The Children's Hospital of Philadelphia, Ruling No. 2026-14 (2026)

REJECTION OF APPEAL

The Children’s Hospital of Philadelphia (the Hospital) seeks Departmental Appeals Board review of a decision by the National Institutes of Health (NIH) to terminate a grant issued to the Hospital.  The Board lacks jurisdiction over this matter because the grant termination does 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.  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.  For the reasons discussed below, 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.  See 45 C.F.R. Part 16, App. A, ¶¶ B, C.  A grant is a type of federal financial assistance that provides 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,” and “grant agreement or grant”); 31 U.S.C. § 6304 (grant agreements).  Research grant awards 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).

Procedural and Case Background 

A.       Grant Termination

By letter dated March 14, 2025, NIH terminated award no. 5R25GM149980-02 pursuant to the 2024 NIH GPS and 2 C.F.R. § 200.340(a)(2).  Ex. 3, at 1.4  The letter states that the NIH GPS, incorporated into all NIH grant awards, permits NIH to terminate awards as outlined in 2 C.F.R. § 200.340.  Id. (citing NIH GPS at IIA-155).  NIH notes that section 200.340(a)(2) authorizes grant terminations “‘to the greatest extent authorized by law, if

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an award no longer effectuates the program goals or agency priorities.’”  Id. (quoting 2 C.F.R. § 200.340(a)(2) (eff. Aug. 13, 2020)).  The letter states that “[t]his award 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 notes that the Hospital “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 Hospital to submit any request for review to the Acting Director of NIH.  Id.  The Hospital then filed a first-level appeal with NIH.  Ex. 4.

By letter dated August 19, 2025, NIH denied the Hospital’s appeal (described as a request for reconsideration), stating that it terminated the grant because “the research activities do not align with the agency’s priorities.”  Ex. 1.  The letter further states that NIH was upholding the termination because, among other things, the project was “focused on addressing structural racism and discrimination” and that “poorly defined terms such as structural racism are not within the priorities of NIH.”  Id.  NIH did not assert, either in the initial termination notice or reconsidered decision, that the Hospital failed to comply with the terms of the award.  No appeal rights were offered in the reconsidered decision.

B.       Notice of Appeal

On September 17, 2025, the Hospital filed a notice of appeal (NA) with the Board, arguing that the grant termination and reconsidered decision are “invalid.”  NA at 3-5.  Regarding jurisdiction, the Hospital argues that “NIH terminated the Award based on its incorrect belief that Appellant has not complied with the terms of the Award.”  Id. at 2.  According to the Hospital, “NIH terminated the Award ‘due to changes in NIH/HHS priorities,’ and NIH views compliance with new agency priorities as a necessary term or condition of the award.”  Id.  The Hospital, therefore, contends that it is entitled to Board review because NIH (i) terminated the award (a discretionary project grant) for failing to comply with the terms of the award, and (ii) denied noncompeting continuation awards for failing to comply with the terms of a previous award.  Id. at 2-3 (citing 45 C.F.R. Part 16, App. A, ¶ C(a)(2), (3)).  The Hospital further contends that it was entitled to a preliminary appeal under Part 50, Subpart D for the same reason and states that it exhausted that appeal process.  Id. (citing 42 C.F.R. § 50.404(a)(1)).

On September 30, 2025, the Board acknowledged receipt of the notice of appeal but advised the parties that the Chair was “currently evaluating whether the Board has jurisdiction to review the agency decision described in the notice of appeal.”  Dkt. 3.

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Analysis

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

The Board lacks jurisdiction over this matter because the grant termination does not fall within any of the categories of disputes reviewable by the Board under 45 C.F.R. Part 16, Appendix A.  Although this dispute arises under an “HHS program authorizing the award of direct, discretionary project grants,” the appealed decision is not 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.  See 45 C.F.R. Part 16, App. A ¶ C(a)(1)-(4).  The record reflects that NIH terminated the award under 2 C.F.R. § 200.340(a)(2) having determined that the award no longer effectuates agency priorities.  See Ex. 3 (initial notice), Ex. 1 (reconsidered decision).  As the Board previously concluded in several similar cases, we have no authority to review the NIH grant termination at issue.  See, e.g., Albert Einstein College of Medicine, Ruling No. 2026-12 (Jan. 28, 2026).5

In 2020, the Office of Management and Budget (OMB) issued revised guidance regarding federal award terminations under 2 C.F.R. § 200.340.6  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) (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.

