Proposal Related

Compensation for Certain Additional Professional Services (Trustee Doc. T68-060)

Trustee Document T68-060

Policy on Compensation for Certain Additional Professional Services 

WHEREAS it is the responsibility of every university to promote and encourage the search for new truth and knowledge for the benefit of mankind, and

WHEREAS a state university is distinctive in its emphasis on research and the dissemination of research findings as a service to the citizens of the state and nation, and

WHEREAS there is a great need for more highly trained research scientists and teachers, and

WHEREAS the University of Massachusetts maintains and supports a Graduate School for the purpose of providing training at the Master's and Doctoral levels, and

WHEREAS in order to provide such training the University of Massachusetts must maintain a highly qualified faculty which is itself competent in and interested in research, and

WHEREAS such a faculty will be more productive and stimulating in the teaching of students at both the graduate and undergraduate levels, and

WHEREAS a university is recognized for the scholarly and creative work of its faculty, and

WHEREAS it is the policy of the University of Massachusetts to expect each member of the faculty to teach, engage in research and/or other scholarly and creative work, and to perform a service role to and for the University including the academic advisement and counseling of students, and

WHEREAS it is also the policy of the University to undertake research sponsored and paid for by grants or contracts from agencies of the federal government, foundations, business, or other sources outside the University, and

WHEREAS such sponsored research is of great economic advantage to the Commonwealth in that it both supports research that might otherwise require state appropriations and provides new processes for development by Massachusetts industrial and agricultural interests,

THEREFORE, it is the policy of the University of Massachusetts to permit compensation for certain additional professional services within the following policies:The first duty and first loyalty of a member of the faculty is to the University. He is under obligation to render to the University the most effective service of which he is capable. No outside service shall be undertaken, whether with or without pay, that might interfere with the discharge of this paramount obligation.

 In view of the fact that the University operates on a six day class week, members of the faculty are permitted, when approved, the equivalent of one day per week for sponsored research, consulting, or other activities related to their profession for which additional compensation may be received. Under no circumstances, however, are members of the faculty to be given any reduction in normal teaching, service, or other assigned load on account of performance of such other activities.

I. Research; including sponsored research, i.e., research contracted by the University with outside agencies.

1.     It is the responsibility and the duty of all deans and department heads to give faculty members as much encouragement as possible to do research as a normal part of their employment. When released time for sponsored research is authorized, no loss of so -called fringe benefits should occur because an equivalent portion of the faculty member's base salary should be budgeted in advance against, and charged to, the grant or contract of the agency sponsoring the research.

2.     University participation in tests and investigations shall be limited to activities which lead to the extension of knowledge or to increased effectiveness in teaching. Routine tasks of commonplace type will not be undertaken except where it is shown conclusively to the appropriate University officials that satisfactory facilities for such services do not exist elsewhere.

3.     Research proposals shall bear the approval of the principal investigator, the department head, the academic dean (or in the case of agriculture, the Director of the Massachusetts Agricultural Experiment Station) and the Dean of the Graduate School and Coordinator of Research before being submitted to the Treasurer of the University for execution. Two extra copies of the proposal shall be submitted for the files of the Provost’s Office and the Treasurer’s Office.

4.     Members of the faculty on academic year appointment are encouraged to participate in sponsored research and may, when approved by the Trustees, receive additional compensation in addition to the budgeted salary. Such additional compensation may be earned only during the Summer months (i.e., between Commencement and Fall Registration). Such compensation must be permissible within the policies of the agency sponsoring the research and must be charged to the sponsor's funds. Additional compensation shall be computed at the rate of 1/40th of the faculty member's then current academic year salary for each full week of research services, or 1/200th of the faculty member's then current academic year salary for each full day of research service. Maximum additional compensation from sponsored research shall not exceed ~ percent of the faculty member's then current academic year salary.

5.     Members of the faculty on calendar year appointment are permitted to participate in sponsored research but may not receive additional compensation in addition to the budgeted salary.

6.     When additional compensation is to be paid for sponsored research, such funds must be budgeted in advance against, and charged to, the contract or grant executed with the agency sponsoring the research. Funds received as a result of an agreement with the University for the performance of research are funds belonging to the University, notwithstanding the fact that the agreement may have resulted from negotiations by an individual member of the faculty. Such funds, therefore, shall be administered in accordance with regular procedures governing trust funds.

II. Other Activities

1.     Members of the faculty are permitted to accept outside service of a professional nature, with or without pay, only providing it conforms to the following stated principles.

a.     A faculty member undertaking outside service shall inform the head of his department of the nature and extent of such activities and must obtain prior permission from the head of the department and the Dean of his College or School before undertakinq such outside service. A department head undertaking outside service shall inform his dean of the nature and extent of such activities and must obtain prior permission from the dean before undertaking such service. A record of all such outside service shall be reported to the Provost.

 When approved by the department head and dean, members of the Faculty are permitted to teach under the Four-College Cooperative Plan at approved salaries which have been established by the Four-College Cooperative Plan. Teaching for the University at other off campus locations may, when approved, be compensated at such rates as the Trustees may determine.

b.     No member of the faculty shall accept or retain employment which would bring him as an expert, or in any other capacity, into conflict with the interests of the University or its programs of Cooperative Extension and Control Service or the Commonwealth of Massachusetts; and if in his opinion, proposed employment might involve such conflict, he shall disclose the relevant facts when seeking the permission required under (a) above.

c.      As a state-supported institution, the University is under obligation to render service to the people of the Commonwealth so far as this may be practical. The appropriate school dean or other University officer shall decide whether and to what extent this obligation can be met in the circumstances of any particular case.

d.      The University assumes no responsibility for private professional service rendered by members of the faculty. When a faculty member does work in a private capacity, he must make it clear to those who employ him that his work is unofficial. No official University stationery or forms shall be used in connection with such work nor shall the name of the University be used in any advertising or in any other way without the express consent of the University, given in writing by the President.

