Negotiation and Your Initial Award

Negotiation and Your Initial Award

Learn how negotiation determines your terms of award, what to do if your award differs from your original request, how your institution negotiates F&A rates, and how you accept an award.

Negotiation Determines Your Terms of Award

Your grants management specialist goes through a checklist of items to make sure your application complies with NIH policies.

As you are about to become a PI of an NIH grant, you will work closely with your institution, and you will continue to do so throughout the award period.

Send all the documentation we ask for and only what we ask for. And make sure your business office signs everything you send, even if it delegates some submission roles to you.

Until you get your Notice of Award, don't take anything for granted. You may have to negotiate reductions in funding, removal of Specific Aims, bars to award, or other issues.

Since you'll rely heavily on the staff in your institution's business office, make sure you know what they need.

By this point, you should have done the following:

Your grants management specialist goes through a checklist of items to make sure your application complies with all NIH policies that affect it.

In addition to your just-in-time documentation, he or she looks at such items as our preapproval of an application over $500,000, compliance with any special requirements in a request for applications, and overlap with another funded grant.

If your research is in a high-profile policy area—for example, human subjects, research animals, or select agents—talk to your program officer and grants management specialist early on to learn our expectations.

After all the required documentation is in place, your program officer and grants management specialist contact you to negotiate the level of support and other aspects of your award.

Timing. If your application is fundable, you will see the Notice of Award in the Commons within six to eight weeks of our advisory Council meeting or earlier if it underwent expedited second-level review. This could take longer if it's at the start of fiscal year and we do not have a budget, the study section had human or animal concerns, or you have a complex grant type.

Find additional information in the Grants Negotiation SOP.

Negotiate Your Level of Support

For most awardees, negotiation consists of reviewing your budget, making sure everything is still appropriate, and possibly adjusting your funding level.

Before we can issue your Notice of Award, we need to set a budget level and terms of award that you agree to, a process NIH calls negotiation.

For most awardees, negotiation consists of reviewing your budget, making sure everything is still appropriate, and possibly adjusting your funding level based on our financial management plan and your other support.

Your Award May Differ From Your Request

If your project's scope, timeline, or budget is reduced, you have three options. Then get advice from your program officer and work with your grants management specialist to choose the option that's best for you.

In your Notice of Award, your budget or Specific Aims may differ from those that you requested due to the following factors.

Initial peer review. Your study section may recommend changes to your Research Plan or budget. For example, it may deem that you can achieve your Specific Aims with less money or time than you requested. Reviewers may conclude that some of your Specific Aims are not necessary.

Overlap. A grants management specialist or program officer may modify your award based on overlap identified in your other support information. If part of your Research Plan or scientific effort has already been paid for by NIH or another organization, we reduce the funding level accordingly.

Programmatic reduction. We may have to reduce your budget if our annual appropriation is not sufficient for us to fund applications at Council-recommended levels. 

If your project's scope, timeline, or budget is reduced, you have the following options (listed in our order of preference):

  1. Revise your project to conform to the reviewers' recommendations.
  2. Request that our advisory Council restore funds, years, or Specific Aims.
  3. Decline funding.

Make Sure Your Institution Has Negotiated F&A Rates

F&A typically covers more facility costs than administrative costs. It pays for all the services it takes to keep your lab open and running.

Usually, your grant support pays for direct costs plus facilities and administrative costs (previously called indirect costs) negotiated for your institution.

In case you're curious, F&A covers more facility costs than administrative costs. It pays for all the services it takes to keep your lab open and running—electricity, heating, air conditioning, custodial services, hazardous waste disposal, and so on—so you can conduct your research.

These infrastructure costs are factored into a formula that becomes your institution's negotiated F&A rate.

For academic institutions, F&A costs often account for about one-quarter to one-third of your institution's cost, but the F&A rate is a different number—it is the ratio of F&A costs to a factor called modified total direct costs (MTDC). See the NIH Definition for Modified Total Direct Costs (MTDC).

F&A rates of about 50 percent of MTDC are typical for universities. Keep in mind that a 50 percent F&A rate does not mean that 50 percent of the total expenditures are for overhead. MTDC excludes student tuition, equipment, and other large expenditure items.

Depending on the type of organization you work in, you can read more on direct and F&A costs that may be charged to your grant in the following resources.

Organization Type Cost Principles
Universities OMB Circular A-21
Non-Profit Organizations OMB Circular A-122
Hospitals 45 CFR Part 75, Subpart F Appendix
State and Local Governments OMB Circular A-87
Commercial (for-profit)
Organizations
FAR Part 31
 

If your institution has to negotiate F&A rates, your Notice of Award will direct it to the NIH Division of Financial Advisory Services. Once NIH approves a rate, it notifies you and us.

Foreign grantees can receive up to 8 percent of direct costs excluding equipment for F&A costs. For details, go to the Facilities and Administrative Costs section of Foreign Grants Management.

Accepting the Award

Accepting your grant isn't a formal process. By this point, we will have set up a method of payment with your institution so you can receive funds. At the start of your project period—the period of time we agree to fund you—we begin sending you money. By using the money, you accept the award.

Look into spending funds early. For most grants, your institution can allow you to start spending money up to 90 days before your grant's official start date for research within your approved aims.

Note that your business office must approve, since your spending funds early is at your institution's risk because NIAID has not yet made your award. NIAID does not increase your budget if the award can't cover the money you've already spent.

That said, with your institution’s permission, you can use its money to cover costs of personnel, supplies, or equipment on your grant. Contact your institutional business office to find out if this is possible.

Note that the grant does not start early for NIAID, and the renewal date stays the same.

Previous Step: 

Next Step: 

Checklist: 

At this point, make sure:

  • I send just-in-time information through the eRA Commons.
  • I resolve any bars to award through my program officer.
  • I have no other administrative issues that prevent me from receiving my award.
  • I contact my grants management specialist if I have a problem or delay in completing any of the actions listed above.
  • If my award will be different from what I expected, I understand my options and consider getting help making the right choice.
  • If I started my research before receiving my award, I have records of my expenses, so I will be able to charge them to my grant.
  • If I have a restricted award, I make sure that I do not conduct any research I am not permitted to do using NIH funds.
  • I consider whether to discuss with my business office the possibility of spending funds on my research before getting my Notice of Award.

Have Questions?

For business and policy issues, contact your grants management specialist, found in your eRA Commons account or on your summary statement. If you have not been assigned a specialist, go to NIAID's Grants Management Program Contacts to locate one.

Content last reviewed on August 11, 2016