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Proposal Costs

The costs of preparing bids, proposals, or applications for the receipt of any new funding are generally unallowable as direct costs on existing awards. This includes proposal costs for a new award, a competing segment of an existing program, or for supplemental funding on an existing award.

The reason that proposal costs are unallowable is because any costs charged to an Award must provide benefit to that Award. It is difficult to justify how the expenditure of effort for new funding is of benefit to the existing Award. How does effort spent on obtaining additional funding provide benefit to the objectives of the existing award?

Costs related to the receipt of funding for a non-competing segment of an existing award are allowable. This is because these funds are not considered new funding since they are identified in the award.

Also, under NIH Mentored Career Development (CDA or mentored “K”) awards, it is allowable for effort devoted to proposal preparation for subsequent research support to be direct charged. This activity can be considered part of the awarded effort commitment.