Amendments to Trustee Document  T68-060

Section II. Continuing Education and Public Service

1.     Members of the faculty are permitted to participate, with or without compensation, in programs of a continuing education or public service nature requiring their professional services, provided such participation conforms to the following stated principles:

a.     Such services shall be performed in programs of a continuing education or public service nature which are sponsored by the University, and no such faculty member shall so participate without the prior written consent of the head of his department and the dean of his college or school. A record of all such participation, including the amount and nature of services and rate of compensation, if any, entailed, shall be reported to the Chancellor, as the case may be. Subject to the requirements elsewhere herein contained, services so approved may be performed at any time during the calendar year.

b.     All such services and participation shall be in addition to and exclusive of, the regular academic and scholarly duties and services to be performed by such faculty member, as assigned from time to time by the University.

c.      Compensation, if any, for participation in such programs shall be at the rate established by the Dean or Continuing Education with the approval of the Chancellor and the President. A faculty member may receive, during or with respect to any calendar year, such compensation in an amount up to ten (10) percent of his annual salary for regularly assigned duties, and a faculty member on a calendar year appointment may receive, during or with respect to any such year, such compensation in any amount up to twelve (12) percent of his annual salary for such duties.      

d.     Compensation permitted hereunder shall be specifically in addition to that compensation allowed for research activities under Section I. Compensation so permitted shall be considered, however, by deans and department heads in acting upon requests by faculty members for permission to participate, or to perform, outside services of a professional nature, with or without compensation, as described in Section II.

e.     Notwithstanding any other provision contained in this Section II, participation in programs of a continuing education and public service nature, as herein provided, shall at all times be subject to such further rules of uniform application as the Dean of Continuing Education, with the approval of the Chancellor and the President, shall from time to time promulgate.

2.      If University facilities, equipment, or supplies are required for private professional services, approval for the use of such facilities, equipment or supplies must be obtained from the department head and dean. A reasonable fee shall be paid to the University for the use of such facilities, equipment, and supplies. This fee shall be determined by the Treasurer of the University upon the recommendation of the respective dean.

t68060.htm 5/98

Copyright © 1998 University of Massachusetts, Amherst.

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Document Number: 

Trustee Doc. T68-060

Q1. What is the period for Summer Additional Compensation?

A1. Appointments can processed during the period starting on the first Sunday immediately following graduation, and ending August 31 each year.  Three months during this period are available for sponsored research and two weeks are supported by the University for Faculty on 9-month appointments.

Q2. What is the recommended approach to funding summer research with federal or state grants and contracts?

A2.  If the beginning and ending dates of the grants and the budget permit it, fund up to 2.5 months of effort during the period in A1.  An additional 0.5 months may be paid from RTF funds , the Research Support Account (once it is established and funded) or other non-federal, non-state sources that permit such charges.  Also see A3(c) below

Q3. How much summer additional compensation may be paid from grants?

A3(a). If your summer effort funding source is federal, prime federal flow through, i.e., a subcontract, or Commonwealth of Massachusetts funding (grant or contract funded via an ISA or other funding mechanism for a sponsored project), up to 2.5 months, or 83.3% of the 3 month summer period unless the sponsor agency has more stringent restrictions such as NSF.

A3(b) If your summer effort funding does not include any  federal or Commonwealth of Massachusetts funding, you may fund your research up to 3 months or 33% as long as you do not take a vacation and can certify 100% effort on that project.

A3(c) If your first 2.5 months is covered by a federal, prime federal or Commonwealth of MA award, you may work on other non-federal or non-state funded projects for the remaining .5 month, or fund that .5 month with Research Trust Funds (RTF) or returned Academic Year (AY) salary recovery funding.  Again, this would result in a full 33% effort, leaving no time for vacation.  University work that cannot be charged to grants, such as proposal writing, curriculum development, committee work would only be allowed during the .5 month if you use unrestricted funding such as RTF or returned AY salary recovered funds.

Q4.  Can I spread the 2.5 months (83.3%) over the entire summer period or does it have to be 2.5 months 100% time?

A3.  Yes, it is recommended you spread the 83.3% over the entire summer period.   By doing so does not mean you must be here every day for 83.3% time, but rather spreads the percentage over the entire summer period which will allow you to meet your obligations and also build in some flexibility to the schedule. It is only in extraordinary circumstances that you should be committing 100% effort in any specifically stated time period.

Q5. Does the 3.5 month period in A1 mean that more add comp may be paid from grants?

A5. No, because the faculty member has an obligation of 9 full months to the University.  The purpose of starting the summer add comp period early is to provide some flexibility so that the faculty member can work on University duties that cannot be supported by grants, such as writing proposals, preparing course materials, grading papers, etc.  Here are some examples:

E1:  The faculty member works exclusively on grading and preparing course materials for the last two weeks of May  and therefore charges no salary to grants, then there is effectively no change to the summer add comp arrangement compared to previous years.  That is, a maximum of 2.5/9 = 27.78% academic year salary can be charged to grants during June 1 – August 31.

E2: The faculty member completes their course grades and other non-grant related activity by May 16 and works on sponsored research starting on May 16 for which salary is provided from Federal grants.  In this case, the faculty member must fulfill the two week obligation to the university at some other time in the summer, e.g., during the last two weeks in August.

Q6. Can’t I use the two weeks after graduation for vacation?

