Generally speaking, especially in terms of SBIR regulations, pre-award costs within grants are unallowable. While there are several instances where these costs can be allowable, they are only ever allowable with explicit written permission from the program officials, and it is quite rare.
What is the Official Rule?
Prior approval for pre-award costs made up to, and including, 90 days before the award start date is waived by NOAA. In contrast, grant recipients must seek prior approval for reimbursement for pre-award costs over 90 days before the award start date. All costs incurred before NOAA gives the award are considered pre-award costs and are at the recipient’s risk. NOAA is under no obligation to reimburse pre-award costs if the recipient does not receive an award or the award is less than anticipated and inadequate to cover pre-award costs. Approval will be made in Grants Online by the Grants Office through the “Pre-Award Costs More than 90 Days” award action request.https://www.noaa.gov/organization/acquisition-grants/frequently-asked-questions#Q1
Allowable Vs. Unallowable Costs
Many costs are unallowable as per NOAA regulations. Certain types of travel and equipment for example, are unallowable costs. There are cost stipulations regarding overhead costs, consultant or sub-award costs, and personnel costs (budget caps) in every agency. These differ slightly with each solicitation, which is why it is vitally important to read the agency’s requirements as well as the individual solicitation thoroughly before even considering submitting a proposal.
The big takeaway from all this is The NOAA is in no way obligated to pay back any cost incurred before the grant is officially awarded. All costs rendered prior to award are done so at the small business concern’s expense. Why is this important to know? Many companies assume that because they could potentially be awarded a grant in the future that they can pay for consultant services to create the grant out of that future award. This assumption is false. Not only is paying for grant writing services out of a grant award unanimously an unallowable cost in all funding both federal and private, but the award decision is at the hands of the reviewers alone and there is no guarantee they will select your proposal.
How to Ensure Your Costs are Allowable
Before you begin crafting your proposal, do your research. All 11 federal agencies including NOAA have FAQs and guidelines to help applicants determine allowable vs. unallowable costs. If you can not find what you are looking for there, reach out to your program officer to solicit a direct response via phone or email. Grant regulations are much like the law in that ignorance of them will not be a valid excuse for non-compliance in the event of an audit, which could force non-compliant grantees to pay back the award in full.
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