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Sponsored Projects Administration: From Proposals to Closeout And Everything In Between. Overview Julie T. Norris Jane A. Youngers December, 2006. What We Will Do Today & Tomorrow. Compliance Sets the Stage What You Should Know The Life Cycle of a Sponsored Project.
Sponsored Projects Administration: From Proposals to CloseoutAnd Everything In Between Overview Julie T. Norris Jane A. Youngers December, 2006
What We Will Do Today & Tomorrow • Compliance Sets the Stage • What You Should Know • The Life Cycle of a Sponsored Project
Compliance Sets the Stage • Why All the Current Emphasis? • Compliance is part of the bargain we make • When we accept sponsored funding, we accept statutes, regulations, policies, and possibly guidance
Conflict of Interest Misconduct Cost Sharing Effort Reporting Purchasing Intellectual Property Data Management Subcontracting Export controls Human Participants Animal Welfare Property Management Technical Reporting Socio-Economic Biosafety Chemical Safety Radiation Safety Privacy A Sampler ofCompliance Areas
Who is Responsible for Compliance? • Principal Investigators • Sponsored Project Administrators • Department Administrators • Affirmative Action/Equal Opportunity Officer • Compliance Committees • “Institutional Officials” • Other Research Personnel • Compliance Offices (e.g. EHS)
What is the Effect of Non-Compliance? • Vulnerability to audit/suit • Large settlements/fines • Administrative sanctions • Adverse publicity • Loss of public confidence
The Results of Non Compliance:Significant Audits/Settlements Florida International UnivEffort Certification & Direct Costs$11.5 million Johns Hopkins Univ Effort Certification $2.7 million University of MinnesotaMisuse federal funds $32 million Univ California/San Francisco Animal Care Allegations $92,500 fine New York University Medical CenterInflated research grant costs$15.5 million Univ of Southern California Questioned Costs HHS/OIG Audit $400,000 Public DemandforImproved Control East Carolina Univ Questioned Costs HHS/OIG Audit $2.4 million Mayo FoundationMischarging federal grants $6.5 million Univ Alabama/BirminghamEffort Certification & Clinical Research Billing $3.4 million Harvard/BIDMC Costing IssuesSelf-Reported $3.25 million Yale University Effort Certification & Direct Costs $ ??? Northwestern University Committed Time/Effort $5 million
What Has Changed? • Largest research budgets in history but not increasing • Increased public demand for accountability • Increasing use of qui tam provisions of False Claims Act • Increasing level of unfunded mandates putting pressure on us to “do more with less”
What You Should Know • Definitions • Regulations • General Rules
What You Should KnowDefinitions – Funding Mechanisms • Grant • purpose is to transfer money, property, services, or anything of value to recipient in order to accomplish a public purpose • idea generally originates with “performer” • no substantial involvement by sponsor in performance of project
What You Should KnowDefinitions – Funding Mechanisms • Contract • procurement mechanism • principal purpose is to acquire property or services for direct benefit or use of the sponsor • sponsor typically proposes workscope • deliverables usually defined
What You Should KnowDefinitions – Funding Mechanisms • Cooperative Agreement • principal purpose is to transfer funds to recipient to accomplish a public purpose • idea or may not originate with “performer” • substantial involvement is anticipated between sponsor and recipient during project performance
What You Should KnowDefinitions – Funding Mechanisms • Other Transaction Agreement • used when the government decides it has sufficient cause to make an award not subject to the standard terms and conditions used for one of the other types of agreements • used infrequently and only by a few federal agencies; examples include awards subject to ITAR provisions, NIST awards not subject to Bayh-Dole regulations
What You Should KnowDefinitions • Direct Cost Costs that can be identified specifically with a particular sponsored project relatively easily with a high degree of accuracy.
What You Should KnowDefinitions • F&A (Indirect) Costs Costs that are incurred for common or joint objectives and therefore cannot be identified readily and specifically with a particular sponsored project.