A6. Regardless of grant activity, two weeks during the period in A1 are part of the 9-month obligation to the University. If you only work and collect salary for 2.5 months of summer, then the unpaid period of the 3-month summer period can be used for 2 weeks vacation.  If you are paid for an additional 33% effort during the summer period, then there is no room left for vacation.  Just as in prior years, when the summer add comp period was 3 months, summer add comp of 33% meant that no vacation time was available.

Q7.  Is there a waiver process to the 2.5 months limitation?

A7.  Yes, there is a waiver process however, these will only be granted in very exceptional cases and the PI must certify a full three months of 100% summer effort, with no vacation or other University (non sponsored program) duties. Please see Summer Effort Waiver Procedures.

 

Q8.  What if I am already committed in my award to a full 3 months of effort?

A8. You are still limited to 2.5 months unless a waiver is requested and granted.  See Q7 for process.  The reduction of .5 months may not be significant depending on how the summer effort has been accumulated amongst your grants.  Significant changes in level of effort must be approved by the sponsoring agency.  Contact OPAM for more information on how to coordinate with your sponsor.

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Academic Year Salary Recovery and Summer Additional Compensation

Memo from the Provost to Business Managers

Date: April 4, 2011

Subject: Memo on Summer and Academic Year Salary Recovery from Grants

In August 2010, I sent a memorandum to all Principal Investigators outlining procedures for academic year (AY) salary recovery from grants. This memorandum generated much discussion across campus, and the MSP, in response to the concerns of a number of faculty members, filed a formal grievance concerning the procedures outlined in my August memorandum. The Administration and the MSP have been in discussions since that time, and I am pleased to report that we have reached an agreement. The following Settlement Agreement supersedes my August 2010 memorandum on AY salary recovery from grants:

Settlement Agreement

Summer and Academic Year Salary Recovery from Grants

This Agreement is made and entered into by and between the Trustees of the University of Massachusetts Amherst ("University") and the Massachusetts Society of Professors/Faculty Staff Union/MTA/NEA .("Union")

In consideration of the mutual promises and covenants herein set forth, the parties hereby agree as follows:

  1. The University shall make academic year (AY) salary recovery from grants entirely voluntary, at the discretion of each investigator.
  2. The University and the Union agree that summer salary paid directly from federal and state grants shall be capped at 2.5 months during a three-month period in the summer, in order to resolve compliance issues. That is, salary from federal and state grants should not exceed 83.3% effort in any time period during the summer. In the exceptional case in which a federal project requires and the Principal Investigator can certify full three months of 100% summer effort, a waiver can be granted by the Provost.
  3. The three-month summer period in item 2 can begin to be taken at any time between the current graduation date and prior to the beginning of the next academic year on September 1. Note that faculty who are paid 2.5 months from federal or state grant funds plus an additional 0.5 month in 4a have no time remaining for vacation during the summer.
  4. When Principal Investigators choose to recover AY salary and associated fringe benefits from grants (which cannot exceed their AY effort on the corresponding grant-funded projects), the University and the Union agree that:
    1. For the 1st month of AY salary recovery, or any portion thereof, up to ½ month of the Investigator's summer salary shall be paid from unrestricted funds with the other ½ month of salary going to the Investigator's school or college. This salary is for summer effort which may be unrelated to the federal and state grants and is in addition to any summer salary, up to 2.5 months, paid directly from such federal and state grants.
    2. For the 2nd and 3rd months, or any portion thereof, of AY salary recovery, ½ shall be paid from unrestricted funds to the Investigator as a (non-base) bonus, with the other ½ going to the Investigator's school or college (allowing a maximum bonus during any fiscal year of 11% of the base salary).
    3. As an alternative to using the funds for summer salary in 4a or bonus in 4b, the Investigator may place these funds into a Research Support Account (RSA).
    4. To comply with Federal tax regulations, the election in 4c,not to receive a bonus, is irrevocable and must occur prior to when the AY effort is charged to a grant. That is, the decision to take a bonus must be made at the time the option is first available. As a result, Investigators are not permitted to retroactively charge grants for effort in order to receive bonus payments.
    5. This agreement will not affect previous arrangements regarding distribution of other funds.
       
  5. For option 4c, an RSA will be established for each investigator at the time the AY salary is first recovered and a bonus is declined. RSA funds can be spent on any research-related activity whose costs are allowed on RTF accounts. The research-related activity shall be described by the Investigator when the expenditure is made.
  6. The maximum RSA balance is three months of the institutional base salary, after which the recovered funds shall be paid as in 4a. That is, the bonus payment will be made automatically.
  7. For AY salary recovery beyond three months in any academic year, individual arrangements would have to be approved by the Investigator's Head or Chair, Dean, the VCRE and the Provost.
  8. This policy does not pertain to time periods when the PI is employed by the University less than full-time. For example, faculty on a full-year sabbatical at ½ salary may earn the remainder of their salary up to 100% by charging 50% effort on federal and state grants. The amount direct charged to grants in this example would not be eligible for bonus payments.
  9. To ensure compliance with federal regulations, no summer salary or bonuses will be paid unless the PI has up-to-date training and certification of effort.
  10. Nothing in this Agreement restricts the Principal Investigator's ability to use their RTF or RSA funds for salary.
  11. This Agreement shall be implemented effect ive April 7, 2011. The University shall notify all Principal Investigators of the opportunity to re-budget any grant submitted on or after August 1, 2010.
  12. In consideration of the aforementioned the Union shall withdraw its grievance and complaint of prohibited practice upon execution of this Agreement.

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On December 26, 2013 the Office of Management and Budget (OMB) released its final rule of “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards” (2 CFR Chapters I, II, Part 200, et al), and continues to provide interim updates.

