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The Joy of Contracts… Or… When Did I Sign Up To Become A Lawyer?
Division of Sponsored Research & TrainingPresented by:Dawn Boatman, Director ([email protected])Alexia Lewis, Assistant Director of Pre-Award ([email protected])(904) 620-2455
April 20, 2006
Overview of Presentation
Award mechanisms definedDSRT InvolvementElements of different types of contractsWhich agreement is appropriate?
Summary – Keep it Easy!! Elements of a Statement of Work
Example & Discussion
Credits for Information presented
OMB Circulars A-133: Audits of States, Local Governments, and Non-Profit Organizations
OMB Circular A-21: Cost Principles for Educational Institutions
UNF DSRT Policy Manual NSF Grants Policy Guide NIH Grants Policy Statement Free Advice Web site Illinois Institute of Technology
Award mechanisms defined
Financial AssistanceGrants Cooperative Agreements
Acquisition / ProcurementContracts
Research Agreement / Contract for Services Subcontract / Subaward / Consortium / Subagreement
Prime Recipient / Lead / Pass-Through entity Subrecipient / Subcontractor
DSRT Involvement - Why?
Compliance with RegulationsFederal
OMB CircularsCFRFARs
State Florida Statutes
UNF policyAgency specific guidelines
DSRT Involvement – Why?
The root of all evil - OMB A-133 Outlines requirements to ensure compliance and
good stewardship of agency funds Applicable regardless of source of funds
NIH GPS says it best The grantee, as the direct and primary recipient of
grant funds, is accountable for The performance of the project The appropriate expenditure of grant funds by all parties All other obligations of the grantee
DSRT Involvement – Why?
Advocate for PI & UNF Submission of proposals we can endorse/fulfill Protection of PI/UNF rights Obtaining most favorable terms Advising of meaning of terms & conditions (T&C)
Provide good stewardship of agency funds Point of contact
Administrative versus technical contact
DSRT Involvement – When & How?
Proposal StageBig Picture
Good work at proposal stage saves time! Reduces misunderstandings Makes negotiations easier at the award stage Clear definitions of expectations and cost Appropriate commitments made
DSRT Involvement – When & How?
Proposal StageCan UNF endorse the proposal?
Performance of workCommitments
Effort / Time Space / UNF resources Appropriate to UNF/College/Dept mission Other agencies
BudgetTerms & Conditions
DSRT Involvement – When & How?
Proposal Stage - Requirements Subcontract:
Letter from Institution’s Authorized Official Clearly defined SOW Budget for subrecipient Anything else lead agency requires
Contract for Services / ICA: Define services to be provided (SOW) Price Quote / Total Cost / Per Task Cost (Budget) Some agencies require letter of commitment / quote
Both should be named in the proposal if known
DSRT Involvement – When & How?
Award StageBig Picture
Written contract is formalization of projectUNF’s President “is authorized to negotiate,
enter into, and execute research contracts; to solicit and accept research grants and donations”
Delegated to the Director of the DSRT Florida Statute 1004.22
DSRT Involvement – When & How?
Award StageProcessSome agencies do not have standard
contracts Input is gathered from PI
Prior to negotiations As needed during the process
What are we looking for? Taking exception to?
DSRT Involvement – When & How?
Award Stage Important Points
Never lost an award due to not reaching agreement on terms
Negotiations can be complex and lengthy Working with DSRT early can reduce this Don’t forget about Preliminary Accounts!
DSRT Involvement
Summary -Best to involve DSRT
Early and often!For any non-technical discussions with agenciesWhen any UNF commitments are made
Use of space Use of time/effort Budgetary information
When any type of legal language is involved
Elements of Contracts
Questions before moving on?
