Post-Award Resources

Purpose

OMB Circular A-21, Cost Principles for Educational Institutions, section J, contains a list of items that are deemed unallowable as direct costs on federally sponsored projects.  Additionally, some non-federal sponsors consider these costs to be unacceptable as charges to their sponsored agreements (always consult sponsor guidelines or the Office of Sponsored Programs [OSP] for specific questions).

Scope

This policy and the applicable procedures apply to all departments at SIT charged with the fiscal management of sponsored projects.

Effective Date

This policy is effective September, 2008.

Definitions

Direct Costs are costs that can be identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity, or that can be directly assigned to such activities relatively easily with a high degree of accuracy (A-21, D1).  For a cost to be charged directly to an activity there must be a direct benefit to the activity.

Facilities and Administrative Costs (F&A) are those costs that are incurred for common or joint objectives and cannot be readily and specifically identified with a specific activity (A-21, E1). These costs are allocated to the direct activities through the use of the F&A rate.

Consistent Treatment is defined as charging all costs incurred for the same purpose, in like circumstances as either direct costs only or indirect costs only. Any cost charged as a direct cost to federal contracts must also be direct charged to other institutional activities. If a cost is identified as an indirect cost it may be charged as a direct cost only in certain specific circumstances where the characteristics of the cost would unfairly burden the indirect costs. Direct costs that are allocated to sponsored projects or activities must be allocated using a reasonable method that is consistently followed. All departments must treat like costs in the same way.

General Policy

This policy provides the general guidelines for all SIT departments. More specific explanations and a discussion of the major expense items can be found in the SIT costing procedures entitled “Allowable and Unallowable Expenses.”   This policy and the related procedures follow A-21 definitions. The following is a list of indirect activities/costs of major concern that are GENERALLY considered to be UNALLOWABLE and should not be charged directly to federal sponsored agreements:

• Newsletter/brochure preparation
• Correcting and organizing data (non-project related)
• Maintaining data bases
• Alcohol
• Alumni activities
• Bad debts
• Commencement & convocation
• Contract and grant administration
• Entertainment, etc.
• Filing
• First-class travel
• Food
• General departmental administration
• Administrative and clerical staff – personnel activities, accounting and budgeting activities, filing, processing vouchers, routing travel planning, routine data entry routine telephone answering, processing and tracking routine purchase orders
• Goods or services for personal use
• Housing and personal living expenses for institution’s officers
• Interest, fund raising, and investment management costs
• Local telephone costs – including equipment
• Losses on other sponsored agreements or contracts
• Memberships
• Office supplies
• Overruns on other sponsored projects
• Postage
• Processing and tracking routine purchase orders
• Processing vouchers
• Subscriptions

Approval to direct charge typically unallowable costs is accomplished in one of two ways:

• Declaration of Major Project status, or
• Explanation of the “special circumstances” of any such unallowable costs

Both of these circumstances may be handled by completion of the form entitled “Request for Approval of Unallowable Costs.”

The following is a list of costs and activities that are GENERALLY considered to be ALLOWABLE and may be direct charged if they can be identified specifically with a particular sponsored project and if approved by the funding agency. This list is not intended to be all inclusive, but is offered as a guide.

• Advertising costs – as described in A-21
• Consultants
• Equipment – if it meets the definition or has been previously described as part of a fabricated item that will be tagged and meet the definition of equipment upon completion
• Insurance
• Long distance toll charges
• Material costs
• Publication charges
• Remodeling costs
• Salaries and associated fringe benefits – for faculty and students
• Subrecipient / subcontract costs
• Telephone survey required specifically by a project
• Travel costs – approved by sponsor and prior approval for foreign travel from SIT Provost/Dean/Chair
• Tuition

Procedures

The Principal Investigator (PI), co-investigators, project staff and departmental administrative support staff are responsible for ensuring that:

• Unallowable items noted above are excluded from the calculation and preparation of budget data contained in proposals submitted to Federal agencies;
• After the receipt of a Federal award, expenses in the unallowable cost categories are not charged to the related sponsored or cost sharing projects;
• The award notice / sponsored agreement is reviewed to determine if other cost items are restricted by the sponsor (these items may be charged to the appropriate non-federal and /or departmental projects as allowed under University and sponsor policies);
• Preparation and submission of the form entitled “Request for Approval of Unallowable Costs” to OSP at the time of proposal submission if unallowable costs are suspected

Non-Federal Sponsored Agreements

All project related costs may be direct charged to non-federal sponsored agreements if they have been approved by the awarding sponsor. Non-federal agreements have been determined to be unlike circumstances.

A cost transfer is a reassignment (transfer) of charges within or between cost centers (project accounts).  They are created in departments, labs, or centers to bill inter-departmental costs, to adjust billing errors, or for other reasons associated with the department’s regular financial operations.  When cost transfers to move expenses involve sponsored projects it is critical that the transfer meets the rules for allowability, allocability, reasonableness and consistency. 


A journal is the document used to process a cost transfer.  Although costs should always be charged to the correct account and subcode when they are incurred, cost transfers are sometimes necessary.

When are Cost Transfers Allowed?

Stevens allows cost transfers involving sponsored projects only in special circumstances, including:

• Error correction
• Transfers between related projects of the same sponsored project, i.e., parent to child account or child to parent account.
• Costs benefiting more than one sponsored project
• Transfers between subcodes
• Transfer of retroactive expenses (including pre-award costs) on a project necessitated by a delay in finalizing contract negotiations

Any time you initiate a transfer, you invite the assumption that the transaction was not handled properly initially.  If expenses are being transferred to a sponsored project, there will be considerable scrutiny of the reasons for the transfer, and the justification for moving those charges will require a clear explanation and be understandable to an auditor or any other person reviewing the documentation at a later date.