The Uniform Guidance consolidates and replaces OMB Circulars A-110 (Administrative requirements), A-21 (Cost principles), and A-133 (Audit requirements). The Uniform Guidance (UG) applies to all new federal awards issued on or after December 26, 2014. Modifications adding new funding to awards issued prior to that date may also include a clause updating the terms of the award to fall under UG.

Important Changes in the UG

This page describes specific differences between the Uniform Guidance and its predecessors, Circulars A21, A110, and A133.

Select any of the links below to find out more about changes resulting from the Uniform Guidance.

Timeline

§  December 26, 2013– OMB issued the final rule of the Uniform Guidance (UG).

§  December 19, 2014 Joint Interim final rule published:  Includes OMB updates to UG and Federal agency-specific plans for implementing UG.

§  December 26, 2014– UG went into effect. 

§  July 1, 2015– Uniform Guidance audit requirements are applicable to awards.

§  July 1, 2016– Uniform Guidance procurement requirements are applicable to awards.

Agency Updates

The National Science Foundation (NSF)

National Institutes of Health (NIH)

  • Interim General Grant Conditions serve as the applicable terms and conditions for recipients of NIH awards and are aligned with the HHS regulations implementing the Uniform Guidance (UG).  The conditions are effective for Notices of Award (NoA) issued on or after December 26, 2014 that obligate new or supplemental funds.
  • Notices of Award (NoA) issued on or after December 26, 2014 that do not involve obligation of new or supplemental funds remain subject to 45 CFR Part 74.
  • See also NIH's 45 CFR Part 75 related FAQs.

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Uniform Guidance Working Group at UMass

Jennifer Donais – Assistant Vice Chancellor for Research
Robert Liebowitz – Controller
Ian Raphael – Director of Research Business Manager Liaisons
Carol Sprague –Director, Grant and Contract Administration
Research Administration Advisory Board Members

Additional Resources

Office of Management and Budget

Other Federal Resources

Council on Governmental Relations (COGR)

Videos from NCURA

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Only Cost Share When it is Required by the Solicitation

Cost Sharing or Matching: (As defined by 200.29 (link is external)) is the portion of project costs not paid by Federal funds unless otherwise authorized by Federal statute.  All cost sharing must be tracked and maintained in a separate account.

Voluntary Cost Sharing: (As defined by 200.99 (link is external)) is specifically pledged on a voluntary basis in the proposal’s budget or the Federal award on the part of the non-Federal entity and that becomes a binding requirement of the Federal award.

Section 200.306 (link is external) specifies that cost sharing or matching should only be solicited for research proposals when required by regulation and transparent in the notice of funding opportunity.  Voluntary committed cost sharing is not expected under Federal research proposals and is not to be used as a factor in the review of applications or proposals unless it is specifically stated as such in the announcement. Only mandatory cost sharing or cost sharing committed in the budget must be included in the research base for computing F&A cost rate.

Shared costs, matching funds, and contributions must meet certain criteria to be accepted as cost sharing.  In particular, salary costs above a Federal awarding agency’s cap are not mandatory cost-share or match.  For more information on the criteria for cost-sharing allowability, go to Section 200.306 (link is external).

For more information on cost sharing transparency in funding opportunities, go to Appendix I to Part 200 – Full Text of Notice of Funding Opportunity; E. Application Review Information, 1. Criteria – Required (link is external).

Impact at the University of Massachusetts:

  • The University’s Cost Sharing Policy is consistent with these requirements.
  • Research proposals for federal grants must only include cost sharing when it is required by the solicitation.

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Definition of Allocable Expanded from “Solely” to “Specifically”

Section 200.405(link is external) language in the guidance changed from “incurred solely for the Federal award” to “incurred specifically for the Federal award”.  Federal funds cannot be used to overcome deficiencies or reasons other than those specified at the time of the award.  If an incurred cost benefits two or more projects, the cost should be allocated proportionately; costs for equipment purchased under an award are allocable regardless of the use of the equipment when it is no longer needed.

Impact at the University of Massachusetts:

  • PI’s must properly evaluate the circumstances where proportional costs are to be applied to these types of cost categories and write a proper budget justification backing up the evaluation.  OPAM will carefully analyze fair and appropriate direct cost allocation methodologies.
  • This section also continues and reinforces the cost principles of the old A-21 in that costs charged to sponsored projects must meet the following criteria:
    • Allowable – The cost is permissible according to federal regulations, sponsor policy and award terms and conditions.
    • Allocable – Must provide a “benefit” to the project.
    • Reasonable – The “prudent person” test – would a prudent person purchase the item at this cost? The cost is necessary for the performance of the activity.
    • Consistent – The cost is consistent with established University policies and procedures.

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Items Requiring Pre-Approval

Section 200.407. Specifies that the institution may want to seek prior written approval to avoid subsequent disallowance or dispute based on unreasonableness or nonallocability.  Many items require pre-approval.  For the full list, go to Code of Federal Regulations - Title 2 Section 200.407. (link is external)

Changes have been made regarding the following items requiring pre-approval:

  • Revisions to the budget or program plan.  See also Making Changes.
  • Overloads (Section 200.430)
  • Cost increases for fluctuations in exchange rates (Section 200.440).  See also Foreign Activities.
  • Participant support costs (Section 200.456).  See also Participant Costs.

Impact at the University of Massachusetts:

  • Any costs that you anticipate incurring during the performance of your research project should be included in your proposal budget and budget justification.
  • Post-award changes to costs requiring pre-approval must be requested in writing before the change is made.  Contact your OPAM award administrator for more information.

