|(a) A cost is an Allowable Cost and may be charged
to the Grant Award if it is reasonable, allocable, and adequately
(1) A cost is reasonable if the cost does not exceed
that which would be incurred by a prudent individual or organization
under the circumstances prevailing at the time the decision was made
to incur the cost; and is necessary for the performance of the Grant
Award defined in the Scope of Work in the Grant Contract.
(2) A cost is allocable if the cost:
(A) Benefits the Grant Award either directly or indirectly,
subject to Indirect Cost limits stated in the Grant Contract;
(B) Is assigned the Grant Award in accordance with
the relative benefit received;
(C) Is allowed or not prohibited by state laws, administrative
rules, contractual terms, or applicable regulations;
(D) Is not included as a cost or used to meet Matching
Fund requirements for any other Grant Award in either the current
or a prior period; and
(E) Conforms to any limitations or exclusions set forth
in the applicable cost principles, administrative rules, state laws,
and terms of the Grant Contract.
(3) A cost is adequately documented if the cost is
supported by the organization's accounting records and documented
consistent with §703.24 of this title (relating to Financial
(b) Grant Award funds must be used for Allowable Costs
as provided by the terms of the Grant Contract, Chapter 102, Texas
Health and Safety Code, the Institute's administrative rules, and
the Uniform Grant Management Standards (UGMS) adopted by the Comptroller's
Office. If guidance from the Uniform Grant Management Standards on
a particular issue conflicts with a specific provision of the Grant
Contract, Chapter 102, Texas Health and Safety Code or the Institute's
administrative rules, then the Grant Contract, statute, or Institute
administrative rule shall prevail.
(c) An otherwise Allowable Cost will not be eligible
for reimbursement if the Grant Recipient incurred the expense outside
of the Grant Contract term, unless the Grant Recipient has received
written approval from the Institute's Chief Executive Officer to receive
reimbursement for expenses incurred prior to the effective date of
the Grant Contract.
(d) An otherwise Allowable Cost will not be eligible
for reimbursement if the benefit from the cost of goods or services
charged to the Grant Award is not realized within the applicable term
of the Grant Award. The Grant Award should not be charged for the
cost of goods or services that benefit another Grant Award or benefit
a period prior to the Grant Contract effective date or after the termination
of the Grant Contract.
(e) Grant Award funds shall not be used to reimburse
unallowable expenses, including, but not limited to:
(1) Bad debt, such as losses arising from uncollectible
accounts and other claims and related costs.
(2) Contributions to a contingency reserve or any similar
provision for unforeseen events.
(3) Contributions and donations made to any individual
(4) Costs of entertainment, amusements, social activities,
and incidental costs relating thereto, including tickets to shows
or sports events, meals, alcoholic beverages, lodging, rentals, transportation
(5) Costs relating to food and beverage items, unless
the food item is related to the issue studied by the project that
is the subject of the Grant Award.
(6) Fines, penalties, or other costs resulting from
violations of or failure to comply with federal, state, local or Indian
tribal laws and regulations.
(7) An honorary gift or a gratuitous payment.
(8) Interest and other financial costs related to borrowing
and the cost of financing.
(9) Legislative expenses such as salaries and other
expenses associated with lobbying the state or federal legislature
or similar local governmental bodies, whether incurred for purposes
of legislation or executive direction.
(10) Liability insurance coverage.
(11) Benefit replacement pay or legislatively-mandated
pay increases for eligible general revenue-funded state employees
at Grant Recipient state agencies or universities.
(12) Professional association fees or dues for an individual
employed by the Grant Recipient. Professional association fees or
dues for the Grant Recipient's membership in business, technical,
and professional organizations may be allowed, with prior approval
from the Institute, if:
(A) the professional association is not involved in
lobbying efforts; and
(B) the Grant Recipient demonstrates how membership
in the professional association benefits the Grant Award project(s).
(13) Promotional items and costs relating to items
such as T-shirts, coffee mugs, buttons, pencils, and candy that advertise
or promote the project or Grant Recipient.
(14) Fees for visa services.
(15) Payments to a subcontractor if the subcontractor
working on a Grant Award project employs an individual who is a Relative
of the Principal Investigator, Program Director, Company Representative,
Authorized Signing Official, or any person designated as Key Personnel
for the same Grant Award project (collectively referred to as "affected
(A) the Grant Recipient will be paying the subcontractor
with Grant Award funds for any portion of the affected Relative's
(B) the Relative submits payment requests on behalf
of the subcontractor to the Grant Recipient for payment with Grant
(C) For exceptional circumstances, the Institute's
Chief Executive Office may grant an exception to allow payment of
Grant Award funds if the Grant Recipient notifies the Institute prior
to finalizing the subcontract. The Chief Executive Officer must notify
the Oversight Committee in writing of the decision to allow reimbursement
for the otherwise unallowable expense.
(D) Nothing herein is intended to supersede a Grant
Recipient's internal policies, to the extent that such policies are
(17) Tips or gratuities.
(f) The Institute is responsible for making the final
determination regarding whether an expense shall be considered an
|Source Note: The provisions of this §703.26 adopted to be effective December 7, 2016, 41 TexReg 9527; amended to be effective March 15, 2018, 43 TexReg 1442; amended to be effective June 5, 2019, 44 TexReg 2723; amended to be effective March 11, 2021, 46 TexReg 1472