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.             

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Photo of Moushmi Patil Moushmi Patil

Moushmi Patil represents government contractors across a range of industries and in all stages of the public procurement process. Her experience includes high-stakes litigation and corporate matters, as well as navigating regulatory compliance issues.

Moushmi routinely advises clients on the most complex regulatory…

Moushmi Patil represents government contractors across a range of industries and in all stages of the public procurement process. Her experience includes high-stakes litigation and corporate matters, as well as navigating regulatory compliance issues.

Moushmi routinely advises clients on the most complex regulatory challenges relating to the public procurement process. Her experience include litigating bid protests before the Court of Federal Claims and the Government Accountability Office, coordinating regulatory due diligence processes for large scale M&A transactions, and negotiating with government actors on government intellectual property and data rights matters. Moushmi also represents clients in connection with criminal and civil investigations by the U.S. Department of Justice, with a focus on matters arising under the False Claims Act.

In addition, Moushmi maintains an active pro bono practice focusing on indigent criminal defense and Freedom of Information Act requests and disclosures.

Photo of Nooree Lee Nooree Lee

Nooree advises government contractors and financial investors regarding the regulatory aspects of corporate transactions and restructurings. His experience includes preparing businesses for sale, negotiating deal documents, coordinating large-scale diligence processes, and navigating pre- and post-closing regulatory approvals and integration. He has advised on…

Nooree advises government contractors and financial investors regarding the regulatory aspects of corporate transactions and restructurings. His experience includes preparing businesses for sale, negotiating deal documents, coordinating large-scale diligence processes, and navigating pre- and post-closing regulatory approvals and integration. He has advised on 35+ M&A deals involving government contractors totaling over $30 billion in combined value. This includes Veritas Capital’s acquisition of Cubic Corp. for $2.8 billion; the acquisition of Perspecta Inc. by Veritas Capital portfolio company Peraton for $7.1 billion; and Cameco Corporation’s strategic partnership with Brookfield Renewable Partners to acquire Westinghouse Electric Company for $7.8+ billion.

Nooree also counsels clients navigating the Foreign Military Sales (FMS) program and Foreign Military Financing (FMF) arrangements. Nooree has advised both U.S. and ex-U.S. companies in connection with defense sales to numerous foreign defense ministries, including those of Australia, Israel, Singapore, South Korea, and Taiwan.

Recently, Nooree’s practice has expanded to include advising on the intersection of government procurement and artificial intelligence. Nooree counsels clients on the negotiation of AI-focused procurement and non-procurement agreements with the U.S. government and the rollout of procurement regulations and policy stemming from the Executive Order on Safe, Secure, and Trustworthy Artificial Intelligence.

Nooree maintains an active pro bono practice focusing on appeals of denied industrial security clearance applications and public housing and housing discrimination matters. In addition to his work within the firm, Nooree is an active member of the American Bar Association’s Section of Public Contract Law and has served on the Section Council and the Section’s Diversity Committee. He also served as the firm’s Fellow for the Leadership Council on Legal Diversity program in 2023.