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Conflict of Interest Disclosures to be Agency-Specific

Federal agencies have specific policies on this that are appropriately tailored to the specific nature of their programs. Section 200.112 (link is external) requires Federal agencies to have policies on conflict of interest in Federal awards and requires non-Federal entities to disclose in writing any potential conflicts of interest (in accordance with applicable policies) to the Federal awarding agency or pass-through entity.  COFAR FAQ .112-1 (link is external) specifies that this clause refers to conflicts related to how decisions are made for selecting subrecipients or procurement contracts.

Impact at the University of Massachusetts:

  • The impact at UMass will remain an open issue until individual federal agencies have published their Implementation Plans.

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Internal Controls §200.303 (link is external)  

The non-Federal entity must:

(a) Establish and maintain effective internal control over the Federal award that provides reasonable assurance that the non-Federal entity is managing the Federal award in compliance with Federal statutes, regulations, and the terms and conditions of the Federal award. These internal controls should be in compliance with guidance in “Standards for Internal Control in the Federal Government” issued by the Comptroller General of the United States or the “Internal Control Integrated Framework”, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

(b) Comply with Federal statutes, regulations, and the terms and conditions of the Federal awards.

(c) Evaluate and monitor the non-Federal entity's compliance with statutes, regulations and the terms and conditions of Federal awards.

(d) Take prompt action when instances of noncompliance are identified including noncompliance identified in audit findings.

(e) Take reasonable measures to safeguard protected personally identifiable information and other information the Federal awarding agency or pass-through entity designates as sensitive or the non-Federal entity considers sensitive consistent with applicable Federal, state, local, and tribal laws regarding privacy and obligations of confidentiality.

Impact at the University of Massachusetts:

  • The Uniform Guidance places strong emphasis on internal controls to reduce the risk of waste, fraud, and abuse in the stewardship of federal funding. Internal controls are the organizational processes we implement to ensure operational effectiveness and efficiency, reliability of internal and external reporting, and compliance with applicable laws and regulations.
  • UMass is required not only to have effective internal controls, but to communicate and follow them. We must also monitor compliance and take action when we identify issues. PIs,  business managers, and central offices will need to collaborate to meet these requirements. This will include stronger efforts to limit cost transfers and late salary transfers, to practice effective financial review and control throughout the award period and to adequately document transactions.

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License Fees and Royalties covered by Bayh-Dole exempt from Program Income

Policy Guide on Profit (200.400 (link is external)).  Entities may not earn or keep profit resulting from Federal financial assistance, unless expressly authorized by the terms and conditions of the Federal award.

Program Income (200.307 (link is external)).  The Uniform Guidance does not include language limiting the treatment of licensing/royalty revenue as program income (A-110, .24(h)), which is inconsistent with Bayh-Dole Act.  In FAQ .307-1 (link is external), COFAR clarified that “U.S. law or statute takes precedent over the Uniform Guidance.”  Therefore, income from license fees and royalties on research funded by a Federal award should be excluded from the definition of program income.

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Budget Preparation and Cost Principles

Participant support costs must be tracked in a separate account  Section 200.75 (link is external).

  • Participant support costs are direct costs such as stipends or subsistence allowances, travel allowances and registration fees paid to or on behalf of participants or trainees (but not employees) in connection with conferences or training projects.
  • Participant support costs should be excluded from the MTDC.  See also MTDC.

    Impact at the University of Massachusetts:
    UMass requires projects to track participant support costs in a separate sub account.

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Compensation-Personal Services and Institutional Base Salary Section 200.430 (link is external)

  • Institutional Base Salary or IBS is annual compensation paid for an individual's appointment (9 or 12 months), whether that individual’s time is spent on research, teaching, administration, or other activities. IBS does not include supplemental payments (one time or recurring), administrative supplements and/ or compensation for special programs and activities. Additionally, IBS does not include payments from other organizations or income that individuals are permitted to earn outside of their institutional responsibilities, such as consulting.
  • IBS rate must be used as the base salary on all grant proposals. For effort reporting purposes, total institutional effort is 100% effort, regardless of the individual’s appointment (e.g., 0.5 FTE, .625 FTE, 1.0 FTE). No individual may commit more than 100% institutional or summer effort or be compensated at a rate that would exceed their annualized institutional base salary.

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Administrative costs may be charged as direct costs under certain conditions.

  • Administrative or clerical salaries and expenses are allowed as direct costs when the activities are integral to a project, can be specifically identified, are included in the budget or have prior approval, and are not also recovered as indirect costs (Section 200.413 (link is external) and 200.430 (link is external)).  “Integral” is defined as essential to the accomplishment of the project’s goals and objectives, rather than necessary for the overall operation of the institution.

    Impact at the University of Massachusetts:
    In order to charge administrative and/or clerical costs to federally sponsored agreements, a determination must be made that the need is based on the specific project being defined as a Major project and the cost is not part of the indirect cost base.  Because the CAS Policy takes precedence, these expenses must be in line with the current CAS Policy in place until such time it may be resubmitted.

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Computing Devices allowed as a Supply – Chargeable as a Direct Cost

  • Cost of Computing Devices: Section 200.453 (link is external) allows computing devices to be charged as direct costs if they are essential and allocable, but not solely dedicated, to the performance of a Federal award.
  • Section 200.20 (link is external) defines a computing device as a “machine used to acquire, store, analyze, process, and publish data and other information electronically, including accessories (or ‘peripherals’) for printing, transmitting and receiving, or storing electronic information.”  To be considered a supply cost, the cost of the computing device may not be equal to or exceed $5,000.  

    Impact at the University of Massachusetts:
    Computing devices should be itemized in your proposal budget and their use in the project clearly justified in the budget justification.
    The PI is required to evaluate and ensure that the project does not have reasonable access to other devices or equipment that can achieve the same purpose. Devices may not be purchased for reasons of convenience or preference.

