by 2 CFR 200.414(f) at 15% of MTDC
    Documentation Full indirect cost rate proposal, audited financials No proposal required
    Eligibility Any non-federal entity with a cognizant agency Entities with no current or prior NICRA (excluding certain subrecipients)
    Renewal Periodic renegotiation; annual for entities receiving $35 million+ in direct federal funding May be used indefinitely once elected
    Consistency across funders Binding on all federal agencies once negotiated Binding on all federal agencies as a Uniform Guidance floor

    Entities receiving $35 million or more in direct federal funding annually are ineligible for the de minimis election and must negotiate and renew a NICRA every year. Subrecipients funded only through a pass-through award cannot negotiate a NICRA directly with a federal agency; they must either use the de minimis rate or negotiate one with the pass-through entity.

    Answer-First: Common NICRA Questions

    Who Approves a NICRA?

    The cognizant federal agency approves a NICRA — the agency providing the organisation’s largest amount of direct federal funding. Some agencies delegate this review; the Interior Business Center, for instance, negotiates rates on behalf of NASA and other funders under an interagency arrangement.

    What Is a Negotiated Indirect Cost Rate Agreement?

    It is the signed document that sets an organisation’s maximum allowable indirect cost rate for federal awards, following review of a formal rate proposal. It governs cost recovery across all federal grants and cooperative agreements the organisation holds, not a single award.

    How Do You Get a Federally Negotiated Indirect Cost Rate?

    An organisation identifies its cognizant agency, prepares a rate proposal with audited financial statements and a cost allocation methodology, and submits it for review. The agency audits the proposal, negotiates adjustments, and issues a provisional rate that typically converts to a final or predetermined rate.

    What Is the Difference Between MTDC and TDC?

    Total Direct Costs (TDC) include every direct cost of a project. Modified Total Direct Costs (MTDC) is a narrower base excluding equipment, capital expenditures, tuition remission, scholarships, patient-care costs, rental costs, and the portion of each subaward exceeding $25,000 — why most NICRAs are negotiated against MTDC rather than TDC.

    Why Sponsored-Programs Offices Need a NICRA on File

    A NICRA determines whether a federal budget line for overhead is defensible at pre-award review and post-award audit. Submitting a proposal without a current NICRA, or applying the wrong rate type or base, is a common reason sponsored-programs offices see budget lines challenged before an award is issued.

    • It gives budget predictability: institutions can forecast indirect recovery across a whole portfolio of federal awards rather than negotiating project by project.
    • It signals credibility to funders, since the rate reflects an independent federal audit of the organisation’s cost structure.
    • It is not optional for large recipients: entities above the $35 million direct-federal-funding threshold must maintain and annually renew a NICRA and cannot use the de minimis election.

    The stakes were underscored in 2025, when NIH attempted to unilaterally cap indirect cost reimbursement at 15% for grants already holding a higher negotiated rate — a policy that immediately triggered legal challenges from research universities. The episode confirmed a NICRA is not a background formality but a binding instrument shaping an institution’s federal research budget.

    Looking Ahead: NICRAs in a Shifting Federal Funding Landscape

    The 2024 revision to 2 CFR Part 200 raised the de minimis floor and clarified cost-base definitions, but it did not remove the core requirement: full, defensible recovery of indirect costs still needs a negotiated rate on file with the cognizant agency. As agencies keep revisiting indirect cost policy, research administration offices should monitor their NICRA’s rate type, base and renewal date as closely as the awards it applies to.

    For related grant-budgeting and compliance terminology, see the CASRAI Dictionary and the broader research administration resource hub.

  • NIH Grant Cancellation Legality Under 2 CFR 200

    NIH grant cancellation legality rests on 2 CFR 200.340: a grant may be terminated mid-cycle only if the recipient fails to comply with award terms, both parties consent, or the awarding agency determines the project no longer effectuates programme goals — and in every case NIH must issue written notice and preserve the recipient’s appeal rights before funding stops.

    A grant termination is the enforceable act of ending some or all of an active federal award before its approved project period expires, distinct from the routine non-renewal of a grant at the end of a competitive cycle. Understanding where that line sits — and what procedural protections apply on either side of it — is now a core competency for research administrators, not a hypothetical.

    Federal grant terminations are governed by the OMB Uniform Guidance codified at 2 CFR 200.340, which HHS incorporates into its own grants regulations and which NIH restates in Section 8.5.2 of the NIH Grants Policy Statement (“Suspension, Termination, and Withholding of Support”). This is an administrative-law standard, not a discretionary one: an awarding agency cannot terminate a grant for an unlisted reason, however compelling it finds that reason.

    NIH’s default posture, per its own policy statement, is to suspend a grant and give the recipient an opportunity for corrective action before proceeding to full termination — except where a serious deficiency or risk to health or safety justifies immediate termination.

    What grounds allow NIH to cancel a grant mid-cycle?

    2 CFR 200.340 recognises a closed, not open-ended, list of termination grounds. The Center for Science in the Public Interest’s litigation summary of APHA v. NIH describes these as “three limited circumstances” under the regulation.