What You Should Know Major Federal Regulations • Office of Management and Budget (OMB) Circulars • A 21 (2 CFR 220), Cost Principles for Educational Institutions • A 110 (2 CFR 215), Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals and Other Nonprofit Organizations • A 133, Audits of Institutions of Higher Education and Other Nonprofit Institutions (http://www.whitehouse.gov/omb/grants/grants_circulars.html)
What You Should Know OMB Circulars • instructions to federal agencies • think “Regents Rules” or BPM’s • guidance documents, not regulation • federal agencies then implement • think “Handbook of Operating Procedures”
What You Should Know OMB Circular A-21 (2 CFR 220) “Cost Principles for Educational Institutions” • defines often-used terms • defines methods of F&A cost calculation • defines allowable and unallowable costs (the “J” section) • includes Cost Accounting Standards
What You Should Know Cost Accounting Standards • 501: consistency in estimating, accumulating and reporting costs • 502: consistency in allocating costs incurred for the same purpose • 505: accounting for unallowable costs • 506: consistency in using the same accounting period CASB Disclosure Statement (DS-2)
What You Should Know Cost Accounting Standards • Potential CAS Problem • cost sharing • effort included in proposal as research (estimate) but recorded in accounting system as instruction (actual)
What You Should Know Cost Accounting Standards • Potential CAS Problem • inconsistent use of codes/terminology • research proposal budgets chemicals but accounting system charges materials and supplies
What You Should Know Cost Accounting Standards • Potential CAS Problem • department charges costs directly that are also in the F&A rate • telephone equipment costs • normally charged indirectly, but……..
What You Should Know OMB Circular A-110 (2 CFR 215) Uniform Administrative Requirements • sets maximum requirements for the government • sets minimum standards for institutions emphasizes • systems • written procedures
What You Should Know OMB Circular A-133 Audits of States, Local Governments, and Nonprofit Organizations • requirement for annual audit of federal programs • in UT System, audit conducted by State of Texas
What You Should Know 37 CFR 401 (Bayh-Dole Act) Rights to Inventions Made by Nonprofit Organizations and Small Business Firms • allows institutions to take title to inventions made under federal funds if institutions do certain things including disclosing inventions, pursuing patents, etc. • government gets nonexclusive rights • cannot assign/sell invention if federal money is involved
What You Should Know Federal Acquisition Regulations (FAR) • procurement regulations • FAR is codified at Title 48 of the CFR and consists of 63 chapters • Chapter 1 is commonly known as the FAR • Chapters 2- 63 are the FAR Supplements, one for each agency (e.g., DOD, NASA, HHS, etc) • contracts will typically include both FAR and FAR Supplements (http://www.acquisition.gov/far/)
What You Should Know FAR (cont) • Each FAR chapter divided into Parts addressing a topic • three main groups of FAR parts • Parts 1-51 contain instructions to the federal contracting officers on what to include in a particular type of contract • Part 52 are the actual contract clauses • Part 53 contains forms
What You Should Know FAR (cont) FAR Numbering System • example: FAR 2-52.227-7039 • 2 = chapter (agency) • 52 = part (topic, in this case contract clause) • 227 = subpart, section • 7039 = subsection • FAR Supplements will have numbering that begins with 252.7xxx
What You Should Know Code of Federal Regulations (CFR) • regulations applicable to each federal agency • includes statutory and other regulatory requirements • each agency has section (title) • example in 45 CFR 46 • 45 is title for Department of Health and Human Services • 46 is part where human subjects regulations are located (http://www.gpoaccess.gov/cfr/index.html)
What You Should Know Federal Demonstration Partnership (FDP) • special terms and conditions applicable to some awards made by 10 Federal agencies • agencies then have their own specific FDP terms and conditions (http://www.nsf.gov/awards/managing/fed_dem_part.jsp)
Grants and Cooperative Agreements OMB A-21 OMB A-110 OMB A-133 37 CFR 401 Contracts FAR both A-21 and A-133 are incorporated into the FAR 37 CFR 401 is also a part of the FAR Other Transaction Agreements anything goes What You Should Know What Regulations Are Applicable?
What Every PI/Administrator Should KnowOrder of Precedence Statute OMB Circulars Administrative Regulations Program Regulations Special Terms and Conditions of Award
What You Should Know Changes Ahead • 2 CFR has been created as one location for government-wide guidance and agency regulations for grants and cooperative agreements • Subtitle A will include OMB Circulars • A-110 is 2 CFR Part 215 • A-21 is 2 CFR Part 220 • Subtitle B will include individual agency regulations
What You Should Know Costing Issues • A-21, Section C-1 states: • the cost of a sponsored agreement is comprised of the allocable direct costs incident to its performance, plus the allocable portion of the allowable F&A costs of the institution…. • Therefore, Federal sponsors reimburse the institution for the allowable costs of a project, including direct costs and F&A costs…
What You Should Know Allowable Costs • For a cost to be allowable under a federal award, it must be: • reasonable and necessary • prudent person rule for reasonableness • is cost necessary for performance of project? • are costs consistent with institutional policies?