Elements of A Contract
NIH GPS definitionA formal written agreement Addresses the negotiated arrangements
Meeting the scientific, administrative, financial, and reporting requirements of a project
Ensuring compliance with all applicable regulations and policies
Goal is to facilitate a smoothly functioning venture
Elements of A Contract
Legal Elements: LACC Legal
Cannot be for illegal activities Assent
This means that each side must be clear as to the essential details, rights, and obligations of the contract
There is no assent if both sides have made a material mistake as to the terms or details of the contract
Competency Both parties must have mentally capacity to enter agreements
Consideration Both parties must give and get something
Agency gives money to get results UNF gives results or performs project to get money
Elements of A Contract
Types of contracts: Fixed Price
Consideration = Agency gets deliverables Tangible items Can be reports or results
UNF Paid for delivering deliverables Lump sum payments
Agency doesn’t care how money is spent Basis for payment is either
SOW / Schedule of Deliverables Set schedule if only deliverable is at end of project
12% Revenue F&A (will be changing) Unexpended funds may be able to be retained
Elements of A Contract
Types of contracts: Cost Reimbursable
Consideration = Agency gets research performed Reports are not considered deliverables
Considered report of progress to show work was done May be required for payment
Contractor paid for performing project Reimbursed for costs incurred
Agency does care how money is spent Line item budget basis for payment
PI or DSRT must certify payments made to others 45% SWF F&A (will be changing) or agency’s rate No excess funds to be retained
Elements of A Contract
Gets a little fuzzy…Reports – deliverable or not?Payments based on what?
Will be clearer as we exploreStatements of WorkDeliverables Schedules
Hang in There!
Elements of A Contract
At a minimum, contracts include the following Preamble
Identifies the parties and states their ability/the reason for their involvement
Basic Project Information Performance dates Project title Key Personnel involved Amount of funding Administrative / Technical Contacts
Statement of Work Within contract or as an attachment to define deliverables
and reporting requirements
Elements of A Contract
At a minimum, contracts include the following (Continued) Financial Information
Type of mechanism (FP or CR) Invoicing information and schedule line item budget or deliverables schedule Types of supporting documentation required
Certifications and Assurances Lobbying Debarment Conflict of Interest Audit reports
Termination / Breach / Disputes language
Elements of A Contract
At a minimum, contracts include the following (Continued) Ownership
Intellectual Property / Data Rights / Copyrights Publishing Rights / Publicity Ownership of Equipment
Independent Contractor Status Non-Indemnification Clause No Warranty for intended use Confidentiality Non-assignment Modifications State of Florida Provisions Waiver of Breach Clause
Elements of A Contract
Signatures of Authorized PartiesAttachment A usually Statement of WorkAttachment B usually Budget or
Schedule of DeliverablesOther attachments for
Special terms and conditionsPrime Award for incorporationSpecific forms / policies / etc…
Elements of A Contract
Should be clear why successful negotiation is a collaborative effort between PI and DSRT
PI for technical and performance reasonsDSRT for legal and administrative reasons
PI must understand termsDSRT must point out and clarify terms
Which Agreement is Appropriate?
Questions before moving on?
Which Agreement Is Appropriate? Subcontracts
Definition: The granting of funding from an award to a recipient to an eligible subrecipient or by a subrecipient to a lower tier subrecipient Subcontract is formalized written agreement
between the University and the subrecipient Subcontract versus Subaward UNF can be
A recipient (have awards directly to UNF) A subrecipient (have subcontracts from awards to others) … But not on the same award!
Which Agreement Is Appropriate? Subcontracts
Specific prior approval of the sponsor is generally required before an activity on a sponsored project may be subcontracted to a third party Inclusion in proposal usually fulfills this
requirementStatutory “Sponsored Research Exemption”
exempts us from competitive bid process if not named in proposal
Florida Statute 1004.22
Which Agreement Is Appropriate? Subcontracts
The subcontract agreement will state The activities to be performed Time schedule Reports to be delivered General provisions applicable to the subcontractor
including flow-down provisions from the prime sponsor
Dollar limitation of the agreement Any additional policies and procedures applicable
to the project The mechanism (FP or CR)
Which Agreement Is Appropriate? Subcontracts
Subcontract with Non-Profit entity: Lead entities must ensure in subcontracts with federal funds: Appropriate federal information is provided to subrecipient. Advise subrecipients of flow down requirements of Federal laws,
regulations, the award terms/conditions and the prime agency terms/conditions.