If a project has an overrun, there’s often a presumption that any proposed cost transfer is to alleviate the overrun, and it likely that it would not be allowed – the barrier is very high for these types of transfers, and difficult to overcome the presumption.  If you encounter this situation, please contact your OSP post-award specialist for guidance.  To bring the project into balance, an entry must be made to an unrestricted departmental account. 

Cost Transfers Criteria

Sponsored Projects

A good justification will allow anyone reviewing the cost transfer to understand how the expense benefits the receiving sponsored project.   It should answer:  who, what, where, when, and why.  It should be easily understood by anyone reviewing the journal (ask yourself……..”…if I leave, will an auditor be able to understand this two years from now?”).  At Stevens, all cost transfer must be accompanied by the “Transfer of Expense Checklist.”   Cost transfers must be:

• In conformance to Institute and sponsor policies (is it allowable, allocable, reasonable and consistent)
• Timely - Cost transfers should be prepared and submitted as soon as the need for a transfer is identified but no later than 90 days after the posting is made and/or within 30 days of the project end date, whichever comes first.  Cost transfers exceeding this time frame will carry a higher burden of justification as to why the transfer request was not made in a timely way.  Cost transfers older than 90 days will need to be reviewed and approved by the Executive Director of OSP.
• Fully Documented – must contain a justification that clearly shows:

Benefit

• Allowability and allocability to the new sponsored project
• Reason for transfer
• System causes are corrected so they will not recur
• The reason for any delay in the timely processing of the transfer
• Accompanied by recertification of effort if reallocation involves cost transfer of a salary expense  (These are particularly problematic and will probably be questioned if not fully and realistically justified.  Additionally, lots of salary reallocation, even if done within the 90 day time period indicates the department might not be using existing Institute practices or may be “parking” salaries on existing federal accounts in order to burn down through balances.)
• Reviewed and approved by the PI or PI’s  designee

Fiscal Stewardship

Frequent, repeated and/or poorly documented cost transfers, even though they might be within the 90 day period, indicate a potential problem.  Does preparer have adequate training?  Does preparer have knowledge of relevant federal circulars and standards of fiscal management?

Appropriately approved

The cost transfer must be signed by the account holder of the account from which the cost is transferred AND the account holder of the account to which the cost is transferred.

Cost Transfer Examples

Example 1

Inadequate justification:  “To reallocate salary because wrong account was charged.”

QUESTION:  If you were certain of the project on which effort was expended at the time the original certification was made, what has changed in the interim?

QUESTION:  What made you think the original account cited as the source of effort was correct in the beginning?

QUESTION:  How will you prevent this same situation from occurring again?

QUESTION:  If this is the result of pre-award costs, why didn’t you engage the process to “REQUEST [A] FOR PENDING ACCOUNT IN ADVANCE OF RECEIPT OF AWARD?”

Example 2

Inadequate justification:  “To reallocate/transfer costs older than 90 days because of backlog in reconciling accounts.”

FACT: OMB Circular A-21, C4b – “Any costs allocable to a particular sponsored agreement under the standard provided in this Circular may not be shifted to other sponsored agreements in order to meet deficiencies caused by overruns or other fund considerations, to avoid restrictions imposed by law or by terms of the sponsored agreement, or for other reasons of convenience.” (This is THE citation used to support the government’s (and subsequently auditors) position regarding cost transfers, both the averseness to seeing cost transfers to begin with and most specifically the ‘gotcha’ verbiage at the end…..”or for other reasons of convenience.”  This makes it clear that the onus is on the recipient to figure out how to perform the stewardship required.  Being busy or understaffed is not going to be an adequate justification.)

FACT:  OMB Circular A-110, C21b(3) – “Effective control over and accountability for all funds property and other assets.

FACT:  OMB Circular A-110, C21b(4) – “Comparison of outlays with budget amounts for each award. 

Example 3

Inadequate justification:  “To reallocate/transfer partial costs from one federal award to another.”

QUESTION:  How long have you known that it was reasonable that these costs could be split among more than one account?

QUESTION:  What made you aware of the fact that costs were appropriate to more than one award?

QUESTION:  What analysis was employed to calculate the correct percentage of application to each federal award?

QUESTION:  Will all costs be split among these awards, or only certain costs? 

QUESTION:  Will this be an ongoing circumstance, or “one time only?”

Summary

1. Any time a transfer is initiated, you invite the assumption that the transaction was not handled properly at the outset. 
2. Frequent and poorly documented cost transfers may indicate problems in the management of research.
3. Federal auditors scrutinize more closely the allowability, allocability, and reasonableness of cost transfers.
4. Federal research sponsors are giving increased attention to the reason behind cost transfers from and to sponsored projects.
5. There is significantly increased audit risk for cost transfers made beyond the approved guidelines, i.e., older than 90 days, frequent and poorly documented, etc.

When preparing a journal to initiate a cost transfer, always use the “Transfer of Expense Checklist” to ensure you’ve provided adequate and needed justification and documentation.

REFERENCED FORM: “Transfer of Expense Checklist"

These activities recognize and comply with the respective requirements of our sponsors, Stevens Institute of Technology (SIT) Policies and Procedures, and SIT Division of Finance.

Sponsor Billings

Typically, billings and payments for Federal awards are handled through a Letter of Credit (LOC) arrangement.   This is a semi-automated process and is managed by the Office of Sponsored Programs (OSP).  The frequency of draws (billings) is dependent upon the volume of activity occurring between SIT and the sponsor and payments are assigned to the correct project accounts strings by the FRS accounting system.

