U.S. Federal grants and contracts information

Applications for U.S. federal grants and contracts must follow the rules of the granting agency or contracting department. When preparing an application, you should be aware of the following:

Allowable costs

Allowable costs refer to expenditures that can be funded with U.S Federal grants and contracts.  Costs are allowable if they meet the criteria set out by the granting agency or contracting department.  To be eligible for re-imbursement under a U.S Federal award, costs must be allowable, allocable and reasonable as defined below.


An expense is allowable on a U.S Federal award if it meets these general criteria:

(a) be necessary and reasonable for performance of the award (as provided in the budget) and be allocable to the particular U.S. Federal award.

(b) conform to limitations or exclusions set forth in the uniform guidance or the U.S Federal award as to the type and amount of cost items.

(c) be consistent with policies and procedures that apply uniformly to both U.S Federal award and other activities of the university.

(d) be accorded consistent treatment.  For example, if a cost item is allocated as indirect cost under one project, it should be allocated as indirect cost for other projects.

(e) be determined in accordance with generally accepted accounting principles.

(f) not be included as a cost or used to meet cost sharing or matching requirements.

(g) be adequately documented.


Allocation means the process of assigning a cost to one or more cost objectives in reasonable proportion.

For example, if a cost benefits two or more projects in proportions that can be determined without undue effort or cost, the cost should be allocated to the projects based on the proportional benefits. 

A cost is allocable to a U.S Federal award if it is necessary to the overall operation of the university and is assignable in part to the U.S. Federal award, as in the case of indirect costs, provided the Federal award.


A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.

Prior approval

Prior approval requirements include revision of budget and program plans. Unless waived by the Federal agency, prior written approval is required for the following:

  1. Change in budget
  2. Change in scope or the objective of the program (even if there is no associated budget revision)
  3. Change in key person
  4. A disengagement from the project for more then 3 months, or a 25% reduction in time devoted to the project by the PI
  5. Transfer of funds budget for participant support costs
  6. Sub-awarding or contracting out of any work
  7. Fixed amount subawards
  8. Changes in the amount of cost-sharing or matching funds
  9. When reasonableness and allocability of costs may be difficult to determine (e.g., for special or unusual costs)

Salary cap

Department of Health and Human Services

Department of Health and Human Services grants, contracts and cooperative agreements are currently subject to legislatively imposed salary limitations. This includes agencies such as National Institutes of Health (NIH), Food and Drug Administration (FDA), and the Centers for Disease Control and Prevention (CDC). For current salary limitations (in USD), see the NIH Salary Cap Summary.

For NIH, any adjustment for salary limits will be made at the time of award; therefore, if applicable, requested salary should be based on institutional base salary at the time the application is submitted.

Department of Defense

Department of Defense contracts are subject to compensation limits.

Graduate student compensation

NIH grants limit compensation for graduate students. Compensation includes salary and benefits. While actual institutional-based compensation should be requested and justified, this may be adjusted at the time of the award. See the NIH Grants Policy Statement, Section Graduate Student Compensation.

Exchange rate

Applications for U.S. federal grants and contracts are typically in USD. Contact our staff to discuss exchange rates.

When forecasting your budget, keep in mind that budgets for research agreements denominated in a foreign currency are set up annually in Canadian Dollars in Unit4 using the current exchange rate at that time.

Fly America Act

Travel using U.S. Federal funds must comply with the requirements of the Fly America Act (49 U.S.C. 40118) which generally provides that air travel funded by Federal funds may only be conducted on U.S. flag air carriers and under applicable Open Skies Agreements.