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§ 200.340(a)(1) (eff. Aug. 13, 2020).7  As further explained below, NIH made section 200.340 applicable to NIH grants through the NIH GPS.8  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 Hospital argues that under applicable HHS regulations, NIH could only terminate an award “(i) for non-compliance, (ii) for cause, or (iii) with the consent of the awardee.”  NA at 2 (citing 45 C.F.R. § 75.372(a)).  Since NIH did not terminate the award “for cause or with consent of the awardee,” the Hospital posits that “NIH must have determined it had authority to terminate the award for non-compliance.”  Id.  According to the Hospital, “NIH terminated the Award ‘due to changes in NIH/HHS priorities,’ and NIH views compliance with new agency priorities as a necessary term or condition of the award.”  Id.  The Hospital further argues that “by removing all future years of support on the grounds that Appellant has not complied with the terms of the Award, NIH denied noncompeting continuation awards for failure to comply with the terms of a previous award.”  Id.  These arguments are both unfounded and unpersuasive.

First, the assertion that NIH must have terminated the award for noncompliance contradicts the plain language of the initial termination notice and reconsidered decision, neither of which alleged that the Hospital failed to comply with the terms of the award.  Indeed, NIH stated in the initial termination notice that the award was terminated pursuant to the NIH GPS and 2 C.F.R. § 200.340(a)(2) because the award “no longer effectuates agency priorities.”  Ex. 3, at 1.  Similarly, the reconsidered decision upheld the award termination on grounds that “the research activities do not align with the agency’s priorities.”  Ex. 1.  While 2 C.F.R. § 200.340(a)(1) authorizes agencies to terminate an award if the grantee “fails to comply with the terms and conditions” of the award, NIH did not rely on that provision here.

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Second, there is no evidence that the terms or conditions of the award required the Hospital to align its research project with “new agency priorities.”  The Hospital offered no evidence indicating that compliance with new agency priorities was a term or condition of the award or that NIH held that view.  Moreover, section 200.340(a)(2) does not impose any requirement on grantees; rather, as discussed above, that section authorizes a federal awarding agency to terminate an award on grounds separate from a determination that the grantee failed to comply with the terms and conditions of the award.  Cf. 2 C.F.R. § 200.340(a)(1) & (a)(2).

Third, the Hospital’s assertion that NIH could only have terminated the award for noncompliance is belied by the plain language of the NIH GPS, which is part of the standard terms and conditions of all NIH awards.  See NIH GPS at IIA-1 (§ 3) (“Part II includes the terms and conditions of NIH grants and cooperative agreements and is incorporated by reference in all NIH grant and cooperative agreement awards.”); see also Targazyme at 1-2.  NIH GPS § 8.5.2 provides:

If a recipient has failed to comply with the terms and conditions of award, NIH may take one or more enforcement actions which include disallowing costs, withholding of further awards, or wholly or partly suspending the grant, pending corrective action.  NIH may also terminate the grant in whole or in part as outlined in 2 CFR Part 200.340.

NIH GPS at IIA-155 (emphasis added).  Thus, the notion that NIH could only terminate an award for noncompliance is unsupported by the NIH GPS.

Fourth, the Hospital is conflating the jurisdictional question with a different one:  whether NIH had the legal authority to terminate a grant under section 200.340(a)(2) based on a change in agency priorities.  NA at 2-3.  The question of Board jurisdiction, however, does not turn on whether NIH lawfully terminated the grant due to a change in agency priorities or whether NIH lawfully incorporated 2 C.F.R. § 200.340 into the NIH GPS before its adoption by HHS.  Those questions go to the merits of the dispute.  The question for purposes of determining jurisdiction, and the only issue decided here, is whether the challenged decision is the type of final written agency decision reviewable by the Board under 45 C.F.R. Part 16, Appendix A.  With respect to discretionary grants, the Board may review a final agency decision terminating an award “for failure to comply with the terms of [the] award,” or denying “a noncompeting continuation award . . . where the denial is for failure to comply with the terms of a previous award.”  45 C.F.R. Part 16, App. A, ¶ C(a)(2), (3).  The Board is not authorized under Part 16, Appendix A to review other types of terminations arising under direct, discretionary project grants.  Cf. Dignity, LLC, DAB No. 3121, at 22-23 (2023) (holding that the Board has no authority under Appendix A to review an agency decision denying a non-competing continuation award, except to the extent that the denial is based on the grantee’s failure to comply with the terms and conditions of the prior award).  Here, the Hospital made no showing that

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NIH terminated the award because the Hospital failed to comply with the terms of the award or a previous award.  Rather, the record reflects that NIH terminated the award under 2 C.F.R. § 200.340(a)(2) based on its determination that the award itself no longer effectuates agency priorities.

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.  However, no program regulation or memorandum of understanding authorizes 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.”

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

While the initial termination notice (Ex. 3) referenced 42 C.F.R. Part 50, Subpart D, the mere reference to Subpart D is insufficient to confer preliminary appeal rights.  The 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).  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.  See id.  Thus, for the same reasons that the grant termination is not reviewable by the Board under 45 C.F.R. Part 16, Appendix A, ¶ C, it is not subject to the preliminary appeal process under 42 C.F.R. Part 50, Subpart D.

Conclusion

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 Hospital’s appeal for lack of jurisdiction.