In rare circumstances a Federal sponsor requires a manual bill as specified in the Award Notice, or the contract.  It is also the case that many other types of sponsors require manual billings, including sponsors who have issued a subcontract to SIT on Federal or other flow-through funding.  All billing activity will be handled through OSP.

Sponsor Payments

As referenced above, payments from most Federal sponsors are handled through a Letter of Credit process and electronic transfer and applied to the correct project account by OSP.   The frequency of payments from other types of sponsors, or relationships defined by special circumstances, will be identified in the Notice of Grant Award, or the contract award document At no time should a SIT employee directly receive payment from a sponsor.  If a payment is mistakenly directed to an employee, he/she should complete a “Contracts/Grants Deposit Form” and take the payment to the Bursar’s Office.

Accounts Receivable

As financial activity such as sponsor billings, remittances, Letter of Credit (LOC) drawdowns, and electronic fund transfers post to a project account, a picture begins to emerge that shows its financial health.  Generally, Federal sponsors with whom we have LOC drawdown authority represent a fairly straightforward method of award maintenance, e.g., individual project account expenditures are reviewed and approved and, if correct, the corresponding funds are drawn down from the sponsor and then applied to the project account. 

As previously mentioned, some Federal sponsors and types of Federal awards, as well as many non-Federal sponsors, require a different kind of maintenance and monitoring.  Sponsor bills are prepared and submitted, sponsors remit payments to identified lockboxes, the lockbox is cleared and payments are applied to the correct project account.  This kind of maintenance builds an image of SIT’s research-related accounts receivable position with these sponsors. 

OSP is the central business function vested with responsibility for these activities as they relate to research and sponsored projects (L4 and L5)  and maintains an attitude of diligence as it reports, maintains, and manages the financial tasks for all sponsored award project accounts.  Questions should be directed to 201.216.5710.

Financial Reporting

Financial reconciliation and reporting are critical elements of every award received at SIT.  To sponsors, prudent fiscal management is an indication that the organization understands and follows commonly accepted accounting practices and that reliance can be vested in the recipient to act as a “good steward” on the sponsor’s behalf.  In the case of Federal sponsors, there are specific requirements that govern the management and reporting of award funds.  Failure to observe these requirements can result in serious negative consequences, including reduction in funding levels, interruption/suspension of an award for individual PIs, institutional interruption of Federal support and even fines or other penalties.   Specific directions regarding federal expectations as they pertain to the maintenance and reporting of sponsored projects are found in Circular A-110 at:

C21b, C21b(3), C21b(4) – “Recipients’ financial management systems shall provide for the following…effective control over and accountability for all funds, property and other assets…[and] comparison of outlays with budget amounts for each award…”

Timely reconciliation of budget and project periods for sponsored projects is an important factor in demonstrating our willingness and ability to efficiently manage Federal funds.  This is regarded as a collaborative effort between the OSP post-award specialist, the OSP Accountant, the PI and department personnel; however, the Financial Status Reports (FSRs) themselves are prepared and submitted by OSP.

An important part of this collaboration is sharing information.  Sometimes the PI or department personnel will receive financial communication directly from the sponsor.  If this occurs, all financial information should be shared/forwarded to the appropriate OSP Accountant.  For example, if updated reporting forms are sent to the PI/department personnel instead of the central business office (OSP), preparation and submission of FSRs on outdated forms will usually result in the reports being returned and a delay in acceptance of the required report.

Most sponsors don’t require a PI signature on financial reports, but it is the practice at SIT to send a copy of the report to the PI for his/her review and approval prior to submitting it to the sponsor.  We request that the PI/department personnel send concurrence or questions via email within 10 days.  If there are questions or items on the report that require discussion or clarification, please contact your OSP Accountant at 201.216.5710.  If OSP does not receive acknowledgement or other communication from the PI/department personnel within 10 days the FSR will be submitted to the sponsor in order to meet the required deadline.

The Byrd Amendment (Section 1352, Title 31, U.S. Code) identifies what activities are considered lobbying and therefore prohibited when utilizing federal funds.

The law prohibits recipients of federal funds--whether grants, contracts, or cooperative agreements--from using those funds to lobby to obtain, extend, or modify a federal award.

The regulation is intended to prevent the use of federal funds for lobbying and to monitor the lobbying expenditures of federal funds recipients. Even though the recipient of federal funds is legally the institution to which the award is issued, individuals who are employed by the institution are specifically and individually included under the regulation as well.

Items of the law which apply to Stevens Institute of Technology faculty, research staff, and administrative staff include the following:

1. You may not use federal funds to influence or attempt to influence any member of the Executive or Legislative branches of government (including any agency employee) for the purpose of securing a grant, contract, or cooperative agreement or an extension, renewal, or modification of any of these awards. Charging travel expenses to a federal award or drawing salary from a federal award while attempting to influence the award of federal funds for a specific program is defined as lobbying—and is prohibited. You may neither incur such expenditures on an award yourself nor pay to hire someone to undertake this activity on your behalf.
    
2. There is an exception for payments for individual technical and professional consultant services to the government that are outside of your work as an employee of the Institute. Please contact the Office of Sponsored Programs if you wish to learn if that exception applies to you.
    
3. If the proposed award exceeds $100,000, the Office of Sponsored Programs must certify for the Institute at the time of proposal submission that the institution will abide by the regulations in (1) above and we must, if lobbying has occurred using non-federal funds, submit a report of such activities.
    
4. If the Institute violates the regulations, the institution is subject to fines of $10,000 to $100,000 for each violation and other remedies the federal government may deem appropriate. The penalties could include loss of the particular award and suspension or debarment as an institution from further federal funding.

