NIH Decreases Salary Cap

Notice of Salary Limitation on Grants, Cooperative Agreements, and Contracts
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Notice Number: NOT-OD-12-035

Key Dates
Release Date: January 20, 2012

Related Notice:
NOT-OD-12-034: Notice of Legislative Mandates in Effect for FY2012


Issued by
National Institutes of Health (NIH)


Purpose

This Notice provides information regarding the salary limitation for NIH grant and cooperative agreement awards and extramural research and development contract awards (referred to here as grants).

Every year since 1990 Congress has legislatively mandated a provision limiting the direct salary that an individual may receive under an NIH grant. For FY 2011, the Department of Defense and Full-year Continuing Appropriations Act of 2011 (Public Law 112-10) continued implementation of Public Law 111-117: Consolidated Appropriations Act, 2010 which restricted the amount of direct salary to Executive Level I of the Federal Executive Pay scale; this information was published May 4, 2011 in the NIH Guide for Grants and Contracts (NOT-OD-11-073). No increase had been provided for Federal salaries.

For FY 2012 the Consolodated Appropriations Act, 2012 (Public Law 112-74) signed into law on December 23, 2011, restricts the amount of direct salary to Executive Level II of the Federal Executive Pay scale. The Executive Level II salary is $179,700.

For the purposes of the salary limitation, the terms "direct salary," "salary," and "institutional base salary" have the same meaning and are exclusive of fringe benefits and facilities and administrative (F&A) expenses, also referred to as indirect costs. An individual's institutional base salary is the annual compensation that the applicant organization pays for an individual's appointment, whether that individual's time is spent on research, teaching, patient care, or other activities. Base salary excludes any income that an individual may be permitted to earn outside of the duties to the applicant organization.

NIH grant/contract awards for applications/proposals that request direct salaries of individuals in excess of the applicable RATE per year will be adjusted in accordance with the legislative salary limitation and will include a notification such as the following: None of the funds in this award shall be used to pay the salary of an individual at a rate in excess of the applicable salary cap.

This is the first year that the salary limitation has been reduced; it is now restricted to Executive Level II of the Federal Pay Scale. Since this reduction was included in the law signed December 23, 2011, implementation of the lower level is effective with FY2012 awards where the initial Issue Date of the award is on/after 12/23/2011. For FY2012 awards issued on/before December 22, 2011 (competing and non-competing), the effective salary limitation remains at Executive Level 1, $199,700. Please see the salary cap summary and the time frames associated with salary caps at http://grants.nih.gov/grants/policy/salcap_summary.htm.