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Payouts for Accumulated Leave and Compensation Claims are Allowable

  • Section 200.431 (link is external) The cost of compensation paid to employees for authorized absences, payments for unused leave when an employee retires or terminates employment, and actual claims for workers compensation, unemployment compensation, severance pay, and similar benefits are allowable as indirect costs.  Cost must be recognized in the period that the leave is taken and paid for when the entity uses the cash basis of accounting.

    Impact at the University of Massachusetts:
    UMass does not currently charge federal awards in these instances.

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Publication Costs after the Period of Performance are Allowable

  • Publication and Printing Costs: Section 200.461 (link is external) clarifies that non-Federal entities may charge the Federal award before closeout for the costs of publication or sharing of research results if the costs are not incurred during the period of performance of the Federal award.

    Impact at the University of Massachusetts:
    In developing your proposal, make sure that the costs for publication and printing are specified in the budget.  The budget justification should include an explanation of why the costs will be incurred post-award.
    Departments must work with the Controller’s Office and OPAM regarding the charging of these costs after the termination of the award.  Costs must be charged within 90 days of termination.

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Short-term Travel Visas for Recruitment are Allowable as Direct Costs

  • Short-term travel visas in connection with recruitment efforts are allowable as direct costs provided they can be clearly identified as directly connected, critical and necessary to the project. (Section 200.463 (link is external) Recruiting Costs (d)).

    Impact at the University of Massachusetts:
    Departments must maintain documentation supporting this cost in accordance with the UG requirements.
     

Travel Costs for Conferences
 

  • Family-Friendly policies in regards to travel costs: Section 200.474 has been amended to allow the cost of identifying, but not providing, temporary locally-available dependent care resources for travel to conferences.  If the institution implements a policy that these costs are allowed, the policy must be implemented consistently across all sources of funds.  Travel costs for dependents are unallowable, except for travel lasting 6 months or more.  Must have prior approval from the awarding agency.  (Section 200.474(2) (link is external)).
  • Conference Costs: Section 200.432 (link is external) confirms that costs associated with intra-campus meetings are unallowable.

    Impact at the University of Massachusetts:
    UMass does not currently have a policy which allows for the direct charging of costs associated with identifying dependent care resources for travel to conferences.

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Allowable Expenses for Foreign Activities

  • Exchange Rates: Cost increases due to fluctuations in exchange rates are allowable subject to the availability of funding and prior approval. The institution must review local currency gains to determine the need for additional funding before the expiration date of the award.
    (Section 200.440 (link is external)).
  • Value Added Tax (VAT) is an allowable expense if it is charged for the purchase of goods or services and the non-Federal entity is legally required to pay in country.  Any refunds or applicable credits resulting from the payment of VAT taxes must be credited to the awarding agency
    (Section 200.470 (link is external)).

    Impact at the University of Massachusetts:
    If applicable, additional documentation for foreign subrecipients may be needed to demonstrate requirement ‘to pay in country VAT tax’.

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New Exclusions from MTDC

Modified Total Direct Cost (MTDC) should only include salaries and wages, fringe benefits, materials and supplies, services, travel, and subgrants up to the first $25,000 of each subaward (regardless of the period covered).  Specifically excluded from the MTDC are equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs and the portion of each subaward in excess of $25,000.  (Section 200.68 (link is external))  The Uniform Guidance further excludes participant support costs and rental costs.

Impact at the University of Massachusetts:

  • UMass already requires projects to track participant support costs in a separate sub- accounts.
  • The MTDC is the basis by which Facilities and Administrative (F&A) costs are charged to federal awards.   F&A rates are negotiated campus-wide.

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Change Requests Handled by Your OPAM Award Administrator

Budget Revisions must receive prior approval. (Section 200.308 (link is external))

These include:

  • Changes in the amount of approved cost-sharing.
  • Transfer of funds budgeted for participants support costs to other categories of expense.
  • Subawarding, transferring, or contracting that was not described in the application and funded in the approved award, except for supplies, materials, equipment, or general support services.

Disengagement from the project for more than three months or a 25% reduction in time devoted to the project by the approved project director or principal investigator requires prior approval.  Disengagement refers to the level of the PI’s involvement with project activities, not the PI’s actual presence on campus.

Other Modifications Requiring Pre-Approval are the Same.  Modifications that continue to require pre-approval (under the OMB Circulars and the Uniform Guidance) are: change in the scope or objective of the project, change in key personnel specified in the application, and the inclusion of costs that require prior-approval.

Section 200.308(d) (link is external). Prior written approval for certain costs can be waived by the agency. 

Impact at the University of Massachusetts:

To initiate a change in your program plan or budget after award, contact your OPAM Award Administrator 

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Subrecipients

Contractor vs Subaward

  • Elimination of the term Vendor and replaced with Contractor.  See Sections 200.22 Contract (link is external), 200.92 Subaward (link is external), and 200.330 Subrecipient and Contractor Determinations (link is external).  Determination must be documented.
  • Subaward: A subaward is for the purpose of carrying out a portion of the Federal award and creates a Federal assistance relationship with the subrecipient.  Subawards are subject to F&A up to the first $25,000 of the award for the entire period of performance.
  • Contractor: A contract is for the purpose of obtaining goods and services and creates a procurement relationship with the contractor.  The entire contract amount is subject to F&A. 

Subrecipients: De Minimis indirect cost rate (F&A) of 10% of MTDC should be applied to non-federal entities without a negotiated indirect cost rate (F&A) (Sections 200.210 (link is external), 200.331 (link is external), and 200.510 (link is external)).

