On May 19, 2023, the National Institutes of Health (“NIH”) issued notice that it would be updating its requirements for consortium/subaward agreements on NIH-funded grants. This update, which will be effective October 1, 2023, will bring NIH’s subaward and consortium requirements in line with the Office of Management and Budget Guidance set forth in Title 2 and push NIH grant recipients and subrecipients towards a higher degree of formality in their agreements. Failure to formalize these relationships may endanger eligibility for NIH funding.
The NIH Grant Policy Statement has long set forth requirements for what must be included in consortium agreements. Section 15.2 of the Policy Statement required that the grant recipient “must enter into a formal written agreement with each consortium participant that addresses the negotiated arrangements for meeting the scientific, administrative, financial, and reporting requirements of the grant, including those necessary to ensure compliance with all applicable Federal regulations and policies and facilitate an efficient collaborative venture.” The updated requirements now state that this requirement also applies to subaward agreements, and states expressly that “[i]f a subrecipient is unwilling to accept the requirements outlined in this section, by signing a written agreement, then an agreement cannot be issued.” The message is clear: NIH-funded subaward agreements must now be formalized.
The Notice highlights a specific challenge that NIH is seeking to address: the difficulty of collecting records on foreign sub-recipients. NIH’s revisions are intended to bring Section 15.2 of the Grants Policy Statement in line with 2 CFR § 200.332(a)(5), which states that subaward agreements must include a “requirement that the subrecipient permit the pass-through entity and auditors to have access to the subrecipient’s records and financial statements as necessary for the pass-through entity to meet the requirements for this part.” NIH has, in recent years, been particularly focused on foreign components and other interests implicating foreign entities with respect to its grants. The Notice makes clear that ensuring compliance for foreign sub-recipients has been a challenge for NIH, and the new policy imposes a requirement that a foreign sub-awardee turn over all records—defined as “all documentation that supports the research outcomes as described in the progress report”—to the primary grantee on a periodic basis and “no less than once every three months.” It is no surprise, then, that NIH is seeking additional visibility into records from foreign sub-recipients.
NIH also added language to the introduction of Section 15.2 that NIH would “not support any agreement that does not meet the minimum requirements outlined in [15.2.1]” and that NIH would “reserve the right to request copies of the written agreement and relevant supporting documentation as needed.” A grant recipient’s failure to provide the documentation upon asked could result in “remedies for noncompliance” as well as “potential enforcement actions.”
Because the primary grant recipient is charged with ensuring that all requirements of the Grants Policy Statement are met, grant recipients should be aware of NIH’s new guidelines and follow-up on administrative details that may have been glossed over in prior subaward and consortium agreements. As the policy update states, NIH will not support any non-compliant sub-agreements, and an inattentive prime grant recipient could be left facing demands for funding from subawardees without having the ability to seek reimbursement from NIH. Entities who routinely work with, or who are seeking to work with, NIH on grant opportunities should expect that any foreign partnerships that may be implicated may be subject to further scrutiny, and ensure that such partnerships are given particular attention on the front-end with respect to these requirements.