NSF Regulation
The National Science Foundation (NSF) has a regulation that limits the amount of compensation that “senior personnel” can propose on NSF Awards. This web page explains and interprets the NSF regulation.
Additional information on the NSF two-month rule can be found on the Office of Research website. NSF regulations can be found in the NSF's Proposal & Award Policies & Procedures Guide (PAPPG).
The relevant portion of the regulation is included here with key terms in bold:
“….NSF limits the salary compensation requested in the proposal budget for senior personnel to no more than two months of their regular salary in any one year....It is the organization's responsibility to define and consistently apply the term "year," and to specify this definition in the budget justification. This limit includes salary compensation received from all NSF-funded grants....If anticipated, any compensation for such personnel in excess of two months must be disclosed in the proposal budget, justified in the budget justification, and must be specifically approved by NSF in the award notice budget....a grantee can internally approve an increase or decrease in person months devoted to the project after an award is made, even if doing so results in salary support for senior personnel exceeding the two-month salary policy. No prior approval from NSF is necessary unless the rebudgeting would cause the objectives or scope of the project to change. NSF prior approval is necessary if the objectives or scope of the project change.”
Key Terms and Definitions
The terms in bold above need to be defined in order to understand this regulation. The UW defines these terms as follows:
Salary: Per 2 CFR 200.430 Compensation - personal services, salary is an allowable cost at the Institutional Base Salary (IBS) rate. GIM 35 has information on salary components that the UW includes in IBS.
Senior Personnel: NSF’s definition of Senior Personnel: “…individual(s) designated by the proposer, and approved by NSF, who will be responsible for the scientific or technical direction of the project.”
These individuals are listed by name on the NSF Award as being responsible. NSF’s format for how these Senior Personnel are listed has changed, and will continue to change over time, but typically the named individuals appear at the beginning of the Award document. Here are two current examples:
Example 1: The project, entitled “Science I” is under the direction of John Doe and Jane Doe.
Example 2:
Proposal No: PI Name/Institution
------------------- --------------------------------------------------
12345789 Jane Doe/University of Washington
Year: NSF regulations state that the organization can define the year. UW has defined this as its fiscal year, which runs from July 1 - June 30. For example, FY 2021 is July 1, 2020 - June 30, 2021.
Organization/Grantee: This is the UW, as it is the grantee of the NSF Award.
Interpretation and Exceptions
The UW’s interpretation of this NSF regulation is that any Senior Personnel listed on an NSF Award cannot propose more than two months of their IBS on all NSF Awards in a UW Fiscal Year. This two-month limitation can only be exceeded under certain circumstances.
In the Proposal: If, at the time of proposal preparation, you know that the Senior Personnel will exceed the two month limit, include language in the proposal that identifies that the limit will be exceeded, and request approval as part of the submission. The language can be as simple as:
"In accordance with section II.D.2.f(i)(a) of the PAPPG, sponsor approval is required if upon issuance of this Award, the Senior Personnel will exceed the two-month limitation for all effort on NSF Awards in the UW’s fiscal year. For this proposal submission, we expect that <<NAME SENIOR PERSONNEL>> will expend <<XX>> months on this Award and that, combined with existing NSF Awards, will put them over the two-month limit.”
If the proposal is fully funded, Sponsor approval is considered to have been obtained.
Post-Award Rebudgeting: Per NSF regulations, if the proposal does not have the Senior Personnel exceeding the two-month rule, but due to rebudgeting the effort exceeds two months, NSF approval does not need to be obtained. Instead, there just needs to be a note in the file that due to rebudgeting, the Senior Personnel's effort has now exceeded the two-month limit.