Drexel University, Ruling No. 2026-10 (2026)

REJECTION OF APPEAL

Drexel University (the University) seeks Departmental Appeals Board review of a decision by the National Institutes of Health (NIH) to terminate a cooperative agreement issued to the University.  In response to the Board’s request for an agency opinion on jurisdiction, NIH submitted a written opinion asserting that the Board lacks jurisdiction because the award termination, and subsequent reconsidered decision, were based on “nonalignment with agency priorities” and do not fall within any of the categories of disputes reviewable by the Board under 45 C.F.R. Part 16, Appendix A or 42 C.F.R. Part 50, Subpart D.  NIH explained that the appealed decision does not represent a disallowance, a termination for failure to comply with the terms of the award, a denial of a noncompeting continuation award for failure to comply with the terms of a previous award, or a voiding.  As discussed below, NIH’s jurisdictional opinion is not clearly erroneous and, therefore, this appeal must be rejected.

Legal Background

The Board’s jurisdiction to hear and decide appeals is limited.  Ca. Dep’t of Finance, DAB No. 1592, at 17 (1996) (“[T]here is no general right to review by the Board . . .”).  Board review is available only as provided by statute, regulation, or valid delegation of authority from the Department of Health and Human Services (HHS) Secretary or the head of an HHS operating component.  Experts Are Us, Inc., DAB No. 2342, at 5 (2010); 45 C.F.R. Part 16, App. A, ¶ A.

Before the Board will accept an appeal, the Board’s regulations at 45 C.F.R. Part 16 require that the following conditions be met:  (1) the appellant must have received a “final written decision” by an HHS component (45 C.F.R. § 16.3(b)); (2) the appellant must have appealed that decision within 30 days after receiving it (id.); (3) the appellant must have “exhausted any preliminary review process required by regulation” (id. § 16.3(c)); and (4) the disputed decision “must arise under a program which uses the Board for dispute resolution” and be the type of decision that the Board is authorized to review, as specified in Part 16, Appendix A (id. § 16.3(a); 45 C.F.R. Part 16, App. A, ¶¶ A-E).  The fourth requirement for Board jurisdiction is at issue here.

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Title 45 C.F.R. Part 16, Appendix A, identifies HHS programs that use the Board for dispute resolution and the types of “final written decisions” reviewable by the Board.  45 C.F.R. Part 16, App. A, ¶ A; see also 46 Fed. Reg. 1644, 1645 (Jan. 6, 1981) (noting that Appendix A is the Board’s “jurisdiction statement” reflecting “disputes which agencies have chosen to submit to the Board”).  The Board is authorized to review certain agency decisions involving grants and cooperative agreements.  See 45 C.F.R. Part 16, App. A, ¶¶ B, C.  Grants and cooperative agreements are types of federal financial assistance that provide support or stimulation to carry out a public purpose as authorized by a law of the United States.  See 2 C.F.R. § 200.1 (defining “federal award,” “federal financial assistance,” “grant agreement or grant,” and “cooperative agreement”); 31 U.S.C. §§ 6304 (grant agreements), 6305 (cooperative agreements).  (To simplify, this ruling uses the term “grant” to refer to both grants and cooperative agreements.)  Research grants made by NIH are subject to general terms and conditions depending on the type of grant, as well as any special terms and conditions in the notice of award.  See Targazyme, Inc., DAB No. 2939, at 1-2 (2019).  NIH issues a Grants Policy Statement (NIH GPS) to “make available to NIH recipients, in a single document, the policy requirements that serve as the terms and conditions of NIH grant awards.”  NIH GPS at ii.1

As relevant here, Appendix A provides that the Board reviews “the following types of final written decisions in disputes arising in any HHS program authorizing the award of direct, discretionary project grants or cooperative agreements:” 

• (1)      A disallowance or other determination denying payment of an amount claimed under an award, or requiring return or set-off of funds already received.  . . .
• (2)      A termination for failure to comply with the terms of an award.
• (3)      A denial of a noncompeting continuation award under the project period system of funding where the denial is for failure to comply with the terms of a previous award.
• (4)      A voiding (a decision that an award is invalid because it was not authorized by statute or regulation or because it was fraudulently obtained).