Fixed Amount Subawards. (200.332 (link is external)). With prior approval, fixed amount subawards may be awarded up to the Simplified Acquisition Threshold.

Impact at the University of Massachusetts:

Your OPAM Proposal and/or Award Administrator can help you make the determination of whether a subrecipient is a subaward or a contractor.  Read more:

Subcontractor vs Vendor (Contractor) vs Consultant

1. A Subcontractor is distinguished from both a vendor and a consultant in that a Subcontractor:

a. Performs a substantive portion of the proposed Statement of Work incorporated into the Prime Contract;

b. Has responsibility for internal programmatic decision-making and design;

c. Is responsible for assisting the Prime Recipient in meeting the goals of the project;

d. Is responsible for adhering to applicable Federal programmatic compliance requirements;

e. Retains intellectual property and copyright to the work produced by the Subcontractor’s personnel; may co-author an article in a professional research journal.

f. Note: OPAM does not issue Subcontracts to individual persons; only to a company or organization.

2. A Vendor is issued a Purchase Order based on a request sent by an administering unit to the University’s Procurement Office. The purchase of goods and services, including “Consulting Services”, are obtained from a commercial vendor.

a. A Vendor provides similar goods and services to multiple customers as part of their routine business operations;

b. A Vendor competes for customers with other like providers;

c. A Vendor does not retain intellectual property or copyright to the deliverables;

d. Cost sharing is not required of a Vendor;

e. Joint authorship of publications is not sought by Vendors;

f. The general terms of the Prime Contract do not flow down to the Vendor.

3. A Consultant may be an individual or a commercial entity and is a type of Vendor paid through a Purchase Order issued by the Office of Procurement.

a. A Consultant’s deliverable may be intermittent throughout the project, is not clearly defined and similar other work is performed by that Consultant commercially on a routine basis;

b. A Consultant’s deliverables do not ordinarily generate patentable or copyrightable results of an original or substantive nature;

c. A Consultant is not subject to the compliance requirements of the Prime Contract;

d. A Consultant’s fee is based on an hourly or daily rate which is provided and explained in a Consultant rate proposal;

e. A Consultant’s services are on a “work for hire” basis and all intellectual property or copyrightable rights are assigned to UMass by the Consultant;

f. A Consulting Firm is a commercial entity whose regular business activity is to provide services similar to those proposed under the current project.

g. An Individual Consultant is a non-UMass employee hired to provide technical expertise in support of a sponsored research project. As a general rule, the activities performed by a non-UMass faculty member who is named as an individual Consultant in a proposal must fall outside of the individual’s normal academic duties and cannot make use of his/her institutional facilities, personnel or students. If these criteria are not met, then the faculty member’s home institution should appear as a Subcontractor in the UMass proposal rather than an individual Consultant.

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Terms and Conditions for Subrecipients

Uniform Guidance is Applicable to Subrecipients: Subrecipients receiving flow down from a federal award are subject to the Uniform Guidance.  (Section 200.101 (link is external)).

Subcontracts under Federal Awards: Contracts over the Simplified Acquisition Threshold ($150,000) must address contract breach.  Contracts in excess of $10,000 must address termination for cause.  (Appendix II to Part 200 – Contract Provisions for Non-Federal Entity Contracts under Federal Awards (link is external)).

Federal cost-reimbursement contractsawarded under the FAR are subject to Subpart A, Subpart B, Subpart D (Post Federal Award Requirements and Subrecipient Monitoring and Management), Subpart E and Subpart F.

Impact at the University of Massachusetts:

Contracts for subrecipients of federal awards administered by UMass will include specific terms and conditions applicable to the Uniform Guidance.

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Pass through Entities Must Assess Risk

Section 200.331(b) (link is external) Entities receiving federal awards who then subaward to other entities must consider the risks associated with that subaward combined.

Impact at the University of Massachusetts:

Risk assessments for all subrecipients of federal awards will be conducted by OPAM.  PI’s should be very careful in the selection of the entities they choose and evaluate their experience in working on federally funded projects prior to this relationship.  Less experience will result in the need for more oversight and management by the PI, OPAM and the Controllers Office; refer to excerpt below:

(e) Depending upon the pass-through entity's assessment of risk posed by the subrecipient (as described in paragraph (b) of this section), the following monitoring tools may be useful for the pass-through entity to ensure proper accountability and compliance with program requirements and achievement of performance goals:

(1) Providing subrecipients with training and technical assistance on program-related matters; and

(2) Performing on-site reviews of the subrecipient's program operations;

(3) Arranging for agreed-upon-procedures engagements as described in §200.425 Audit services.

(f) Verify that every subrecipient is audited as required by Subpart F—Audit Requirements of this part when it is expected that the subrecipient's Federal awards expended during the respective fiscal year equaled or exceeded the threshold set forth in §200.501 Audit requirements.

(g) Consider whether the results of the subrecipient's audits, on-site reviews, or other monitoring indicate conditions that necessitate adjustments to the pass-through entity's own records.

(h) Consider taking enforcement action against noncompliant subrecipients as described in §200.338 Remedies for noncompliance of this part and in program regulations.

[78 FR 78608, Dec. 26, 2013, as amended at 79 FR 75885, Dec. 19, 2014]

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Monitoring Required by Section 200.331 Mostly Unchanged

Oversight should be based on the consideration of risk (see above).

Monitoring should include the review of performance and financial reports required of the subawardee to meet the requirements of the federal award. 

