Environmental Protection Agency (EPA) Pre-Award Costs

  • January 12, 2021

Perhaps one of the most important aspects of a grant proposal is a properly itemized and reasonable budget that adheres strictly to the budget guidelines established by both the agency and the individual solicitation. It is for this reason that it is absolutely imperative to thoroughly research the allowable and unallowable costs associated with your prospective grant. In this post, we will be exploring the guidelines specific to the EPA.

Thinking of Pursuing an EPA Grant?

The EPA is one of 11 federal agencies that award equity-free grants to small businesses. Their SBIR grants are offered on a rolling basis for innovations in the environmental industry or related sectors. These grants can be quite lucrative, but you have to follow the rules to win an award. There are several regulations regarding budget as it relates to allowable costs, especially pre-award costs.

Will EPA fund pre-award costs?
EPA does not guarantee the payment of pre-award costs. Applicants incur pre-award costs at their own risk, and EPA is under no obligation to reimburse applicants for pre-award costs. Under certain circumstances, the applicant may be reimbursed for eligible, allowable, allocable, and reasonable costs incurred up to 90 days before grant award without prior EPA approval if 1. The applicant includes the pre-award costs in its proposal and the work plan negotiated with EPA; 2. EPA agrees that the costs are eligible and allowable when the Agency approves the scope of work for the grant; and 3. Any procurement contracts that are funded with pre-award costs comply with the competitive procurement requirements within the grant. Please note an applicant must obtain prior EPA approval from the Award Official to incur pre-award costs more than 90 days before award. Applicants selected for an award will need to discuss any pre-award costs greater than 90 days with their EPA Project Officer to discuss the process for getting these costs approved.

https://www.epa.gov/sites/production/files/2016-11/documents/fy17_ewdjt_faqs.pdf

As shown above, the EPA is not responsible for reimbursing any pre-award costs incurred before the time of the award. While there are some exceptions, the general rule is if you buy something before you officially win an award, expect to pay for it out of pocket. If it was purchased over 90 days before the award’s official announcement, forget about reimbursement regardless of circumstance.

EPA Pre-award Costs

It is also important to know what will never apply as an allowable pre-award cost. Some examples include stipends for students, including on-the-job training costs or scholarship funds to support students’ enrollment in college courses. Another example is the proposal preparation cost. The EPA clearly states on their website:

If my organization is successful in obtaining EPA funding, can we charge the costs we incurred for a consultant to prepare our grant proposal?
No. Costs for preparing your proposal are not an allowable cost.

https://www.epa.gov/sites/production/files/2016-11/documents/fy17_ewdjt_faqs.pdf

Paying for proposal costs retrospectively out of federal award dollars is not only unethical; it violates the government’s contract with the small business concern. Winning a grant comes with several stipulations, including submitting an itemized breakdown of costs, routine reports, and often audits. This means “hiding” that grant dollars were used to pay for proposal preparation would be difficult, if not impossible. If it were discovered that a company used funds in that manner, the agency would likely require the small business to pay back the grant award in full. This would be a major setback to the small business and is certainly not worth the risk.

Know Your Regulations

If you plan on applying for an EPA SBIR grant or any of the other 11 federal agencies SBIR opportunities, take the time to do your research. The agency website usually contains a list of allowable costs and FAQs and resources to reach agency contacts to ask questions directly. There is a wealth of information available for each agency and solicitation, so there is no excuse for being caught off guard regarding allowable costs and pre-award cost limitations.


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