Good federal grant & contract management practices

March, 2025   |   Office of Sponsored Projects, Northern Arizona University

Introduction  

Effective federal grant and contract management is crucial for NAU to ensure that funds are used appropriately and that projects achieve their intended outcomes. These goals are particularly important during this period of transition and change on the federal funding landscape.

As strong grant stewards, interest has grown around our practices of rebudgeting, carry-forward, and no cost extensions on federal grants and contracts at NAU.  This document outlines good practices for these principles – along with definitions, examples, references, and suggestions for today’s funding landscape challenges.

Rebudgeting

Rebudgeting refers to the process of reallocating funds within an approved budget to better align with project needs. Good practices for rebudgeting on sponsored grants and contracts include:

  1. Reviewing the original budget and identifying areas where funds can be reallocated.
  2. Ensuring that rebudgeting requests comply with federal regulations and grant terms.
  3. Obtaining necessary approvals from the grantor agency before making any changes (if necessary).
  4. Documenting all rebudgeting decisions and maintaining clear records.
Example: A research project at NAU initially allocated $50,000 for travel expenses; however, due to changes in project scope, the research team realized they needed more funds for laboratory supplies. They submitted a rebudgeting request to reallocate $20,000 from travel to laboratory supplies. The request was implemented, and the project continued smoothly.

Rebudgeting in today’s federal environment

Rebudgeting on sponsored grants and contracts should be pursued if the actions can facilitate your spending and help continue your research work – particularly against awarded, on-hand obligations to NAU.  Further, rebudgeting within direct cost categories of your project budget is usually allowed without prior approval of agency grant management officers (GMOs). Lastly, NAU can take advantage of “expanded authorities”[1] to facilitate rebudgeting requests; so, if you’re contemplating a budget category change that can help your spending and research work, please consult with your post award Fund Manager in the OSP.

Carry-forward

Carry-forward allows unspent funds from one budget period to be carried over to the next period. Good practices for carry-forward include:

  1. Monitoring expenditures regularly to identify unspent funds.
  2. Submitting carry-forward requests in a timely manner, following the grantor agency’s guidelines.
  3. Providing a clear justification for the carry-forward request, explaining how the funds will be used in the next period.
  4. Ensuring that carry-forward requests are approved by the grantor agency before using the funds. Unobligated fund balances of 25% or more require GMO review and prior approval to carry-forward.

Example: A project at NAU had $30,000 in unspent funds at the end of the first budget period. The team requested to carry forward these funds to the next period to cover additional data analysis costs. The request was justified by explaining the need for more comprehensive data analysis to achieve project goals. The carry-forward request was approved, allowing the project to use the unspent funds effectively.

Carry-forward in today’s federal environment  

Carry-forward circumstances could receive higher levels of scrutiny from agency grant management officers (GMOs) during this transitional period.  While most Federal awards have “automatic carry-forward” provisions, it is predicted that GMOs will be evaluating carry-forward circumstances more closely (even retrospectively) – particularly when they are reviewing progress/milestone reports, and across well/highly-funded projects. You should make all efforts to spend on your awards, at the budgeted pace (and $-level) you initially set-forth. Slowing spending and relying on carry-forward strategies is not recommended during these transitional times.

No-cost extensions

A no-cost extension (NCE) allows a grantee to extend the project period without additional funding. Good practices for no-cost extensions include:

  1. Assessing the need for an extension well in advance of the project end date.
  2. Submitting NCE requests according to the grantor agency’s guidelines and deadlines.
  3. Providing a detailed explanation of why the extension is needed and how the remaining funds will be used.
  4. Ensuring that NCE requests are approved by the grantor agency before extending the project period.

Example: A project at NAU was nearing its end date, but the research team needed an additional six months to complete the final phase of data collection. They submitted an NCE request, detailing the reasons for the delay and how the remaining funds would be used to complete the project. The request was approved, allowing the team to finish the project without additional funding.

No-cost extensions in today’s federal environment  

No cost extensions are also sure to receive heightened scrutiny and review by sponsor agencies during this transitional period at the federal level.  While NCE’s may not require additional funding, they do request additional time and could suggest to a GMO, that delays are being driven by inefficiency: a “trigger” word in today’s federal funding environment. Our recommendation is that NCE’s be avoided whenever they can be.  Project work should progress along the timelines and budget you initially established.  In the event you need a NCE, we will support the need within all current policy frameworks and agency requirements (e.g., extensions of final NIH budget periods will be approved for no more than +12 months, so long as no additional funding is sought/needed). Please consult with your Fund Manager in the OSP with questions, or your plans.

Summary & conclusions

By following these good practices for rebudgeting, carry-forward, and no-cost extensions, NAU can effectively manage federal grants and contracts to ensure successful project outcomes.

To reiterate:

We strongly encourage you to minimize reliance on carry-forward and no-cost extensions: we are expecting more scrutiny, fewer agency approvals, and tighter fiscal constraints; and

We expect to hear more from our sponsor agencies about the requirement to rebudget – to better align our sponsored work with current federal priorities.

Staying informed about recent federal government actions and sponsor agency updates is also crucial for maintaining compliance and adapting to changes in grant management policies. The OSP will take responsibility for this surveillance and keep you aware of developments and changes.

Footnotes:

[1] “Expanded Authority” (2 CFR 200.308) provides NAU the ability to rebudget federal awards and contracts when the total rebudget request is 20% or less of the total award obligation.  Rebudget requests greater than 20% might be an indication of a change in scope – which does require sponsor approval.

References:

  1. National Institutes of Health (NIH) Grants Policy Statement
  2. National Science Foundation (NSF) Proposal & Award Policies & Procedures Guide (PAPPG)
  3. Northern Arizona University Grants Policies
  4. Arizona State University Grants Policies
  5. University of Arizona Grants Policies
  6. Recent Federal Government Grant Management Actions

 

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