45 C.F.R. Part 16, App. A, ¶ C(a)(1)-(4).2

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When an HHS component, such as NIH, uses a preliminary appeal process, “the ‘final written decision’ for purposes of Board review is the decision issued as a result of that process.”  Id., App. A, ¶ C(b).  One such preliminary appeal process is found at 42 C.F.R. Part 50, Subpart D, which establishes a procedure for resolving certain “grant and cooperative agreement disputes” in programs administered by NIH.  42 C.F.R. §§ 50.401, 50.402.  The preliminary appeal process under Subpart D applies only to certain “adverse determinations under discretionary grants and cooperative agreements,” as specified in section 50.404(a).  Section 50.404(a) mirrors the list of reviewable final written decisions under Part 16, Appendix A, ¶ C(a).3  If a grantee contests an “adverse determination” to which the preliminary appeal process applies, the grantee must exhaust that process before the Board will accept the appeal under Part 16.  42 C.F.R. § 50.403.

The Board Chair determines whether the conditions for Board jurisdiction are satisfied.  See 45 C.F.R. § 16.7(b) (providing that the Board will notify the parties if the Board Chair determines that the appeal does not meet the conditions in section 16.3).  If the Board Chair finds there is “some question” about whether the Board has jurisdiction, the Chair “will request the written opinion of the HHS component which issued the decision.”  Id., App. A, ¶ G.  “Unless the Chair determines that the opinion is clearly erroneous, the Board will be bound by the opinion.”  Id.

Procedural and Case Background

1. Notice of Grant Termination

NIH awarded a cooperative agreement (award no. 5U54CA267735-04) to the University as authorized by 42 U.S.C. § 241, 31 U.S.C. § 6305, and 42 C.F.R. Part 52.  Ex. 1, at 1

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(notice of award).4  A cooperative agreement is a type of “financial assistance mechanism in which substantial NIH scientific and/or programmatic involvement is anticipated in the performance of the activity.”  Id. at 6.  The notice of award set forth the terms and conditions, including a statement that the award is “subject to the terms and conditions incorporated either directly or by reference” in the “National Policy Requirements and all other requirements described in the NIH Grants Policy Statement, including addenda in effect as of the beginning date of the budget period.”  Id. at 3 (emphasis added).

On March 21, 2025, NIH informed the University by email that it terminated the award pursuant to the 2024 NIH GPS and 2 C.F.R. § 200.340(a)(2).  Ex. 2, at 1.  The letter states that the NIH GPS, incorporated into all NIH awards, provides that NIH may terminate grants as outlined in 2 C.F.R. § 200.340.  Id. (citing NIH GPS at IIA-155).  NIH points to the version of section 200.340 in effect when the grant was approved in September 2024 and asserts that section 200.340(a)(2) authorizes NIH to terminate grants “‘to the greatest extent authorized by law, if an award no longer effectuates the program goals or agency priorities.’”  Id. (quoting section 200.340(a)(2)).  The letter states that this award was terminated because it “no longer effectuates agency priorities” and that “[t]he premise of this award is incompatible with agency priorities, and no modification of the project could align the project with agency priorities.”  Id. at 1-2. 

The letter further noted that the University “may object and provide information and documentation challenging this termination,” which it described as “a first-level grant appeal procedure that must be exhausted before you may file an appeal with the Departmental Appeals Board.”  Id. at 2 (citing 42 C.F.R. Part 50, Subpart D).  NIH instructed the University to submit any request for review to the Acting Director of NIH no later than 30 days after receipt of the termination notice.  Id.  The University subsequently filed a first-level appeal with NIH. 

By letter dated May 27, 2025, NIH denied the University’s first-level appeal (described as a request for reconsideration) and reiterated that the grant was terminated because “the research activities do not align with the agency’s priorities.”  Ex. 3.  The letter further states that “[t]he program that supported this award was terminated because it no longer aligned with NIH/HHS priorities” and, consequently, grants awarded under this program “can no longer be supported.”  Id.  The letter was signed by the Principal Deputy Director of NIH and did not indicate that the University’s appeal was reviewed in accordance with 42 C.F.R. Part 50, Subpart D.  See, e.g., 42 C.F.R. §§ 50.405, 50.406.  NIH did not assert, either in the initial termination notice or reconsidered decision, that the University failed to comply with the terms of the award or that the award was invalid because it was not authorized by statute or regulation or was fraudulently obtained.  No further appeal rights were offered in the reconsidered decision.

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2. Notice of Appeal and Request for Agency Opinion on Jurisdiction

On June 27, 2025, the University filed a notice of appeal with the Board, asserting that the grant termination is wrong for “scientific, factual and legal” reasons.  Notice of Appeal at 1.  The University noted that it submitted the appeal “[i]n accordance with the procedures set forth in 45 CFR Part 16 and 45 CFR § 75.374.”  Id.    