Monitor subrecipients to ensure that awards are managed in compliance with laws, regulations, and awards terms, and that performance goals are achieved.
Ensure that subrecipients have met their audit requirements and take appropriate actions in the case of bad audit findings.
Most are subject to same OMB circulars and we just request proof of audits being conducted and do a cost analysis for the project.
Ensure that the pass-through entity and auditors to have access to the all necessary records for the pass-through entity to comply with appropriate OMB Circulars and with Sunshine laws.
Which Agreement Is Appropriate? Subcontracts
Subcontract with For-profitThe same OMB Circulars do not apply to
for-profits as apply to UNFThe lead entity must establish requirements to
ensure compliance The contract should describe applicable compliance
requirements and the for-profit subrecipient's compliance responsibility
Methods to ensure compliance may include pre-award audits, monitoring during the contract, and post-award audits
Which Agreement Is Appropriate? Subcontracts
DSRT Policy Manual: Subcontracts/Subrecipient Agreements A subcontract is an agreement, written under the authority and consistent with
the terms of a prime award, that transfers a portion of the research or substantive effort to another organization.
A subrecipient relationship exists when a third party: Performs a substantive portion of the programmatic work, which is defined as
project activities that support the primary purpose of the prime award; Has responsibility for programmatic decision making
Jointly responsible for directing performance of project Uses the funds provided to carry out the program as opposed to providing
goods or services for the program of UNF; Is responsible for helping the UNF meet the requirements of the prime award;
Award is flowed down to subrecipient Has its performance measured against whether the objectives of the program
are met or has responsibility for adherence to applicable program compliance requirements
Jointly responsible for portion of Statement of Work Lead determines who is eligible to receive financial assistance
Compliance / Audits / Cost AnalysisBased on OMB Circular A-
133
Which Agreement Is Appropriate? Subcontracts
What’s this mean to me?A subcontract is appropriate when:
The agreement is with another legally separate entity, not an individual
Individual is using institutional resources
The entity is performing a significant part of the scope of work and is involved in programmatic decision making
The entity is not just providing goods or services that enable UNF to perform the SOW
Which Agreement Is Appropriate?Contract for Services
DefinitionFormalized written agreement for an outside
entity or person/consultant to produce a product or service that is necessary for the performance of the project
Similarities to subcontractFunded by a sponsored agreement Is a contract with a SOW
SOW and invoicing requirements are Complex and cannot be easily managed via an ICA Agreement
Which Agreement Is Appropriate?Contract for Services
Differences from subcontract Procurement Contract / Vendor relationship
Vendor is providing goods/services Consultant providing professional services or highly
technical advice *** Not responsible for portion of main award SOW ***
Contractual language Provisions of the prime award do not flow down to the
recipient Language regarding timing of payments, travel, Equal
Opportunity law included Fixed Price only
Which Agreement Is Appropriate?Contract for Services
Characteristics of a vendor (1) Provides the goods/services within
normal business operations; (2) Provides similar goods/services to many
different purchasers; (3) Operates in a competitive environment; (4) Provides goods/services that are
ancillary to the project; and (5) Is not subject to compliance
requirements of the Federal program.
Which Agreement Is Appropriate?Contract for Services
Characteristics of ConsultantsConsulting by its very nature implies a small
role or part in the researchA PI has responsibility for reporting, progress
and annual reports, etc. A consultant only handles the small aspect that
they are contracted to do
Angela Medyk, UF Research Administrator
Which Agreement Is Appropriate?Contract for Services
MonitoringEnsure that the procurement, receipt, and
payment for goods and services comply with laws, regulations, and the provisions of contract
Vendor transactions are structured such that the vendor is responsible for compliance
Or vendor's records must be reviewed to determine compliance.