At the time of proposal submission or prior to receipt of an award, the Office of Sponsored Programs routinely submits a certification that the Institute has not lobbied. If you or any of your staff are aware of any facts that make this certification inaccurate, please let us know immediately.

What does this mean, practically?

No one may, while paid with federal funds or using award funds for travel expenses, urge an agency to support a specific proposal. It is acceptable to ask "when will a decision be made on my proposal?" It is not acceptable to describe why your proposal should be funded rather than some other one.

If the government asks you to provide individual technical or professional services, that is not lobbying. You might want to  protect yourself by asking, "This would not be considered lobbying, would it?"

A university administrator may describe general outstanding research characteristics of the institution, or even describe the wonderful work going on in a department or school, but may not say (unless asked to report that activity to the government) "I'd like to describe the activities of Professor Y and encourage you to consider making an award for this research” if Professor Y has a proposal pending to the agency to which the administrator is talking.

The regulation identifies certain persons as "regular employees" of an institution and allows them more freedom to discuss research activities with agencies than it allows non-employee "lobbyists.” A regular employee is an individual who has been employed 130 days by the institution during the previous 12 months. Faculty and others new to the Institute should keep in mind this "130 day rule" and be careful about talking to agencies about specific research projects until they have been at the Institute for at least 130 days.

It is not the intent of the regulation to prohibit the normal interchange between a faculty member and a program officer at an agency. However, there is no clear line marking where optimistic discussion of research progress ends and discussion of a new or renewal award begins. Federal program officer have received training on this matter and should know when to cut off discussion, but the responsibility is a joint one. If you are unsure, ask.

In addition, the Department of Energy (DOE) has placed a high priority on these statutory requirements and has issued its own brochure entitled "Lobbying...What You Need to Know As A ... Contractor, Cooperative Agreement Participant, or Grantee." This information is available by following the appropriate links from the DOE. A copy of this regulation can be obtained from the Office of Sponsored Programs.

Lobbying - Frequently Asked Questions

What is a Lobbyist?

Any individual who is employed or retained by a client for financial or other compensation for services that include more than one lobbying contact, other than an individual whose lobbying activities constitute less than 20% of the time engaged in the services provided by such individual to that client over a 3 month period.  (Lobbying Disclosure Act of 1995, Section 3 (10))

What Constitutes a Lobbying Activity?

Oral, written or electronic communications to a covered Legislative or Executive Branch Official in an attempt to influence:

• The formulation, modification, or adoption of Federal legislation but only if the principal purpose of the communication is to influence legislation
• The administration or execution of a Federal program or policy
• Formulation, modification, or adoption of a Federal rule, regulation, Executive order, policy or position of the United States Government
• The nomination or confirmation of a person subject to confirmation by the Senate
• To be considered “lobbying,” the communication must also:
  • Refer to specific legislation
  • Reflect a view on such legislation, and
  • In the case of communications to the general public, it must also encourage recipients to take action about specific legislation1 

What Does Not Constitute a Lobbying Activity? 

• a speech, article, publication or other material that is distributed and made available to the public through a medium of mass communication;
• a request for a meeting, a request for the status of an action, or other similar administrative request(s);
• testimony given before Congress or submitted for inclusion in the public record;
• information provided in writing in response to an oral or written request, or in response to a request for public comments in the Federal Register;
  required by subpoena or civil investigative demand;
• written comment filed in the course of a public proceeding;
• made by the media if the purpose is gathering and disseminating news and information to the public

Who is Considered a Covered Official

• Covered Legislative Branch official includes: members of Congress; an elected officer of either House of Congress; employees of a Member, Committee, leadership staff, joint committee, working group or caucus
• Covered Executive Branch Official includes; The President; the Vice President; any officer or employee in the Executive Office of the President; any Executive Schedule level l-V officer or employee; any member of the armed services at or above pay grade 0-7 & above; and any Schedule C political appointees

Lobbying Activities That Must be Reported

Lobbying activities means lobbying contacts AND efforts in support of such contacts including preparation and planning activities, research and other background work that is intended, at the time it is performed, for use in contacts, and coordination with the lobbying activities of others.

A communication “encourages a recipient to take action” when it:

• States that the recipient should contact legislators or other government employees who may participate in the formulation of legislation for the purpose of influencing legislation
• States a legislator’s address, phone number, or similar information
  Provides a petition, tear-off postcard, or similar material for the recipient to send to a legislator, or
• Specifically identifies one or more legislators who will vote on legislation as opposing Stevens’ view on the legislation, being undecided about the legislation, being the recipient’s representative in the legislature, or being a member of the legislative committee that will consider the legislation

Examples of Lobbying Contact

Stevens' employee Smith travels to Washington in his/her official capacity as an employee of the University and arranges Capitol Hill meetings to discuss the importance of funding for nanotechnology research.  The meetings with staff are considered lobbying contacts and should be reported to the University Legal Counsel for quarterly reporting.

Stevens' employee Smith telephones a covered federal official in the executive branch at Picatinny to advocate on behalf of a proposal for funding which the University submitted to the federal facility.  The contact is considered a lobbying contact and should be reported to the University Legal Counsel for quarterly reporting.

