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Moving to Subaccounts for NIH Award Payments

Proper award management and fiscal oversight are critical to maintaining scientific integrity and public trust in stewardship of federal funds. To this end, all HHS operating divisions, including NIH, are making changes that will affect how grantees manage their grant funds. One such change involves a shift from pooled account payments to subaccount payments.

Traditionally, NIH funding goes to grantee organizations in the U.S. into a single “pooled” account, which they access through the HHS Payment Management System (PMS) to draw down cash and pay for research expenses. We are now moving to a system that uses subaccounts, which means grantees draw down funds from award-specific accounts in the PMS. Foreign grantee organizations are already on the sub-accounting system, and ultimately all NIH grantees will use subaccounts as well.

We announced this transition for domestic grantees earlier this month after receiving a directive from HHS. Hearing concerns from our grantees and others regarding issues in the implementation of the policy, we worked with HHS to adjust the transition timeline. As a result, we will delay implementing the use of subaccounts for noncompeting continuation awards for one year, meaning we will not move these awards to subaccounts until the FY 2015 increment. However, all new awards including competitive renewals will be issued into subaccounts beginning October 1, 2013. The NIH Guide notice issued yesterday provides details on the transition by award type, and timing.

The end goal of issuing all NIH funding into subaccounts has not changed, and we plan to transition all award payments by the end of fiscal year 2015. The sub-accounting system will ultimately allow grantees and NIH to better understand how much money is available for distinct research projects. And this delay in placing noncompeting continuation awards into subaccounts until the next fiscal year will give the grantee organization time to adjust their systems and processes accordingly.

I encourage you to review the new Guide notice (NOT-OD-13-120), and the related frequently asked questions, which includes detailed information on the implementation timeline and how this transition works for all NIH awards.

4 thoughts on “Moving to Subaccounts for NIH Award Payments

  1. I applaud the decision to delay for 1 year the moving of noncompeting continuation awards into subaccounts. I also understand that the sub-accounting system will allow grantees and NIH to better understand how much money is available on projects. However, I feel the quarterly reporting on projects in the sub-accounting system is a duplication of effort that will provide only outdated information. I cordially request that NIH reconsider requiring quarterly reporting on sub-accounts.

    Laura Smith
    Sr. Financial Associate
    Sponsored Projects Administration
    Oregon Health & Science University

  2. Will this eliminate “double-indirect” costs that get charged when a subcontract gets issued to a second university (e.g., first set of indirects on whole grant to university1 and then indirects added to subaward to university2)? This has always seemed so wasteful to me.

  3. This apparently requires that an awardee (a tiny business, in my case) compute the grant drawdowns for every grant separately, when drawing down money for, say, payroll. True?

    To see why I ask: Paying 6 people averaging 4 “direct” salaries plus 2 “indirect” will apparently require computing the company’s running indirect rates and billing all 3 grants according to the specific hours charged by the 4 “directs” plus proportional time for the 2 “indirects” — something that is a mild burden when we now do it quarterly. (If you imagine that, with 6 people, each person works solely on 1 grant, or solely as indirect: They don’t. We can’t. So the grant drawdown varies in every payroll.)

    And if we just have, say, the rent check to write: We must compute each grant’s share of the rent (which will surely NOT be 1/3 for each) and draw down from all 3 grants. Right?

    Can you offer any help? This seems like an extraordinary increase in the burden, from a few hours once a quarter to approximately every week.

  4. This policy seems to be an example of adding significantly to the cost of administering grants without a clear benefit. To a lay person, it is not clear why project specific final budget reports not sufficient to guarantee appropriate stewardship of federal funds. If they are not, it is not clear how this policy will improve that. The public whose trust this policy aims to engender also has a growing intolerance for inefficiency. I hope public advisory groups were consulted including a true estimate of the cost-benefit of the change to both NIH and external researchers. It is not clear that the net global result will not be a transfer of funds from research to administration.

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