Reduction in Effort
Federal sponsors (and some non-federal) require written approval for a PI or Key Personnel to reduce effort greater than 25% from the committed amount in the proposal.
Definition of Key Personnel
Sponsors may define terms such as "Co-PI" and "Key Personnel" differently. Read your Notice of Award and your applicable terms and conditions to understand your sponsor's policies with respect to a reduction in effort of the PI or Key Personnel. Additionally, a sponsor's terms and conditions flow down to any subrecipients.
There are two situations where the committed effort on the proposal may be reduced.
Sponsor Reduction
There are times when a sponsor will issue an award for less than the proposed amount. There are two courses of action:
- Negotiate with the sponsor to obtain a revised approved budget for the (reduced) award amount. As always, such negotiations should be done through the Office of Sponsored Programs (OSP). The committed effort in the revised approved budget is the amount of effort to be met on the award. (Preferred)
- If the budget is not re-negotiated based on the reduced amount, then the amount of effort in the final budget submitted to the sponsor is the amount of committed effort on the award. This is the effort commitment against which any future reductions should be calculated.
Reduction in PI or Key Personnel Effort
During the award implementation, it may be determined that the amount of effort for the PI, and any other named Key Personnel, needs to be reduced. Review the Notice of Award to determine sponsor requirements for reduction in PI effort.
For federal awards, the federal regulations require that any reduction in effort, over the period of performance or all non-competing segments of the award, of 25% or more requires written Sponsor approval. [2 CFR 200.308(f)(3)] However, review the terms of the Notice of Award for any specific requirements and to determine if the federal sponsor has waived this requirement or has additional restrictions.
If the reduction will occur during a No-Cost Extension, review the terms and conditions of your award to determine whether or not prior approval is required. Different federal sponsors have different policies with respect to the required level of effort during a No-Cost Extension.
For more information on sponsor approvals, visit Sponsor Regulations.
Federal Regulations and Policies
Federal awards are governed by 2 CFR 200 and specific agency terms and conditions. While all federal award requirements are based on the regulations, the regulations often leave room for agencies to apply different interpretations and definitions to specific awards. Prior approval regulations and policies flow down to all subrecipients.
Under 2 CFR 200(f)(3), prior written approval from the federal agency is required if the “approved project director or principal investigator” disengages from the project for “more than three months” or reduces effort by 25% or more “over the course of the period of performance.” The regulations do not define the terms “project director” or “principal investigator”.
Individual federal sponsors differ slightly from the regulations in terms of when prior approval is required. Specifically, the National Institutes of Health (NIH) and the National Science Foundation (NSF) publish guidance to clarify when approval is required.
NIH requires prior written approval if:
“There is a significant change in the status of the PD/PI or other Senior/Key Personnel specifically named in the NoA including but not limited to withdrawing from the project entirely, being absent from the project during any continuous period of 3 months or more, or reducing time and effort devoted to the project by 25 percent or more from the level that was approved at the time of initial competing year award (for example, a proposed change from 40 percent effort to 30 percent or less effort or in calendar months a change from 4.8 to 3.6 calendar months). Reductions are cumulative, i.e., the 25% threshold may be reached by two or more successive reductions that total 25% or more. Once agency approval has been given for a significant change in the level of effort, then all subsequent reductions are measured against the approved adjusted level. Selecting “Yes” in the RPPR constitutes a prior approval request to the agency and the issuance of a subsequent year of funding constitutes agency approval of the request.”
NIH Grants Policy Statement, 8.1.2.6
As noted above, the request and approval to reduce effort can be accomplished through submission of the RPPR.
NSF requires prior written approval if:
“[T]he PI or co-PI will devote substantially less time to the project than anticipated in the approved proposal, (defined in the applicable award terms and conditions as a reduction of 25% or more in time) … Requests for changes to the person-months devoted to the project must be signed and submitted by the AOR via use of NSF’s electronic systems. This request must be submitted at least 30 days before the proposed change, or as soon as practicable after the prospective change is known.”
Additionally, NSF defines PI and co-PI as individuals designated as such on the Proposal Budget. [NSF PAPPG, Exhibit II-3]
It is important to note the differences between NIH and NSF in determining the individual that must obtain prior approval to reduce effort. NIH policy requires PIs “named on the Notice of Award” to obtain prior approval. NSF requires PI or co-PIs named in the proposal budget to obtain prior approval.
Thus, if multiple PIs/Co-PIs are named on an NSF proposal, but only one PI is named on the NSF Notice of Award, all the PIs on the proposal are required to obtain prior approval if their effort is reduced by 25% or more.
For NIH, only the PIs named on the NIH Notice of Award are required to obtain prior approval for a 25% or greater reduction in effort, regardless of the individuals named as key personnel on the proposal budget.
It is important to reach out to the sponsor to obtain prior approval before the reduction in effort occurs. After-the-fact requests may not be compliant with agency policy and could represent an audit risk.
Please see the PAFC page of Links to Regulations and Sponsor Terms and Conditions to find additional policies for your specific federal sponsor.
Effort Reduction Example
Example 1: PI proposes to contribute 10% effort during the award. During the award, PI wants to reduce effort to 5%. Since the reduction from 10% to 5% exceeds the 25% threshold, the PI must obtain written sponsor approval before reducing committed effort.
Example 2: PI proposes to contribute 2% effort during the award. During the award, PI wants to reduce effort to 1%. Since the reduction from 2% to 1% exceeds the 25% threshold, the PI must obtain written sponsor approval before reducing committed effort.
Compliance Tips
When reviewing how PIs and units manage committed effort by Key Personnel, auditors will focus on any of the following:
- Monitoring
Evidence to show that the grant managers and/or grant administrators met with the PI and other key personnel or communicated throughout the year to ensure that the PI and other key personnel based on the project terms are on track to meet their projected time and effort commitments based on the initial grant application and budget proposal or if approval for changes are needed.
Evidence for this can be provided in the form of recurring teams meetings, email correspondence, budget and effort reporting updates communicated via email or excel reports.
- Justifications and approvals
Evidence of justification and approval for changes in key personnel or absence from, or changes in time committed to, the project by the approved project director or principal investigator.
The recipient or subrecipient may change the staffing mix and level of involvement within limits specified by agency policy or in the award but may be required to obtain federal awarding agency approval of changes in key personnel (as identified in the award, which may differ from the recipient or subrecipient’s designation in the application/proposal) and changes in the principal investigator’s/project director’s time commitment/level of participation in the project. For grants and cooperative agreements, this may include not only a change in the principal investigator or project director but also the disengagement from the project for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator (2 CFR 200.308(f) (2) and (3)).
- Documentation
Retain records such as emails (both internal and with the sponsor), meeting notes, progress and technical reports, internal memos, or any other contemporaneous documentation supporting key personnel effort devoted to the award and any subsequent changes.
Units must be able to prove, via documentation, that monitoring is occurring on a regular basis.
Shift in Funding Source
A shift in funding source occurs when a faculty member is paid by an award and the faculty member wants to shift the funding (payment) of this effort from the award to another funding source. The same level of effort is being provided to the award, just the funding mechanism has changed.
A “shift” can be processed in the effort system (ECC) in order to document the full amount effort devoted to the award by the faculty member. For more information on performing a "shift" in ECC, see the "Shift in Effort" webpage: Shift in Effort | Post Award Fiscal Compliance
Additional Assistance
If you have questions regarding whether an individual must obtain prior approval for a reduction in effort, please reach out to PAFC via gcafco@uw.edu.