Stevens' employee Smith travels to Washington to meet with a covered DOD official regarding the renewal of a government contract.  Employee Smith does not meet the definition of a lobbyist because he/she does not spend 20% of his/her time on lobbying activities during a quarterly period; nonetheless, the expenses reasonably allocable to employee Smith's lobbying activities (i.e., plant ticket to Washington, costs, time spent preparing materials, etc.) should be reported to the University Legal Counsel for quarterly reporting.
Lobbying activities include:

• Formulation, modification, or adoption of Federal legislation
• The administration or execution of a Federal program or policy
• Formulation, modification, or adoption of a Federal rule, regulation, Executive order, policy or position of the United States Government
• The nomination or confirmation of a person subject to confirmation by the Senate

Examples of Circumstances NOT Considered to be Lobbying

Stevens' employee Smith has a contract to provide technical assistance to the Air Force on an ongoing basis.  Technical communications between employee Smith and covered officials at the Air Force would be required by the contract and therefore would not be considered lobbying contacts.  NOTE:  if uncertain, one should ask the question, "This would not be considered lobbying, would it?"

Stevens' employee Smith is asked to testify before a Congressional Committee in Washington.  Employee Smith's travel to Washington, the meeting and subsequent participation in the hearing would not be considered lobbying contacts.

In a conversation with a federal agency, the Executive Director of OSP, or other university administrator, may describe general outstanding research characteristics of the institution, or even comment on and describe the excellent work going on in Department X, but may not say (unless asked to specifically report that same activity to the government), "I would like to describe the activities of Dr. Y and encourage you to consider making an award for this research," if Dr. Y has a proposal  pending to the agency to which the Stevens' administrator is talking. 
Lobbying activities do not include:

• A speech, article, publication or other material that is distributed and made available to the public through a medium of communication
• A request for a meeting, a request for the status of an action, or other similar administrative request
• Testimony given before Congress or submitted for inclusion in the public record
• Information provided in writing in response to an oral or written request, or in response to a request for public comments in the Federal Register
• Required by subpoena or civil investigative demand
• Written comment filed in the course of a public proceeding made by the media if the purpose is gathering and disseminating news and information to the public

General Information Regarding Lobbying

• When accounting for lobbying activities, one should include time (specify in hours or days) and out-of-pocket expenses spent preparing and planning such activities.  Individuals who have helped in preparations should also complete a report.  Students are excluded because they are not agents of the University.
• Activities related to an employee's personal, professional, or civic interests, as long as they are not on behalf of the University are not reportable and should not be reported to the University Legal Counsel for quarterly reporting.

• It is not the intent of the regulation to prohibit the normal interchange between a faculty member and a program officer at an agency.  However, there is no clear line marking where optimistic discussion of research progress ends and discussion of a new or renewal award begins.  Although federal program officers have received training on this matter and should know when to cut off discussion, the responsibility is a joint one.  If the faculty member is unsure, he/she should ask if the program officer feels they are being lobbied.

Definition and Description of  Consultants, Vendors, and Subrecipients

Sometimes, SIT will procure the services of a third party in order to meet specific needs of individual research projects.  These services share a common goal in that they are obtained in order to meet the stated objectives of the project; however, they differ substantially in the way federal sponsors and SIT regard their presence and contribution to the project, the manner in which their services are obtained, the type of procurement document, the amount of SIT direction and oversight, and the expected deliverable.  Generally, these third party services are divided into the roles of a consultant, vendor, and a subrecipient.  This discussion focuses on how to determine exactly which type of relationship is needed.
 

Consultants (individuals or entities external to SIT)

“An individual retained to provide professional advice or services for a fee but usually not as an employee of the requiring organization.  Consultants also includes a firms that provide paid professional advice or services.”  NIH Grants Policy Statement – See “Allowability of Costs / Activities – Selected Items of Cost – Consultant Services (Rev. 12/03, page 89) . 

How federal sponsors and SIT regard their presence and contribution to the project

Typically, consultants provide expertise unavailable, or at a level unavailable, at the PI’s institution; therefore, it’s normal that these individuals are not SIT personnel.    A consultant’s role is one of an outside expert and typically involves only a few days.  A distinction worthy of note is that while a consultant’s participation is generally limited in duration, he/she may be involved throughout the course of the entire grant period, but usually only a few days at a time.  Consulting rates vary depending on the discipline, amount of education and experience, and other market considerations; however, using the federal government’s GS-18 pay-rate as a comparison should provide a reasonable median.

IMPORTANT NOTE:  The federal government expects that faculty will consult with each other in a collegial way to provide and exchange information and expertise.  If SIT personnel are used in this capacity, they should be referred to as “scientific advisors.”

How their services are obtained

The consultant’s presence and role should be mentioned within the budget category entitled “Consultant” and in the budget justification.  It’s normal to have a letter from the individual, or firm, acting as a consultant.  The letter will state their knowledge of, and agreement to, being named as a consultant in the proposal.  The letter also will state the amount of their compensation.  All travel, per diem, and taxes are the responsibility of the consultant and should be factored into the stated compensation amount.
The type of procurement vehicle:

The PI’s department works with the SIT Logistics function in order to issue a Service Contract for the consultant’s services.  If the consultant is specifically named within the proposal, this serves as a sole source justification.  The contract should specify whether the PI expects a formal deliverable.

Amount of SIT direction and oversight

There is no direction or oversight since this is a service procured to provide expertise and consultation. 

Expected deliverable

Normally, the PI or other key personnel converses  with the consultant on various points or items specific to the research project; therefore, the deliverable may be phone conversations, exchanges of e-mail, verbal face-to-face conversations, or a formal written report.  The PI should specify in the Service Contract whether a written report is required.

IMPORTANT NOTE:  Faculty at other universities, depending upon their institution’s policies, often operate as consultants.  It is important to note that a consultant acts upon his/her own initiative in their role as a private individual.  They are not representing their university and typically any use of their university’s facilities is not allowed.  Also, the tax liability for their compensation becomes their personal responsibility. 

SIT’s full F&A rate is applied to the consultant category; this is considered a work-for-hire and any intellectual property belongs to SIT.  