When Deficiencies are Identified: The subrecipient should take timely and appropriate action to correct deficiencies pertaining to the federal award.  Unresolved deficiencies may result in the issuance of a management decision for audit findings.  (Section 200.521 (link is external))

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Reporting Requirements

Effort Reporting Premised on Strong Internal Controls     

Section 200.430(i) (link is external). Emphasis on documenting salary charges to federal awards using a system premised on strong internal controls which provides reasonable assurance as to the accuracy of the information. The institution’s official payroll system should be the basis for confirming payroll charges to federal awards.

Impact at the University of Massachusetts:

UMass will continue to track paid effort via the ECRT Effort Reporting System.

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Retain Records for 3 Years after Closeout.  Electronic Retention is Preferred

  • Record Retention.  Section 200.333 (link is external) clarifies the requirement that records be retained for three years from the date of submission of the final expenditure report and permits the federal agency to extend the retention period if notified in writing.
  • Storage of Information.  Section 200.335 (c) (link is external) makes clear that electronic, open, machine readable information is preferable to paper as long as there are appropriate controls in place to safeguard from alteration of records.

Impact at the University of Massachusetts:

The Uniform Guidance provides an opportunity to shift from paper to electronic methods of storage. It encourages federal agencies and universities to use electronic formats rather than paper whenever practicable. While we must still provide or accept paper when it is requested, the guidance says that when original records are electronic and non-alterable, there is no need to create and retain paper copies. Similarly, when original records are paper (e.g. receipts), electronic versions (e.g. pdf scans) may be substituted provided they remain readable, are subject to periodic quality control reviews and are reasonably safeguarded against being altered.

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Stronger Closeout Requirements and Enforcement Techniques

Subpart D - Subtitle VII Closeout.  Section 200.343 (link is external) – provide all reports and liquidate all obligations incurred within 90 days.  Includes subrecipient invoices and cash payments.

Section 200.201 (link is external): Requires that the institution certify that project was completed and/or level of effort was expended.  If not carried out fully, the award will be adjusted.

Enforcement Techniques:

  • Withholding future awards
  • Inability to draw down funds beyond 90 calendar days after award end date

Increase in the Single Audit Threshold and Remedies for Noncompliance:

Subpart D - Subtitle VII Remedies for Noncompliance. Section 200.339 (link is external) allows the termination of funds for cause.

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Audit

Section 200.501 (link is external) Audit Requirements raises the Single Audit Threshold from $500,000 in Federal expenditures per year to $750,000 in Federal expenditures per year. This reduces the audit burden for approximately 5,000 non-Federal entities while maintaining Single Audit coverage over 99% of the Federal dollars currently covered.

Impact at the University of Massachusetts

Additional risk assessment tools required for subrecipients under Single Audit threshold ($750k)

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Topics: 

Document File: 

Topics: 

The STTR Program is a highly competitive program that reserves a specific percentage of federal R&D funding for awards to small business and nonprofit academic institution partners.  Small business has been where innovation and innovators thrive, however the risk and expense of conducting serious R&D efforts can be beyond the means of many small businesses.  Nonprofit academic institutions are instrumental in developing high-tech innovations.  Frequently this innovation is confined to the theoretical, not the practical.  The STTR combines the strengths of both entities by joining these two groups in funding opportunities.  The technologies and products are transferred from the laboratory to the marketplace.  The small business profits from the commercialization, which in turn stimulates the economy.

Qualifications:

Phase I activities fund at a smaller amounts (refer to the sponsor solicitation for the limit) and normally run for up to 12 months.  A non-profit academic partner is required.  The maximum amount available to the Academic partner is 60% for Phase I activities.  Phase II activities fund at a higher level (refer to the sponsor solicitation) for periods normally up to 2 years.  The academic partner is eligible for 60% of the proposed funded amount. The Small Business must meet the following criteria:

 -The small business must be American-owned and independently operated

- For Profit

-Principal researcher does not have to be employed by the small business

-Company size limited to 500 employees

Proposals:

 Proposals from the University for participation in an STTR project are submitted by the Office of Pre-Award Services (OPAS) and handled in the same manner as any subcontract proposal. The UMass PI may be listed as the PI of the overall project however, not as an employee of the company.  The components of the proposal include the following:

  1. Kuali Questionnaire
  2. UMass succinct scope of work
  3. UMass budget – Note, because the amount available to the University as a partner in an STTR is very limited, the University is willing to reduce the overhead rate to 26% for the Phase I activities, with the understanding that if a Phase II proposal is submitted, the full federal rate will be applied.
  4. UMass faculty and staff and student salary for participation on the STTR project must be paid through the UMass subcontract and not paid directly by the company.
  5. Bios ketch
  6. all other components as required in the sponsor RFP

*Note:  If the principal investigator or a direct family member has a financial interest in the company, including consulting contracts, a conflict of interest disclosure must be filed with the Department Head as well as the Vice Chancellor for Research and also identified on the Internal Processing Form.

Intellectual Property, Allocation of Rights, and Award

 Part of the requirements of an STTR project is an agreement on intellectual property rights.  This understanding is captured in an Allocation of Rights Agreement (ARA) prior to the issuance of an award from the federal agency to the small business.  The company or the PI will contact the Office of Post-Award Management (OPAM) once this document is requested by the federal agency.  OPAM will engage UMII (University of Massachusetts Innovation Institute) who will complete and return the University’s standard boilerplate ARA agreement to the small business.  All negotiations are conducted by UMII staff in consultation with Legal Counsel as needed.  Along with the transmission of the ARA, OPAM will also provide the company with a boilerplate funding agreement designed specifically for the STTR project which the company may use for awarding the subcontract to the University.  All negotiations of this agreement will be conducted by OPAM staff.  The IP terms agreed to in Phase I as evidence in the ARA will carry forward to the Phase II program if awarded.

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