|The file below has been archived
for historical reference purposes only. The content and links are no longer maintained and may be outdated. See the
OER Public Archive Home Page for more details about archived files.
APPENDIX 6. GRANTS TO FOR-PROFIT ORGANIZATIONS (PHS GPS 9505)
On the basis of the Federal Grant and Cooperative Agreement Act
(Public Law 95-224, 41 U.S.C. 501-509) and implementing guidance
from the Office of Management and Budget, it has been determined
that for-profit organizations are eligible to receive awards under
all PHS financial assistance programs unless specifically excluded
Except as noted in the paragraph below, no profit or fee will
be provided to for-profit organizations through financial assistance
awards. A profit or fee is considered to be an amount in excess
of actual allowable, allocable, and reasonable direct and indirect
costs which are incurred in conducting an assistance project.
Beginning July 1, 1992, PHS awarding offices shall negotiate fixed
fees for competing grants awarded under the Small Business Innovation
Research (SBIR) program when (1) requested by the grantee organization
and (2) the amount of the fixed fee, together with the direct
and indirect costs to be awarded, is within the Phase I and Phase
II award limitations set by the program.
For-profit organizations will be subject to the same administrative
requirements currently applicable to nonprofit institutions, except
for the following:
- Cost Principles--There are no cost principles applicable
to for-profit organizations receiving financial assistance awards.
Therefore, the cost principles set forth in Federal Acquisition
Regulations in 48 CFR Part 31.2 will generally be used. PHS has
elected the option provided in 41 CFR Part 1-15.102 of not authorizing
independent research and development costs. For hospitals, however,
the cost principles in 45 CFR Part 74, Appendix E, will be used.
- Property--Except as provided below, title to real property,
equipment, and supplies acquired by a for-profit recipient under
a financial assistance award or subaward shall vest upon acquisition
in the Federal Government. Under SBIR legislation, awarding offices
may authorize the transfer of title to the awardee for equipment
purchased with funds provided under SBIR funding agreements where
such transfer would be more cost effective than recovery of the
property by the Federal Government. The management, control, and
disposition of property in the hands of grantees will be governed
by the rules applicable to contractors that are set forth in 48
CFR Part 45.5.
- Matching--Any legal requirement for matching will be
made through separate matching agreements negotiated for each
- Patents and Inventions--The requirements set forth
in 37 CFR Part 401, which implement OMB Circular A-124, govern
the development and reporting of patents and inventions. Disposition
of royalties or equivalent income earned on patents and inventions
arising out of activities developed under financial assistance
awards or subawards shall be governed by determinations made or
agreements entered into under 37 CFR Part 401 on a case-by-case
basis only. Disposition of rights on inventions made by small
business firms is subject to Chapter 38 of Title 35 U.S. Code.
Inventions made under SBIR awards shall be reported to the PHS
awarding office within 2 months after the inventor discloses it
in writing to the SBIR recipient. The SBIR recipient must notify
the PHS awarding office in writing within 2 years of the first
disclosure whether the recipient elects to retain title to any
such invention. The Federal Government may obtain title if the
SBIR recipient fails, within the specified time period, to disclose
the invention or elect to retain title.
- General Program Income--The Additional Costs Alternative
described in 45 CFR Part 74.42(e) is not an allowable alternative
except for the SBIR program.
- Prior Approval Authority--See section 8, "Prior
- Audits--Recipients of SBIR Phase I awards receiving
no more than $100,000 in cumulative Federal awards are exempt
from the audit requirements of OMB Circular A-133. However, the
organization should have its records available for review by the
PHS agency should the agency elect to do so.