Vendors

A vendor is a dealer, distributor, merchant or other seller providing goods or services that are necessary for conducting a federal program. 

How federal sponsors and SIT regard their presence and contribution to the project

Typically, a vendor provides goods or services that may be for an organization’s own use or for the use of beneficiaries of the federal program.  Additionally, a vendor

• Provides goods and services within normal business operations;
• Provides similar goods or services to many different purchasers;
• Provides goods or services that are ancillary to the operation of the Federal program;
• Operates in a competitive environment;
• Is not subject to the compliance requirements of the Federal program. OMB Circular A-133, Subpart B, Section .210

How their services are obtained

The vendor’s presence and role should be mentioned within the budget category entitled “Other Expenses” and in the budget justification.  It’s normal to have a letter, on company letterhead, from the individual, or firm, acting as a vendor.  The letter will state their knowledge of and agreement to the provision of services being mentioned in the proposal.  The letter will also state the cost of their services.  This cost will be all-inclusive and there will be no additional compensation.

Type of procurement vehicle

The PI’s department works with the SIT Logistics function in order to issue a Purchase Requisition, or a Contract depending on the amount, for the vendor’s services.  The requisition should specify the expected deliverable.  If the PI has already identified a specific vendor in the proposal this usually suffices as the required justification for the sole source award. OMB Circular A-110, Subpart C, Section .46.

Amount of SIT direction and oversight

The vendor receives a detailed description of the services being purchased and exercises no independent judgment regarding execution of the work or the outcomes, other than what might be considered a part of the vendor’s normal provision of services.  For example, the vendor by virtue of the nature of their business, may have software that provides trend forecasting or demographic analysis.  This type of analysis, while important to the project, does not represent independent judgment in execution of the work or outcomes.  At all times, the SIT PI is in charge of the project and incorporation of the vendor’s data within the overall project scope. 

Expected deliverable

As previously mentioned, this is a procurement of services; therefore, a specific deliverable is anticipated.  This may be a report, but usually takes a more definite form such as survey results, assays, analyses, etc. The Purchase Requisition or Contract should specify the nature of the expected deliverable.
SIT’s full F&A rate is applied to the vendor category; this is considered a work-for-hire and there is an employer/employee relationship between SIT and the vendor; any intellectual property belongs to SIT.

Subrecipients

A subrecipient is an institution, company or organization that receives, at any tier, financial assistance that is passed down from a prime sponsor.  

How federal sponsors and SIT regard their presence and contribution to the project

The responsibility of a subrecipient is to help SIT meet the requirements of a federal award and a subrecipient’s performance is measured against meeting the objectives of the prime grant or contract.  The portion of work being performed by the subrecipient constitutes a significant component of the research program, and the subrecipient is required to provide the resources necessary to conduct that portion of the work.  This includes providing a responsible investigator at the work site of the cooperating entity to oversee the program activities.  A subrecipient receives financial assistance from SIT to carry out a program and the funds awarded to the subrecipient will be used to carry out a program of that third party as compared to providing goods or services for SIT’s program.  These relationships are referred to variously as subcontracts, subawards, subrecipient agreements, and subgrants.  The terminology is less important than the procedures established by SIT to describe, procure, monitor and collaborate with the organizations.  Typically, a subrecipient is a state or local government, college, university, or non-profit organization that expends federal awards received from a primary recipient entity to carry out a federal program.  However, it is permissible for a subrecipient to be a for-profit entity.  Under a subaward a subrecipient organization generally

• Determines who is eligible to receive what Federal financial assistance;
• Has its performance measured against whether the objectives of the Federal program are met;
• Has responsibility for programmatic decision-making;
• Has responsibility for adherence to applicable Federal program compliance requirements; and
• Uses the Federal funds to carry out a program of the organization as compared to providing goods or services for a program of the primary recipient entity. OMB Circular A-133, Subpart B, Section .210

How their services are obtained

The subrecipient’s presence and role should be mentioned within the budget category entitled “Contractual / Consortium Costs” and in the budget justification.  It’s normal to have a Statement of Work, a budget, and a letter or document of commitment from the subrecipient organization signed by an authorized institutional official.  The letter will state their knowledge of and agreement to the provision of services described in the proposal.  The letter also will state the cost of their services.  Although the majority of subrecipient relationships are to other universities, this is not always the case.  Non-profit and for-profit entities also are potential subrecipients.  The nature of the organization’s participation rather than the type of organization defines their role.  

Type of procurement vehicle

SIT’s Office of Sponsored Research (OSR) issues Subrecipient Agreements to describe, define and bind the relationship between the entities.  The Agreement contains all Contract Provisions listed in Attachment A of OMB Circular A-110, and incorporates all required elements mentioned in OMB A-110 and A-133, including monitoring, approved budgets, and Statements of Work.  The Subrecipient Agreement is signed by the SIT PI as an acknowledgement of the content, executed by the subrecipient organization and fully executed by the Director of OSP, or the appropriate designee.  If the PI has already identified a specific subrecipient in the proposal this may serve as part of a sole source justification. 

Amount of SIT direction and oversight

As previously stated, the subrecipient organization has responsibility for programmatic decision-making regarding the goals and objectives included in their Statement of Work.  Additionally, the sub’s performance is measured against whether the stated objectives of the federal (for consistency, “federal” should be upper OR lower case throughout) award are met, whether they adhere to the goals in their Statement of Work, and if they produce the expected deliverable.  While the PI at SIT retains primary responsibility for the overall direction and execution of the project, his/her interaction with the PI at the subrecipient organization is primarily one of collaboration and collegial effort rather than direction or oversight.

