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<html lang="en-US">
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<HEAD>
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<TITLE>NIH Guide: SALARY LIMITATION ON GRANTS, COOPERATIVE AGREEMENTS AND CONTRACTS</TITLE>
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<META NAME="Title" CONTENT="NIH Guide: SALARY LIMITATION ON GRANTS, COOPERATIVE AGREEMENTS AND CONTRACTS">
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<META NAME="Filename" CONTENT="not98-186.html">
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<META NAME="Location" CONTENT="/grants/guide/notice-files/">
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<META NAME="Publication_Date" CONTENT="December 24, 1998">
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<META NAME="Keywords" CONTENT="NATIONAL INSTITUTES OF HEALTH">
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<BODY BGCOLOR="#FFFFFF" TEXT="#000000">
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<pre>
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SALARY LIMITATION ON GRANTS, COOPERATIVE AGREEMENTS AND CONTRACTS
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Release Date: December 22, 1998
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P.T.
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National Institutes of Health
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The purpose of this notice is to provide updated information regarding the
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salary limitation as it relates to NIH grant and cooperative agreement awards.
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This information also applies to extramural research and development contract
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awards. The last notice in the NIH Guide for Grants and Contracts regarding
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the salary limitation was published February 12, 1998.
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Fiscal Year (FY) 1999 is the tenth consecutive year for which there is a
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legislatively mandated provision for the limitation of salary. Specifically,
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the Department of Health and Human Services (HHS) Appropriation Act for FY
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1999, Public Law 105-277, restricts the amount of direct salary of an
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individual under a grant or cooperative agreement (hereafter referred to as a
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grant) or applicable contract to Executive Level III of the Federal Executive
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Pay Scale. That rate is currently $125,900 which reflects a $900 increase
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over the FY 1998 salary limit. Direct salary is exclusive of fringe benefits
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and indirect costs/general and administrative expenses. NIH will apply the
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limitation to all competing awards made with FY 1999 funds. Therefore, NIH
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grant awards for applications that request direct salaries of individuals in
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excess of a RATE of $125,900 per year will be adjusted in accordance with the
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legislative salary limitation and will include a notification such as the
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following:
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According to the HHS Appropriations Act, "None of the funds appropriated in
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this title for the National Institutes of Health and the Substance Abuse and
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Mental Health Services Administration shall be used to pay the salary of an
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individual, through a grant or other extramural mechanism, at a rate in excess
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of Executive Level III of the Federal Executive Pay Scale."
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The term "salary" has been interpreted by HHS Legal Counsel to mean "direct
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salary", which is exclusive of fringe benefits and indirect costs/general and
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administrative expenses. "Direct salary" has the same meaning as the term
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"institutional base salary". An individual's institutional base salary is the
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annual compensation that the applicant organization pays for an individual's
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appointment, whether that individual's time is spent on research, teaching,
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patient care, or other activities. Base salary excludes any income that an
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individual may be permitted to earn outside of duties to the applicant
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organization.
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The following are examples of the adjustments that NIH will make when salaries
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exceed the limitation:
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EXAMPLE 1. INDIVIDUAL WITH FULL-TIME APPOINTMENT.
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Individual's institutional base salary for a
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FULL-TIME (twelve month) appointment $150,000
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Research effort requested in application/proposal 50%
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Direct Salary requested $75,000
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Fringe benefits requested (25% of salary) $18,750
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Subtotal $93,750
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Applicant organization's indirect costs at a
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rate of 45% of subtotal $42,188
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Amount requested - salary plus fringe benefits
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plus associated indirect costs $135,938
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If a grant/contract is to be funded, the amount included in the award for the
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above individual will be calculated as follows:
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Direct salary - restricted to a RATE of $125,900
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multiplied by effort (50%) to be devoted to project $62,950
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Fringe benefits (25% of allowable salary) $15,738
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Subtotal $78,688
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Associated indirect costs at 45% of subtotal $35,410
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Total amount to be awarded due to
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salary limitation $114,098
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Amount of reduction due to salary
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limitation ($135,938 requested minus
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$114,01998 awarded) $21,840
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EXAMPLE 2. INDIVIDUAL WITH HALF-TIME APPOINTMENT.
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Individual's institutional base salary for a
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HALF-TIME appointment (50% of a full-time
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twelve month appointment) $65,000
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Research effort requested in application/proposal 30%
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Direct Salary requested $19,500
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Fringe benefits requested (25% of salary) $ 4,875
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Subtotal $24,375
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Applicant organization's indirect costs at a rate
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of 45% of subtotal $10,969
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Amount requested - salary plus fringe benefits
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plus associated indirect costs $35,344
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If a grant/contract is to be funded, the amount included in the award for the
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above individual will be calculated as follows:
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Direct salary - restricted to a RATE of $125,900
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multiplied by 50% appointment by 30% effort
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to be devoted to project $18,885
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Fringe benefits (25% of allowable salary) $ 4,721
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Subtotal $23,606
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Associated indirect costs at 45% of subtotal $10,623
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Total amount to be awarded due to salary
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limitation $34,229
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Amount of reduction due to salary limitation
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$35,344 requested minus $34,229 awarded) $ 1,115
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Other important points relating to NIH grants only are:
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o No adjustments will be made to previously established commitment levels for
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non-competing awards issued with FY 1999 funds.
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o NIH competing grant awards issued in FY 1999 will reflect adjustments to all
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years of a project, including future years, so that no funds are awarded or
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committed for salaries over the limitation.
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Other important points relating to both NIH grants and contracts are:
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o Awards issued with FY 1998 funds are still restricted to the $125,000 rate
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of pay.
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o An individual's base salary, per se, is NOT constrained by the legislative
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provision for the limitation of salary. The rate limitation simply limits the
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amount that may be awarded and charged to NIH grant and applicable contract
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awards. An institution may supplement an individual's salary with non-federal
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funds.
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o The salary limitation does NOT apply to payments made to consultants under
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an NIH grant or contract although, as with all costs, such payments must meet
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the test of reasonableness.
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o The salary limitation provision DOES apply to those subawards/subcontracts
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for substantive work under an NIH grant or contract.
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o COMPETING applications submitted to the NIH should continue to reflect the
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institutional base salary of all individuals for whom reimbursement is
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requested. NIH staff will make necessary adjustments to requested salaries
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prior to award.
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INQUIRIES
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Questions concerning this notice or other policies relating to grants or
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contracts should be directed to the grants management or contracts management
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offices in the NIH institutes or centers.
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</pre>
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<P><HR><P>
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<A HREF="/grants/guide/WeeklyIndex.cfm?WeekEnding=12-24-98">Return to Volume Index</A>
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<P>
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<A HREF="/grants/guide/index.html">Return to NIH Guide Main Index</A>
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