Which Agreement Is Appropriate?Contract for Services
What’s this mean to me?A Contract for Services is appropriate when
Agreement is with individual or entityProviding goods/services that enable UNF to
perform the SOW Not performing substantial portion of SOW or involved
in programmatic decision making
Which Agreement Is Appropriate? ICAs
Just a few words…Similar to Contract for Services
Used for same purpose in same situationsDifferent from Contract for Services
Simple SOW Simple invoicing requirementsProcessed through Purchasing
If paid with grant/contract funds, must be submitted to DSRT for approval
Which Agreement Is Appropriate?Process
Process for Subcontract/Contract for Services: Request for Contract Document sent to
DSRT http://www.unf.edu/dept/research/request_for_contract.pdf
DSRT prepares contractForwards it to the PI for review and SOW input
Contract negotiated with other partySigned by authorized signatories
DSRT encumbers the funds
One Very Important Point
Can a UNF faculty member be a consultant on a UNF award? No! Intra-university consulting is assumed to be
undertaken as a university obligation requiring no compensation in addition to full-time salary
An exception to every rule In unusual situations, one may be consultant and
employee, receiving funds for both roles as long as those separate services are not related to and are not charged to the same project
One Very Important Point
Is allowable when the consultation is across departmental lines or
involves a separate or remote operation the work performed is in addition to their regular
workload
Under no circumstances can an individual be paid as a consultant and an employee on the same project!
Summary – Keep it Easy!!
So how do I know what to do?We need to think about
What is the intent of the arrangement?What protections need to be in place for both
PI/PDs and their institutions?We don’t need to think about
Which mechanism is the easiest?
Summary – Keep it Easy!!
OMB A-133 acknowledges the use of judgment in making this determination: “There may be unusual circumstances or
exceptions to the listed characteristics. In making the determination of whether a subrecipient or vendor relationship exists, the substance of the relationship is more important than the form of the agreement. It is not expected that all of the characteristics will be present and judgment should be used in determining whether an entity is a subrecipient or vendor.”
Easiest thing to do – contact DSRT
Summary – Keep it Easy!!
Ask these two guiding questions Is the collaborating party involved in the scientific
development or execution of the project? Yes = Subcontract No = Contract for Services or ICA
Does the collaborator need to use any of their home institution’s resources?
Yes = Subcontract / Contract for Services No = Contract for Services / ICA
Complex SOW and Invoicing = Contract for Services Not Complex = ICA
Elements of Statements of Work
Questions before moving on?
Elements of a Statement of Work
Where do they come from?If agency provides:
DSRT can compare to proposalDSRT must rely on PI for approval
If UNF provides: DSRT must be provided with a SOW by PIDSRT can try to pull SOW out of the
proposal but need PI input
Elements of a Statement of Work
What it is:Must clearly define work / tasks to be
performedMust be measurable
Specific deliverables and requirementsDeliverables should be tied to payments
Should be as concise as possible Goal is to reduce proposal information into
list of deliverables
Elements of a Statement of Work
What it isn’t: Is not another version of the proposal
Although proposal may be used for grants or CR contracts
Is not specific to who at UNF is performing what activities
Key Personnel are defined in contract proper
Is not related to effort devoted That is CR mechanism
Is not related to customary administrative functions Things that UNF must do internally to perform
Elements of a Statement of Work
Examples in hand-outsAttachment A – which is good?Attachment B – Schedule of Deliverables
Working Exercise / DiscussionProposal Narrative & Activities Performed
Working Exercise
What is a good statement of work based on information provided?For fixed priceFor cost reimbursable
Attachment A - SOW
Attachment A / Statement of Work UNF will conduct a study to determine the
effects of Drug X versus Placebo on blood sugar levels in Hispanic diabetics and in Hispanics with normal blood sugar levels involving 20 subjects (50% in control group).
UNF will: Submit a written progress report on 6/30/07 Present research results at project meeting at
Johns Hopkins on 9/30/2007 Submit a written final report on 1/31/2008
Attachment A - SOW
If Cost Reimbursable can use First paragraph within contract properProposal narrative as attachmentReference to work “as outlined in proposal
dated…”
Attachment B
For Cost ReimbursableFor Fixed Price
Questions?
ContactsDawn Boatman
[email protected] 10, Room 1120
Alexia [email protected] 3, Room 1321