Budget and Budget Narrative Guidance for Non-Competing Continuation Applications
You should develop your budget and budget narrative for a total budget that is equal to the amount show in Box 14 of your Notice of Award, “Recommended Future Support”. You must complete the required budgetary forms and submit a budget narrative with detailed justification as part of your continuation application. You must enter the project budget on the Budget Information Non-construction Programs standard form (SF 424A) according to the directions provided with this standard form. The budget narrative consists of a detailed line-item budget that includes calculations for all costs and activities by "object class categories" identified on the SF-424A and justification of the costs. You must indicate the method you are selecting for your indirect cost rate. See Indirect Charges below for further information.
Project budget calculations must include estimation methods, quantities, unit costs, and other similar quantitative detail sufficient to verify the calculations. If matching or cost sharing is required, you must include a detailed listing of any funding sources identified in box 18 of the SF-424 (Application for Federal Assistance).
You must provide an object class category budget using Section B, box 6 of the SF 424A for the next year of the proposed project. Provide a budget justification, which includes a budget narrative and a line-item detail, for the next year of the proposed project. The budget narrative should describe how the categorical costs are derived. Discuss the necessity, reasonableness, and allocation of the proposed costs.
Your budget narrative should justify the overall cost of the project as well as the proposed cost per activity, service delivered, and/or product. For example, the budget narrative should define the amount of work you have planned and expect to perform, what it will cost, and an explanation of how the result is cost effective. For example, if you are proposing to provide services to clients, you should describe how many clients are you expecting to serve, the unit cost of serving each client, and how this is cost effective. If this analysis differs significantly from that provided in your original proposal or subsequent continuation applications, explain the difference.
Use the following guidelines for preparing the detailed object class budget required by box 6 of the SF-424A. The object class budget organizes your proposed costs into a set of defined categories outlined below. Both federal and non-federal resources (when required) must be detailed and justified in the budget narrative. "Federal resources" refers only to the HHS/OASH grant funds for which you are applying. "Non-federal resources" are all other non-HHS/OASH federal and non-federal resources. We recommend you present budget amounts and computations in a columnar format: first column, object class categories; second column, federal funds requested; third column, non-federal resources; and last column, total budget. Note, subrecipient/contract and consultant detailed costs should all be included in those specific line items, not in the overall project object class line items, i.e., subrecipient travel should be included in the Contractual line item not in Travel.
Object Class Descriptions and Required Justifications
Personnel Description: Costs of staff salaries and wages, excluding benefits.
Personnel Justification: Identify the project director or principal investigator, if known at the time of application. Provide a separate table for personnel costs detailing for each proposed staff person: the title; full name (if known at time of application), time commitment to the project as a percentage or full-time equivalent: annual salary and/or annual wage rate; federally funded grant salary; non-federal grant salary, if applicable; and total salary. No salary rate may exceed the statutory limitation in effect at the time you submit your application (see D.6 Funding Restrictions, Salary Limitation for details). Do not include the costs of consultants, personnel costs of delegate agencies, or of specific project(s) and/or businesses to be financed by the applicant. Contractors and consultants should not be placed under this category.
Fringe Benefits Description: Costs of employee fringe benefits unless treated as part of an approved indirect cost rate.
Fringe Benefits Justification: Provide a breakdown of the amounts and percentages that comprise fringe benefit costs such as health insurance, Federal Insurance Contributions Act (FICA) taxes, retirement insurance, and taxes.
Travel Description: Costs of travel by staff of the applicant organization.
Travel Justification: For each trip, show the date of the proposed travel, total number of traveler(s); travel destination; duration of trip; per diem; mileage allowances, if privately owned vehicles will be used; and other transportation costs and subsistence allowances.
Equipment Description: "Equipment" means an article of nonexpendable, tangible personal property having a useful life of more than one year per unit and an acquisition cost that equals or exceeds the lesser of: (a) the capitalization level established by the organization for the financial statement purposes, or (b) $5,000. (Note: Acquisition cost means the net invoice unit price of an item of equipment, including the cost of any modifications, attachments, accessories, or auxiliary apparatus necessary to make it usable for the purpose for which it is acquired. Ancillary charges, such as taxes, duty, protective in-transit insurance, freight, and installation, shall be included in or excluded from acquisition cost in accordance with your organization's regular written accounting practices.)
Equipment Justification: For each type of equipment requested applicants must provide a description of the equipment; the cost per unit; the number of units; the total cost; and a plan for use of the equipment in the project; as well as a plan for the use, and/or disposal of, the equipment after the project ends. An applicant organization that uses its own definition for equipment should provide a copy of its policy, or section of its policy, that includes the equipment definition; include this with your Budget Narrative file. Reference the policy in this justification and include the policy copy in your Budget Narrative file (not your appendices).
Supplies Description: Costs of all tangible personal property other than those included under the Equipment category. This includes office and other consumable supplies with a per-unit cost of less than $5,000.
Supplies Justification: Specify general categories of supplies and their costs. Show computations and provide other information that supports the amount requested.
Contractual Description: Costs of all contracts or subawards for services and goods except for those that belong under other categories such as equipment, supplies, construction, etc. Include third-party evaluation contracts, if applicable, and contracts or subawards with subrecipient organizations (with budget detail), including delegate agencies and specific project(s) and/or businesses to be financed by the applicant. This line item is not for individual consultants.