What You Should Know Allowable Costs (cont) • allocable • assignable to a cost objective in accordance with benefits received • incurred to advance work under the project • consistent • costs incurred for the same purpose, in like circumstances, must be treated consistently as either a direct or indirect (F&A) costs
What You Should Know Allowable Costs (cont) if: an allowable cost is one that is eligible for reimbursement by the Federal government then an unallowable cost is one that is not eligible for reimbursement by the Federal government
What You Should Know When is a Cost Allowable vs Unallowable • cost may be “expressly” unallowable • defined in A-21 J section as either an unallowable activity (e.g., fund raising, alumni activities, lobbying) or unallowable transaction (e.g., alcohol, entertainment, fines) • cost may be allowable only as an F&A cost (such as proposal preparation) • cost that is allowable as direct cannot be included in F&A rate
What You Should Know Allowable vs Unallowable (cont) • generally, it is not the type of cost that determines allowability, but purpose and circumstance of expenditure • consequently, some costs can be direct or indirect • however, any cost designated as unallowable cannot be used as cost sharing
Unallowable Activities (something you do) organized fund raising lobbying commencement & convocation general public relations & alumni activities student activities managing investments solely to enhance income prosecuting claims against the federal government fundraising athletics student housing campus bookstore What You Should Know Unallowable Costs
Unallowable Transactions (something you buy) advertising (most) alcoholic beverages entertainment fines and penalties memorabilia, promotional materials moving costs (some) certain recruitment costs certain travel costs cash donations to other parties “golden parachute” severance payments interest (except interest paid to outside parties for certain purposes memberships in social, dining, or country clubs What You Should Know Unallowable Costs (cont)
What You Should Know Unallowable Costs (cont) • individual awards may designate additional costs as unallowable • these additional unallowable costs are set forth in program guidelines and award documents
What You Should Know Unallowable Costs (cont) • Entertainment • what is entertainment • amusement or social event • what is allowable on federal awards • Never on research awards, but meals and refreshments may be provided with training sessions, meetings, conferences when • integral part of project-related event • costs are reasonable • not directly related to amusement or social event • individuals outside institution are involved • Sometimes on TRIO or similar programs
What You Should Know “Sensitive Costs” OMB A-21, Part F.6.b states that the following costs should “normally” be treated as indirect: • administrative & clerical salaries • general purpose equipment • office suppies • memberships • subscriptions & books • telephone charges other than long distance
What You Should Know Problematic Costs • Allowability of: • home access to internet • pagers, BlackBerry’s, PDA’s • visa fees
What You Should Know General Costing Rules • Pre-award costs, where permitted, limited to 90 days • Unexpended funds may often, but not always, be carried forward • Rarely can unexpended funds be transferred to unrestricted accounts
What You Should Know Cost Sharing/Matching • Cost sharing/matching represents costs of carrying out a project not charged to the project/award. • Types of cost sharing: • Required cost sharing or matching is a programmatic requirement – often expressed as a percent of budget request or by requirement of faculty effort without compensation
What You Should Know Cost Sharing/Matching (cont) • Types of cost sharing (cont) • Voluntary cost sharing is not required, but is offered to enhance a proposal’s competitiveness • Implicit (mandatory) cost sharing occurs when an agency places a cap or limit on budget items; e.g. NIH salary cap • Voluntary cost sharing, including effort without salary, must be prudently allocated
What You Should Know Cost Sharing/Matching (cont) • Required cost sharing should not generally exceed amount required • Commitments to cost share must be approved by the institution • Source of cost sharing must be secured prior to submission of proposal
What You Should Know Cost Sharing/Matching (cont) • Cost sharing commitments on Federal projects cannot be satisfied from other Federal projects • Salary requests and charges to projects should generally reflect effort committed • Cost sharing must be readily verifiable from institutional records