On July 21, 2025, the Board Chair requested, under Part 16, Appendix A, ¶ G, that NIH submit an opinion about whether the Board may review the challenged determination.  The Chair directed NIH to address among other issues:  (1) whether the reconsidered decision appealed by the University is reviewable by the Board under Appendix A, ¶ C; (2) whether the reconsidered decision is a type of “adverse determination,” as described in 42 C.F.R. § 50.404(a), to which NIH’s preliminary appeal process applies; and (3) whether any other HHS program regulation or memorandum of understanding authorizes Board review of the parties’ dispute.  In the same letter, the Board advised the University that it could file a response to NIH’s opinion within ten days of receiving it and invited both parties to submit evidence supporting their respective positions.  

3. NIH’s Opinion on Jurisdiction

On July 31, 2025, NIH filed an opinion asserting that the Board lacks jurisdiction over this matter because the grant termination was for “nonalignment with agency priorities” and does not fall within any of the categories of disputes reviewable by the Board.  NIH Op. at 6 (citing 2 C.F.R. § 200.340(a)(2)).  NIH explained that the appealed decision does not represent a disallowance, a termination for failure to comply with the terms of the award, a denial of a noncompeting continuation award for failure to comply with the terms of a previous award, or a voiding.  Id. at 3 (citing 45 C.F.R. Part 16, App. A, ¶ C).   

Similarly, NIH opined that the grant termination was not subject to the preliminary appeal process under Part 50, Subpart D, because it does not fall within any of the four categories of “adverse determinations” specified in 42 C.F.R. § 50.404(a).  Id. at 4 (“The appealed decision does not represent a termination for failure to comply with the terms of the award, a disallowance of an expenditure charged to the grant or failure to account for grant funds, a determination that a grant is void, or a denial of a noncompeting continuation award for failure to comply with the terms of a previous award.”).  NIH acknowledged that its initial termination letter included “standard language” that referenced the preliminary appeal process under Subpart D but noted that, absent an “adverse determination” as specified in section 50.404(a), the exhaustion and notice requirements under Subpart D are irrelevant and inapplicable.  Id. at 5.

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Finally, in response to the Chair’s question about disputes reviewable under programs not specified in Appendix A (see 45 C.F.R. Part 16, App. A, ¶ A), NIH states that it is “not aware of any program regulation or memorandum of understanding authorizing the Board to review the dispute at issue here.”  Id. at 6.

4. The University’s Response

The University filed a response to NIH’s opinion on jurisdiction, arguing that the challenged decision is reviewable by the Board because it represents a “voiding” of the award by NIH.  Resp. to Op. at 2, 4 (citing 45 C.F.R. Part 16, App. A, ¶ C(a)(4)).  The University contends that NIH determined the grant was unauthorized based on unspecified executive orders issued by the President.  Id. at 2 (“NIH appears to have concluded that the grant was no longer authorized by statute or regulation under various Executive Orders issued . . . after January 20, 2025.”).  The University acknowledged that the grant termination was not based on any failure to comply with the terms of the award and noted that it “exhausted the preliminary appeal process that NIH instructed the University to follow if it wished to challenge the grant termination.”  Id. at 2, 3.

Analysis

1. The appeal does not concern a final written decision reviewable by the Board under 45 C.F.R. Part 16, Appendix A.

NIH’s opinion that the Board does not have jurisdiction because the grant termination, and subsequent reconsidered decision, do not fall within any of the categories of disputes reviewable by the Board under Part 16, Appendix A, is not clearly erroneous.  As NIH explained, the grant termination was based on its determination that the grant “no longer effectuates agency priorities” and is “no longer aligned with NIH/HHS priorities.”  Ex. 2 (initial termination); Ex. 3 (reconsidered decision).  The University provided no evidence that NIH “voided” the grant based on a determination that the award was unauthorized by statute or regulation or was fraudulently obtained. 