The amount of SIT’s administrative direction and oversight is considerable.  The fact that the subrecipient is receiving federal funds in order to accomplish program objectives means that SIT must monitor the sub’s activity and progress on the project.  Several factors determine the level of monitoring applied to each subrecipient and those specifics are discussed in a separate procedure entitled “Subrecipient Agreement Issuance and Monitoring.” 

Expecte deliverable

Normally the anticipated deliverables are both scientific and fiscal reports that describe the results of the subrecipient’s efforts. 

IMPORTANT NOTE:  SIT’s full F&A rate is applied to only the first $25,000 of each subrecipient agreement.  For example, if SIT has a subrecipient that receives $50,000 total costs in each year of a five-year award, SIT applies its full F&A rate to only $25,000 total costs in the first year of the award.  The remaining $25,000 in the first year does not have any F&A applied.  Years two through five of the award also are without any SIT F&A. A subrecipient is considered an independent contractor.  There is no employer/employee relationship between SIT and the sub, this is not considered a work-for-hire and issues of intellectual property are generally negotiated between the parties.  Other universities generally enjoy the same rights and privileges accorded to all institutions of higher education by the federal government. 

The following OMB Circulars are located on Government sites:

A-21 “Cost Principles for Educational Institutions; and

A-110 “Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations”
A-133 “Audits of States, Local Governments, and Non-Profit Organizations”
NCURA’s “A Guide to Managing Federal Grants / Managing Subrecipient Awards”

OMB Circular A-21, Cost Principles for Educational Institutions, section J, contains a list of items such as office supplies, postage, local telephone costs, memberships, and administrative and clerical salaries that are deemed unallowable as direct costs on federally sponsored projects.  Additionally, some non-federal sponsors consider these costs to be unacceptable as charges to their sponsored agreements (always consult sponsor guidelines or the Office of Sponsored Research (OSR) for specific questions). 

At The Stevens Institute of Technology (SIT) the only way these costs may be charged to a federal project is if it qualifies as a Major Project or is programmatically described as allowable.  A Major Project is described in detail on the OSR Routing Form or in Exhibit C of OMB Circular A-21.

Guidelines

Although there may be a few exceptions, the followings items should also be considered as unallowable on federally sponsored projects:

• Advertising, public relations and promotional costs – (Institutional promotion of the Stevens Institute of Technology is unallowable; however, some types of advertising, such as recruitment of study patients and recruitment of project personnel may be permitted [see qualifiers at A-21, J1c, d, and e])
• Alcoholic beverages
• Alumni activities
• Bad debts
• Charitable contributions, donations or gifts
• Commencement and convocation expenses (see qualifier at A-21, F9[a])
• Contingency provisions (see qualifier at A-21, J21c)
• Entertainment
• Fines and penalties (Costs resulting from violations of Federal, State, and local or foreign laws and regulations, see qualifier at A-21, J18)
• Food costs – (Not allowable for routine operations or staff meals, except in the course of travel or as a part of a meeting related to the specific terms of the agreement.  May be appropriate as a direct cost for seminars and patient incentives when related to the specific needs of the agreement.  Usually authorized as part of the agreement.)
• Fund raising and investment management costs (see qualifiers at A-21, J22a-f)
• First class or other non-coach class trave
• Housing and personal living expenses of University officers (“officers” includes current and past officers, A-21, J20b)
• Legal fees – (May be allowable in certain narrow circumstances; however, it’s advisable to check with OSP)
• Lobbying (see qualifier at A-21, J4b-g)
• Losses / overruns on sponsored projects
• Marketing and selling of goods
• Malpractice insurance that does not involve human subjects
• Membership in any civic or community organization, country club, social or dining club
• Membership in any professional organization (part of F&A)
• Personal use of goods or services
• Student activity costs

Most costs that are directly associated with unallowable costs are also prohibited.  For example, the mileage or other travel expenses associated with traveling to participate in lobbying activities are directly associated with the unallowable lobbying efforts and are not permitted. OMB Circular A-21 also excludes most administrative costs from being directly charged to federally funded projects, unless they have been declared Major Projects. 

Procedures

The Principal Investigator (PI), co-investigators, project staff and departmental administrative support staff are responsible for ensuring that:

• The appropriate category is checked on the OSR Routing Form if the PI determines this is a Major Project or is programmatically allowed
• Unallowable items noted above are excluded from the calculation and preparation of budget data contained in proposals submitted to Federal agencies if it is not an approved Major Project
• After the receipt of a Federal award, expenses in these costs categories are not charged to the related sponsored or cost sharing projects
• The award notice / sponsored agreement is reviewed to determine if other cost items are restricted by the sponsor (These items may be charged to the appropriate non-federal and/or departmental projects as allowed under Institute and sponsor policies)

In accepting government sponsored projects (grants, contracts, and other types of agreements) Stevens agrees to abide by government regulations regarding the use of those funds. Office of Management and Budget Circular A-21 sets forth general criteria for determining the allowability of direct costs on government sponsored projects at educational institutions. Many government agencies publish additional cost guidelines specific to those agencies, and familiarity with such regulations is also necessary.

Although generally not as stringent as government requirements, non-governmental agencies may also have cost guidelines with which faculty (principal investigators), departmental business officers, and/or grant administrators should be familiar.

This Guideline summarizes pertinent overall government regulations and Stevens practices used to determine whether or not a particular cost item would be considered an allowable direct cost for budgeting and/or charging on a government sponsored project. Government auditors may use the same guidelines when conducting audits of government sponsored projects awarded to Stevens.

Over time, technology has consistently decreased the cost of personal computers and laptops to the point where most no longer meet the definition of equipment as shown in Circular A‐21,

“…an article of nonexpendable, tangible personal property having a useful life of more than one year and an acquisition cost which equals or exceed the lesser of the capitalization level established by the institution financial statement purposes, or $5,000.”