    Ground Regulatory basis Typical trigger
    Recipient non-compliance 2 CFR 200.340(a)(1) Failure to meet award terms and conditions, financial mismanagement, or research misconduct findings
    Mutual agreement 2 CFR 200.340(a)(2) Recipient and NIH jointly agree the project is no longer viable (e.g. PI departure)
    Agency priorities / “for cause” 2 CFR 200.340(a)(4) NIH determines the award “no longer effectuates the program goals or agency priorities”

    The third ground is the one currently under judicial scrutiny. It gives the agency real latitude to align funding with shifting priorities, but that latitude is not unlimited: agency reasoning must still satisfy the Administrative Procedure Act’s bar on “arbitrary and capricious” action, meaning NIH must show a reasoned, non-conclusory basis tied to the individual award rather than a blanket, category-wide directive.

    What notice and appeal rights does 2 CFR 200 guarantee?

    Termination is not self-executing. 2 CFR 200.341 requires NIH to provide written notice specifying the reason for termination, the effective date, and whether the termination is full or partial. Where non-compliance is the stated ground, the notice must also disclose that the termination will be reported in the federal System for Award Management (SAM.gov), a public record that can affect an institution’s future funding eligibility.

    Recipients then have a two-tier route to challenge the decision:

    Stage Forum Typical deadline Scope of review
    First-level appeal NIH official named in the termination notice Per notice instructions Procedural and factual objections to the stated grounds
    Formal appeal HHS Departmental Appeals Board 30 days from final NIH decision Whether NIH followed its own regulations and notice requirements

    Disagreement over scientific merit is generally not a valid appeal ground; DAB review focuses on whether NIH complied with its own procedural rules, not on re-litigating peer review.

    How did 2025–26 litigation test these limits?

    The clearest real-world stress test of this framework is American Public Health Association v. NIH (D. Mass., No. 1:25-cv-10787). Beginning in February 2025, NIH terminated a large volume of active grants tied to categories the administration disfavoured, without individualised, award-specific justification.

    On 16 June 2025, District Judge William Young ruled the underlying directives and the resulting terminations arbitrary and capricious under the APA, finding the stated reasons “conclusory and bereft of reasoning.” His 23 June 2025 Partial Final Judgment declared the directives and terminations “of no effect, void, illegal, set aside, and vacated.” The First Circuit unanimously denied the government’s request to stay that judgment on 18 July 2025.

    On 21 August 2025, the Supreme Court issued a narrower, 5–4 emergency-docket ruling: it left the vacatur of the NIH directives in place, but held that district courts likely lack jurisdiction to order restoration of the terminated grants themselves, because such claims sound in contract and belong before the Court of Federal Claims under the Tucker Act. That split — policy directives reviewable in district court, individual grant restoration routed to a separate contract forum — is now the operative jurisdictional map for any institution challenging a termination. As of the case’s most recent public docket update, First Circuit oral argument on the merits appeal was calendared for 6 January 2026, with the outcome not yet reflected in publicly available case summaries at the time of writing.

    Separately, the Government Accountability Office found in August 2025 that NIH’s cancellation of roughly 1,800 grants violated the Impoundment Control Act of 1974, which requires the executive branch to obligate congressionally appropriated funds absent a formal rescission request to Congress. Harvard’s T.H. Chan School of Public Health, tracking the terminations independently, put the broader 2025 total at roughly 2,100 grants worth approximately $9.5 billion.

    Answer-first Q&A: what administrators are asking

    Are NIH grant terminations illegal?

    Not inherently. A termination is lawful when NIH cites one of the three grounds in 2 CFR 200.340, issues proper written notice, and grounds its reasoning in the specific award. A federal court found a 2025 wave of terminations unlawful specifically because NIH skipped individualised justification and relied on blanket, category-based directives instead.

    Can the government cancel a federal grant?

    Yes — federal agencies retain statutory authority to terminate grants “to the extent authorized by law,” including when an award no longer serves programme goals. That authority is bounded by the Administrative Procedure Act, the Impoundment Control Act’s restrictions on withholding appropriated funds, and the agency’s own termination regulations.

    How could researchers get a cancelled NIH grant restored?

    Institutions can pursue NIH’s internal appeal, then the HHS Departmental Appeals Board, or litigate under the APA in district court against the policy directive itself. Per the Supreme Court’s August 2025 ruling, restoration of the underlying funding obligation likely requires a separate contract claim at the Court of Federal Claims.

    How many NIH grants have been cancelled?

    Independent tracking by Harvard’s T.H. Chan School of Public Health documented roughly 2,100 grants worth approximately $9.5 billion terminated during 2025, a volume the litigation record describes as unprecedented against decades in which such terminations were “exceedingly rare.”

    What should research administrators do now?

    Three practical implications follow directly from the legal standard, independent of how any single case resolves:

    • Preserve every termination notice in full — the stated reason under 2 CFR 200.341 determines which appeal forum and deadline apply, and a vague or category-wide reason is itself a procedural defect worth flagging.
    • Track the SAM.gov disclosure trigger — a non-compliance-based termination notice generates a public record that can affect future eligibility, so institutions should confirm the correct ground was cited.
    • Route restoration claims correctly — the 2025 jurisdictional split means a policy challenge and a funds-restoration claim are no longer the same lawsuit, and misfiling in the wrong forum can cost months.

    The underlying legal standard has not changed: NIH still needs one of three grounds, still owes written notice, and recipients still retain a defined appeal path under 2 CFR 200. What 2025–26 litigation changed is the practical burden of proof NIH must meet to invoke the “agency priorities” ground, and the forum in which recipients must seek a remedy. Research administration offices that build both into their grant-monitoring workflow will be far better positioned than those relying on general awareness that “terminations are being challenged in court.”