Contractual Justification: Demonstrate that all procurement transactions will be conducted in a manner to provide, to the maximum extent practical, open, and free competition. Recipients and subrecipients are required to use 45 CFR § 75.328 procedures and must justify any anticipated procurement action that is expected to be awarded without competition and exceeds the simplified acquisition threshold fixed by 41 U.S.C. § 134, as amended by 2 CFR § 200.88, and currently set at $150,000. Recipients may be required to make pre-award review and procurement documents, such as requests for proposals or invitations for bids, independent cost estimates, etc., available to HHS/OASH.
Note: Whenever you intend to delegate part of the project to another agency, the applicant must provide a detailed budget and budget narrative for each subrecipient/contractor, by agency title, along with the same supporting information referred to in these instructions. If you plan to select the subrecipients/contractors post-award and a detailed budget is not available at the time of application, the applicant must provide information on the nature of the work to be delegated, the estimated costs, and the process for selecting the delegate agency.
Other Description: Enter the total of all other costs. Such costs, where applicable and appropriate, may include but are not limited to: consultants; insurance; food (when allowable); participant support costs; professional services (including audit charges); space and equipment rent; printing and publication; training, such as tuition and stipends; staff development costs; and any other costs not addressed elsewhere in the budget.
Other Justification: Provide computations, a narrative description, and a justification for each cost under this category.
Indirect Charges Description: Total amount of indirect costs. This category has one of two methods that an applicant may select. You may only select one. For either method, you must show your calculation of the direct cost lines included in the base multiplied by the applicable indirect rate. If you are not using an indirect rate, all costs must be charged to direct cost line items.
1) Your organization currently has an indirect cost rate approved by the Department of Health and Human Services (HHS) or another cognizant federal agency. You should enclose a copy of the current approved rate agreement. If you request a rate that is less than allowed, your authorized representative must submit a signed acknowledgement that the organization is accepting a lower rate than allowed.
2) Per 45 CFR § 75.414(f) Indirect (F&A) costs, “any non-Federal entity [i.e., applicant] that has never received a negotiated indirect cost rate, … may elect to charge a de minimis rate of 10% of modified total direct costs (MTDC) which may be used indefinitely. As described in § 75.403, costs must be consistently charged as either indirect or direct costs, but may not be double charged or inconsistently charged as both. If chosen, this methodology once elected must be used consistently for all Federal awards until such time as a non-Federal entity chooses to negotiate for a rate, which the non-Federal entity may apply to do at any time.”
This method only applies to applicants that have never received an approved negotiated indirect cost rate from HHS or another cognizant federal agency. Applicants awaiting approval of an indirect cost rate may request the 10 percent de minimis. When the applicant chooses this method, costs included in the indirect cost pool must not be charged as direct costs to the grant.
Program Income Description: Program income means gross income earned by your organization that is directly generated by this project if funded except as provided in 45 CFR § 75.307(f). Program income includes but is not limited to income from fees for services performed or the use or rental of real or personal property acquired under the award. Interest earned on advances of federal funds is not program income. Except as otherwise provided in federal statutes, regulations, or the terms and conditions of the federal award, program income does not include rebates, credits, discounts, and interest earned on any of them. See also 45 CFR §§ 75.307, 75.407 and 35 U.S.C. §§ 200-212 (applies to inventions made under federal awards).
Program Income Justification: Describe and estimate the sources and amounts of Program Income that this project may generate if funded. Unless being used for cost sharing, if applicable, these funds should not be added to your budget. This amount should be reflected in box 7 of the SF-424A.
Non-Federal Resources Description: Amounts of non-federal resources that will be used to support the project as identified in box 18 of the SF-424. For all federal awards, any shared costs or matching funds and all contributions, including cash and third-party in-kind contributions, must be accepted as part of the recipient’s cost sharing or matching when such contributions meet all of the criteria listed in 45 CFR § 75.306. For awards that require matching by statute, recipients will be held accountable for projected commitments of non-federal resources in their application budgets and budget justifications by budget period or by project period for fully-funded awards, even if the justification by budget period, or by project period for fully-funded awards, exceeds the amount required. A recipient’s failure to provide the required matching amount may result in the disallowance of federal funds. If you are funded, you will be required to report these funds on your Federal Financial Reports. For awards that do not require matching or cost sharing by statute, where “cost sharing” refers to any situation in which the recipient voluntarily shares in the costs of a project other than as statutorily required matching and are accepted by HHS/OASH, we will include this non-federal cost sharing in the approved project budget and the recipient will be held accountable for the non-federal cost-sharing funds as shown in the Notice of Award (NOA). A recipient’s failure to provide voluntary cost sharing of non-federal resources that have been accepted by HHS/OASH as part of the approved project costs and that are shown as part of the approved project budget in the NOA may result in the disallowance of federal funds. If you are funded, you will be required to report these funds on your Federal Financial Reports.
Non-federal Resources Justification: You must provide detailed budget information for every funding source identified in box 18. "Estimated Funding ($)" on the SF-424. Provide this documentation as part of your Budget Narrative file, not your Appendices.
You must fully identify and document in your application the specific costs or contributions you propose in order to meet a matching requirement. You must provide documentation in your application on the sources of funding or contribution(s). In-kind contributions must be accompanied by a justification of how the stated valuation was determined. Matching or cost sharing must be documented by budget period (or by project period for fully-funded awards).
Estimated Unobligated Balance
You must provide an estimated unobligated balance separate from your proposed budget at the amount provided by in this guidance. You must explain why an unobligated balance exists. If you are requesting to use the unobligated balance in the upcoming budget year, you must:
- indicate how you will use the unobligated funds;
- provide a revised budget and budget narrative for these funds;
- indicate the impact on the project if the funds are used to offset funding rather than add to funding; and,
- if applicable, indicate how you will meet the increased amount of matching or cost sharing.
Content last reviewed on March 30, 2017