The Agency-Specific Rules Applicable to Your R&D Funding Award

MISTAKE #8: Not paying attention to NIH, DoD, DoE Agency-Specific Rules

When you receive a Phase II SBIR, STTR, RO1, APRA-E, BARDA or BAA grant or contract, you need to comply with the Federal Acquisition Regulation (FAR) Part 31, and specifically FAR 52.216-7. Of course, there are pitfalls along the way. One is not understanding agency-specific rules and regulations.

After more than 30 years of specializing in government award accounting, we know the mistakes government awardees make, and how to prevent them.  Our “Top 10 Accounting Mistakes Government Awardees Make” blog series is designed to help you avoid trouble and protect your business.

As a government grant or contract awardee, hopefully, you’re aware of the FAR, and are performing the ongoing steps necessary to maintain a FAR part 31 compliant accounting system. 

But don’t stop there.  Every major agency has their own supplementary regulations to the FAR.  For example:

• National Institutes of Health: NIH Grants Policy Statement
• Department of Defense: Defense Federal Acquisition Regulation (DFAR)
• Department of Energy: Department of Energy Acquisition Guide (DEAR)

Supplemental regulations differ from one agency to another.

If you have multiple awards with multiple agencies, you can’t assume that what works for the DoD will work for the DoE.  Sometimes an agency uses its supplements to provide greater allowability than the FAR provides.  Usually, they create unique agency limitations.  For example:

• The DOD and DOE will reimburse for internal research and development costs where NIH will not.
• Most agencies have a dubious “reasonableness” standard to salary limitations.
  • Additionally, the NIH has a hard salary cap of $189,600.
  • The DOD will reimburse up to $525,000 for 2018 salaries (if reasonable). This limitation was created by Section 702 of the Bipartisan Budget Act of 2013 which established a $487,000 cap on the reimbursement of compensation costs for contractor employees, adjusted annually to reflect the change in the Employment Cost Index for all workers as calculated by the Bureau of Labor Statistics (BLS).   The BBA cap is codified statute (10 U.S.C. 2324(e)(1)(P) and 41 U.S.C. 4304(a)(16).
  • Simple – right?
• Patent cost recovery rules also differ greatly from agency to agency. The DOE allows an applicant to request up to $15,000 in a Phase II SBIR for domestic patent costs, where FAR says that these costs are generally unallowable unless required by your contract or grant. Typical disallowances can run into the tens or hundreds of thousands of dollars for the protection of intellectual property via patent costs.  Are you Googling the most accurate document??

Supplemental regulations can change frequently.

There are constant tweaks to the rules and it’s your responsibility to be aware of them.  Your funding agency isn’t going to call to make sure you’re paying attention.

How to stay current on funding agency supplemental regulations.

In government grant or contract accounting, what you don’t know can hurt you. So how do you stay on top of all the latest info?

• Visit your awarding agency’s website and spend more time and effort than you want investing in becoming a legal and accounting expert.
• Some of the universities have teams of people who update the University website as rules change. You could follow these great executive summaries and hope that you don’t miss anything big.
• Stick your head in the sand.
• Get help.

Talk to an expert.

Trust us, staying on top of all the changes to the FAR and supplemental regulations takes time. It’s highly possible your time would be better spent working on growing your business!

As government grant and contract accounting specialists, it’s our job to keep up with all the agency supplemental regulations.  If you’re concerned with avoiding trouble, we’re here to help.

Contact Us to schedule a time to speak to one of our government funding experts, and we will follow up within 48 hours!

Top 10 Mistakes Government Awardees Make:

1. Mistake #1: Taking The NIH Safe Rate
2. Mistake #2: Not Having a Far Part 31 Compliant Accounting System
3. Mistake #3: Overspending on Direct Costs
4. Mistake #4: Overspending on Indirect Cost Rates
5. Mistake #5: Audit Findings
6. Mistake #6: Spending Too Much on Accounting Staff
7. Mistake #7: Improper Allocation of Costs
8. Mistake #8: Not Paying Attention To Agency-Specific Rules
9. Mistake #9: Timekeeping and Uncompensated Overtime Issues
10. Mistake #10: Spending Too Much on Accounting When You’re Not a CPA