In 2020, the Office of Management and Budget (OMB) issued revised guidance regarding federal award terminations under 2 C.F.R. § 200.340.5  The revised guidance replaced the “for cause” basis for termination with a provision authorizing federal awarding agencies to terminate an award “to the greatest extent authorized by law, if an award no longer effectuates the program goals or agency priorities.”  Compare 2 C.F.R. § 200.339(a)(2)

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(eff. to Aug. 12, 2020) with 2 C.F.R. § 200.340(a)(2) (eff. Aug. 13, 2020).  OMB stated that it revised section 200.340 “to strengthen the ability of the Federal awarding agency to terminate Federal awards, to the greatest extent authorized by law, when the Federal award no longer effectuates the program goals or Federal awarding agency priorities.”  See 85 Fed. Reg. 49,506, 49,507 (Aug. 13, 2020).  OMB further stated that it was “eliminating the termination for cause provision because this term is not substantially different than the provision allowing Federal awarding agencies to terminate Federal awards when the recipient fails to comply with the terms and conditions.”  Id. at 49,508.  OMB retained, as a separate basis for termination, the awarding agency’s authority to terminate an award if a grantee “fails to comply with the terms and conditions” of the award.  Compare 2 C.F.R. § 200.339(a)(1) (eff. to Aug. 12, 2020) with 2 C.F.R. § 200.340(a)(1) (eff. Aug. 13, 2020).  NIH states that it incorporated revised section 200.340 into the 2024 NIH GPS and, therefore, made it applicable to all NIH grants.  NIH Op. at 3 (citing NIH GPS § 8.5.2).6  HHS, however, has not amended Part 16, Appendix A, or issued other regulations authorizing the Board to review a grant termination based on an awarding agency’s determination that an award no longer effectuates program goals or agency priorities. 

The University’s contention that NIH “voided” the grant having concluded that it was not authorized by statute or regulation is unfounded.  Resp. to Op. at 2, 4.  A “voiding” is defined in the Board’s regulations as “a decision that an award is invalid because it was not authorized by statute or regulation or because it was fraudulently obtained.”  45 C.F.R. Part 16, App. A, ¶ C(a)(4); see also NIH GPS at IIA-160 (§ 8.7).  The record reflects that the grant was issued pursuant to 42 U.S.C. § 241, 31 U.S.C. § 6305, and 42 C.F.R. Part 52.  Ex. 1, at 1 (specifying the statutory authority for the award).7  No evidence in the record indicates that NIH determined the grant was invalid under, or issued in violation of, these or any other statutory or regulatory authorities.  Nor is there any evidence that NIH determined that the University obtained the grant by fraud. 

In its jurisdictional opinion, NIH further states that it “does not concede” that the dispute is one “arising under an ‘HHS program authorizing the award of direct, discretionary project grants or cooperative agreements,’” apparently suggesting that the dispute may fall outside of Appendix A for that reason as well.  NIH Op. at 3.  I need not decide whether the award at issue is a “direct, discretionary” project grant or cooperative

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agreement because, assuming that it is, the termination is not reviewable under Appendix A, ¶ C.  Moreover, neither party contends that the grant is “mandatory” or that the appealed decision would fall under any other reviewable category in Appendix A.

Finally, Appendix A states that “[d]isputes under programs not specified in this appendix” may be reviewed by the Board if such review is authorized by a “program regulation” or “memorandum of understanding between the Board and the head of the appropriate HHS operating component or other agency responsible for administering the program.”  45 C.F.R. Part 16, App. A, ¶ A.  This provision is inapplicable here.  I am aware of no program regulation or memorandum of understanding authorizing the Board to review disputes concerning NIH grant terminations based on the agency’s determination that an award no longer effectuates or aligns with “agency priorities.”

2. NIH’s preliminary appeal process under 42 C.F.R. Part 50, Subpart D is inapplicable.

While the initial termination letter referenced 42 C.F.R. Part 50, Subpart D, the mere reference to Subpart D is insufficient to confer preliminary appeal rights under that subpart.  The preliminary appeal process under Subpart D applies to certain “adverse determinations” under discretionary project grants, none of which apply here.  See 42 C.F.R. § 50.404(a)(1)-(4).  As NIH explained, the appealed decision is not a termination for failure to comply with the terms of the award, a disallowance of an expenditure charged to the grant or failure to account for grant funds, a determination that a grant is void, or a denial of a noncompeting continuation award for failure to comply with the terms of a previous award.  NIH Op. at 4.  The University offered no evidence that this matter involves an “adverse determination” as specified in section 50.404(a).

Conclusion

NIH’s opinion that the Board lacks jurisdiction over this matter is not clearly erroneous. The Board’s jurisdiction is limited, and no statute, regulation, or delegation of authority confers the Board with jurisdiction to review this matter.  I therefore reject the University’s appeal for lack of jurisdiction.