Regulations & Policies
Academic Affairs - Research and Sponsored Programs
Fixed-Price Sponsored Project Agreements |
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| Number: | 2.1020P |
Policy Status:
New Responsible Division/Department: Academic Affairs / Office of Research and Sponsored Programs |
| Effective Date: | 11/20/17 | |
| Revised Date: | ||
I. OBJECTIVE AND PURPOSE
The purpose of this policy is to outline the administrative requirements for formulating, monitoring, and closing-out fixed-price sponsored agreements, including the treatment of residual funds and cost overruns resulting from projects funded via fixed-price agreements. Under a fixed-price sponsored project agreement, sponsors pay a specific dollar amount for certain agreed upon deliverables, services, and/or milestones. Fixed-price agreements are generally used when reasonably definite specifications for research or service deliverables are defined to be accomplished within a delimited period of time and for which a fair and reasonable budget can be established.
Fixed-price agreements pose a risk to the University and thus must be closely monitored. In a fixed-price agreement, for example, the University agrees to perform the work regardless of the actual cost of conducting the project. If the University underestimates the cost of the project, the University must pay to complete the work. If, on the other hand, the University overestimates the cost of completing the work, residual funds will remain after the project is completed. Residual balances may indicate that proposed costs were not reasonable in relation to the work performed, that all expenses have not been correctly allocated, or that the project deliverables were changed contrary to contractual obligations. Large residual balances may be subject to review by the sponsor or other auditors; residual balances on federal awards can lead to charges of violation of cost and pricing regulations.
II. STATEMENT OF POLICY
Budgeting and Expenditures
All proposals for fixed-price sponsored projects must be processed using established University procedures for sponsored projects administration. Special care is needed when developing budgets for fixed-price agreements to ensure that the University is in the best possible position to fulfill its proposed obligations. Fixed-price agreements often do not require submission of an itemized budget to the sponsor, but an internal itemized budget still is required to ensure cost proposals for fixed-price relationships are estimated on a cost basis consistent with 香港六合彩开奖结果2023 cost-accounting policies. Expenses should be budgeted and justified based on anticipated reasonable costs. Budgets should not anticipate revenue in excess of expense nor funding to recover expenses incurred prior to the beginning of the project. Fixed-price sponsored project agreements carry Facilities and Administrative (F&A) costs consistent with 香港六合彩开奖结果2023's Facilities & Administrative Costs Policy (2.0030P).
All expenditures and effort for sponsored projects must be charged to the project index. They must not be charged to any other sponsored project index, nor to any other University account.
Deficits and Cost-Overruns
It is the responsibility of the Principal Investigator to properly monitor the timing of tasks, completion of deliverables, and final reporting of results on fixed-price sponsored project agreements. Most fixed-price agreements include a clause or special terms section regarding the submission and/or acceptance of a final report or product tied to the final payment. If the terms are not met as provided by the contract, the University has violated the agreement and total reimbursement of costs may not be forthcoming.
Responsibility for any cost overruns on sponsored project fixed-price agreements, including costs incurred in excess of the awarded amount, deficits incurred for late submission, or unmet or unacceptable deliverables, are detailed in 香港六合彩开奖结果2023's Uncollectible Costs on Contracts and Grants Policy (2.0880P).
Residual Balances
Funds resulting from a positive residual balance on a fixed-price sponsored project agreement upon full close out of the project are retained by the University and are maintained in the Sponsored Research Trust Fund administered by the Office of Research and Sponsored Programs.
If a residual balance exists upon project closeout, the residual balance will first be used to cover F&A costs on the entire funded amount at the University's full negotiated rate identified on 香港六合彩开奖结果2023's F&A rate sheet. Next, the remaining residual balance will be utilized to cover any cost overruns (deficits) made by the Principal Investigator(s) on other restricted accounts for which he or she is responsible. Finally, any remaining residual balance will be distributed as follows:
- If the residual balance is ten percent (10%) or less of the total award amount, the entire residual balance will be transferred to the Principal Investigator's IPD (for projects with multiple principle investigators, the distribution will be according to the percent of credit allocated to each).
- If the residual balance is above ten percent (10%) of the total award amount, no more than ten percent (10%) of the total award amount will be transferred to the Principal Investigator's IPD. Of the remaining residual balance, twenty percent (20%) will be transferred to the department's or school's IPD and eighty percent (80%) will be maintained in the ORSP Research Development account to support faculty research programs at the University.
Funds transferred to IPDs/Research Development Indexes must be used in accordance with 香港六合彩开奖结果2023's Facilities & Administrative Costs Policy (2.0030P).