Join us for our free webinar
Understanding the Financial Strings attached to Your Government Funding Award.
Ready to get started?
Make sure your next government funding proposal is cash flow positive
NEXT WEBINAR • 06/25/2024
"Understanding the Strings Attached to Your Federal Funding Award"

Debunking the Myths – NIH Grants ARE Soft Cap

June 16, 2011 / Ed Jameson / Blog Posts
Share This:


During our June 14th webinar with the Larta Institute, the question came up on NIH Grants and if there had been a change in regulation to institute a HARD CAP of $1mm on a Phase II award (similar to those found in other agencies such as the Department of Defense ), or if the Phase II awards were considered SOFT CAP, where $1mm is merely a suggestion that can be exceeded.

ed followed up to this question by reaching out to Matthew E. Portnoy, Ph.D, an SBIR/STTR Program Manager and Director of the Division of Special Programs at the NIH.  The below email  and regulations were attached as a response to prove the Jameson & Company stance, that indeed NIH grants are SOFT CAP awards.  This is why our clients do not leave money on the table!

This question comes up very often and we decided to paste the email response and regulations into our blog for everyone to review.

**Please keep note, that until SBIR is reauthorized, the below regs remain in effect.

From: Portnoy, Matthew (NIH/OD) [E] []
Sent: Tuesday, June 14, 2011 5:04 PM
To: ed
Cc: SBIR-STTR Program; Etzler, Katherine (NIH/OD) [C]
Subject: RE: SBIR phase 2 question

Dear Ed,

At NIH there has never been a hard cap on NIH awards.  The current limit for Phase II of $1M over two years is still a guideline and can be exceeded with strong justification.  Note this is a hard cap at other Federal agencies, but not at the NIH.



Matthew E. Portnoy, Ph.D.

Director, Division of Special Programs

NIH SBIR/STTR Program Manager

Office of Extramural Programs

Office of Extramural Research

National Institutes of Health

6705 Rockledge Drive, Room 3540, MSC 7963

Bethesda, Maryland 20892-7963

Telephone: (301) 435-2688

Fax: (301) 480-0146

Email :




When calculating whether your direct cost per year is $500,000 or greater, do not include any sub-recipient F&A in the base but do include all other direct costs as well as any equipment costs.   NOTE:  Direct cost requests equal to or greater than $500,000 require prior approvalfrom the NIH Institute/Center before application submission.  For more information, see NIH Guide Notice NOT-OD-02-004.


Release Date:  October 16, 2001
NOTICE:  NOT-OD-02-004
March 7, 2011  - See Notice NOT-OD-11-049 Notice of Budget Update for PA-11-063.
January 4, 2011 - See Notice NOT-EB-11-002 Notice of Update for New Biomedical Frontiers at the
Interface of the Life and Physical Sciences (R01).
July 29, 2010  - See Notice NOT-DK-10-011 Change of Application Budget Limit for NIDDK PAR-08-182.
(NICHD Policy and procedures, see NOT-HD-06-003)
(Also see policy revision NOT-NS-06-004 and also NOT-OD-04-040)
National Institutes of Health
The National Institutes of Health (NIH) is updating its policy on the
acceptance of applications requesting direct costs of $500,000 or more
for any one year.  Effective with the January 1, 2002 receipt dates,
applicants must seek agreement to accept assignment from
Institute/Center staff at least 6 weeks prior to the anticipated
submission of any application requesting $500,000 or more in direct
costs for any year.
The NIH supports research projects with large budgets but needs to
consider such awards as early as possible in the budget and program
planning process.  Regardless of the merit of the application or the
budget justification, unanticipated requests for unusually high amounts
of direct costs are difficult for NIH to manage.  It is in the best
interest of all parties if applicants anticipating large direct costs
to contact the appropriate NIH program staff as early as possible to
ensure that an Institute/Center would be willing to accept the
This notice clarifies and revises the policy published in the NIH Guide 
for Grants and Contracts on March 20, 1998.
The current policy advises an applicant planning to submit an
investigator-initiated new, competing continuation, competing
supplement, or any amended/revised version of the original application
requesting $500,000 or more in direct costs for any year to contact
Institute or Center program staff before submitting the application.
Discussions with program staff should occur as plans for the study are
being developed.  However, that notice does not specify a timeframe for
this process.
This revised policy requires applicants to seek agreement from
Institute/Center staff at least 6 weeks prior to the anticipated
submission of any application requesting $500,000 or more in direct
costs for any year.  If staff is contacted less than 6 weeks before
submission, there may be insufficient time to make a determination
about assignment prior to the intended submission date.  If the
requested dollars are significantly greater than $500,000, then
approval should be sought even earlier.
This policy does not apply to applications submitted in response to
RFAs or in response to other Announcements that include specific
budgetary limits.  However, such applications must be responsive to any
budgetary limits specified, or they will be returned to applicants
without review.
An applicant planning to submit a grant application with $500,000 or
more in direct costs for any year is required to contact in writing or
by telephone NIH Institute or Center program staff.  This contact
should be made during the development process of the application but no
later than 6 weeks before the anticipated submission date.  If the
Institute or Center is willing to accept assignment of the application
for consideration of funding, the staff will notify the Center for
Scientific Review before the application is submitted.
The Principal Investigator must include a cover letter with the
application.  That cover letter must identify the program staff member
and Institute or Center that has agreed to accept assignment of the
An application received without indication of prior staff concurrence
and identification of program staff contacted will be returned to the
applicant without review.  Therefore, NIH strongly encourages
applicants to contact Institute or Center staff at the earliest
possible time.
For additional information about this policy, the program staff at any
Institute or Center may be contacted.  Applicants who are uncertain
about which Institute or Center may have the greatest interest in the
research for which support is sought should contact:
Division of Receipt and Referral
Center for Scientific Review
National institutes of Health
Telephone:  (301) 435-0715
FAX:  (301) 480-1987

Ready to Learn More? Speak With A Government Funding Award Expert!
Call Now: 781-862-5170 – or – Schedule A Call

Ed Jameson, CPA, Managing Partner

I’ve been in practice for over 40 years helping our small business clients procure, manage, and survive audits on more than $6 billion in federal government contract and grant funding. We’ve been featured presenters and panel moderators at Tech Connect’s National SBIR/STTR conferences since 2010, and I’ve presented at the DOD’s Mentor Protégé Summit and present regularly for several state and local organizations.