The federal government, through audit and information dissemination at professional meetings, has consistently apprised the research community that it does not consider a personal computer or laptop as an appropriate direct cost in most cases. Typically these are considered an infrastructure cost to be borne by the institution through institutional and/or departmental operating accounts. There are some cases where the government has entertained the inclusion of a laptop in a proposal, if thoroughly justified.

In order to minimize disallowed costs through audit findings, at Stevens, PCs and laptops will not be allowed as an approved expenditure of research funds, unless it has been included in the original proposal and completely justified as to the reason it is being included, the purpose and benefit to the project, and if the project will be negatively impacted by not purchasing the computer (see possible examples of justifications below).

Scenario and example #1 – research is being done that includes the collection of seismic/geological/meteorological data in terrain‐challenging desert/polar areas. Potential justification might be as follows:

“Budget includes the purchase of a Dell Latitude E6400 XFR Toughbook. Data will be collected at field sites located in the Gobi desert where extremes between heat and cold require hardware competent to handle such temperature variations and still remain operational.”

Scenario and example #2 – research is being done that includes a large amount of on‐site data collection from or about human subjects (interviews/subject observations/specific archive research). Potential justification might be as follows:

“Budget includes the purchase of two laptops with embedded wireless cards that are necessary for on‐site data collection. Because this data is collected in the field, subject identifiers must be initially included until it can be transcribed and identifiers separated from the data; therefore, separate computers (in addition to the available department resources) are needed in order to safeguard and control the data and subject confidentiality.”

NOTE: Personal computers and laptops purchased with sponsored project funds will be subject to the application of F&A and will be tagged and tracked in the Stevens inventory system and must be accounted for at the project’s end.

External Consultant 

Circular A-21, J10d(1) – “…Since intra-university consulting is assumed to be undertaken as a university obligation requiring no compensation in addition to full-time base salary, the principle also applies to faculty members who function as consultants or otherwise contribute to a sponsored agreement conducted by another faculty member of the same institution…”

No Stevens employee(s) will serve as a Consultant for compensation on a Stevens proposal.

Additional considerations when including outside consultants:

• Presence must be justified
• Normal daily rate (number of days
• Travel costs and subsistence should be included in rate
• Usually (but not required) have terminal degree in the field/discipline

The following should be considered when deciding whether to include outside consultants:

Grantees normally expected to utilize services of their own officers of employees, whenever possible. Payment for consultants should be comparable to the normal fees charged by the consultant for comparable services
Presence of consultants is normally considered to be of limited duration, i.e., a few days.  Need for extended presence may indicated need for different relationship.

Intra-University Consultant
Subject to Full F&A

Circular A-21, J10d(1) – “…Since intra-university consulting is assumed to be undertaken as a university obligation requiring no compensation in addition to full-time base salary, the principle also applies to faculty members who function as consultants or otherwise contribute to a sponsored agreement conducted by another faculty member of the same institution…”

Considerations when contemplating the presence of external or intra-university consultants:

• Stevens employees who will be compensated for effort must be shown in the salary and wages section of the budget
• Stevens employees may contribute uncompensated effort on a limited basis as subject matter experts.  

Vendor

Individual or organization shall be considered a vendor under the following circumstances:

Provides the goods and services within normal business operations
Provides similar goods or services to many different purchasers
Operates in a competitive environment
Provides goods or services that are ancillary to the operation of the federal program

As a vendor, individuals or organizations are not subject to:

• compliance requirements of the federal award
• the performance being measured against whether the objectives of the federal program are met
• exercising  any programmatic decision making

As a vendor, individuals or organizations take all project direction from the principal investigator

Travel
Subject to Full F&A

Travel expenses directly related to the project are normally allowable under the conditions described as follows:

• Allowance for air travel normally will not exceed the cost of round-trip, economy airfares and   travelers must travel by US-Flag air carriers, if available
• Domestic travel:
  defined as US, its possessions, Puerto Rico, and travel to Canada and Mexico
• Foreign travel is defined as travel outside areas specified above 

Foreign Travel

When traveling abroad employees must receive prior written approval from the appropriate vice president, dean, director, or department head (academic/administrative).

Program income is defined as recipient earned gross income that is directly generated by a supported activity or earned as a result of an award.  Program income includes, but is not limited to, income from fees for services performed, the use of property acquired under federally funded projects, the sale of commodities or items fabricated under an award, or license fees.  Program income does not include the receipt of principal on loans, rebates, credits, discounts, etc., or interest earned on any of them.

When program income is anticipated on federal awards, the sponsoring agency usually specifies in the award terms and conditions how the program income is to be used; it may be added to the funds committed to the project, deducted from the total project costs, or used as cost sharing.  Federal regulations often require that program income be spent in support of the project before the Institute requests additional cash payments from the agency. 

Discussion

Except as provided below, program income earned during the project period of a sponsored project shall be retained by the Institute and, in accordance with Federal awarding agency regulations or the terms and conditions of the award, shall be used in one or more of the ways listed in the following:

1. Added to funds committed to the project the Federal awarding agency and the Institute and used to further eligible project or program objectives
    
2. Used to finance the non-Federal share of the project or program
    
3. Deducted from the total project or program allowable cost in determining the net allowable costs on which the Federal share of costs is based
    
4. When an agency authorizes the disposition of program income as described in “a” or “b,” program income in excess of any limits stipulated shall be used in accordance with “c”
    
5. In the event that the Federal awarding agency does not specify in its regulations or the terms and conditions of the award how program income is to be used, “c” shall apply automatically to all projects or programs except research.  For awards that support research, “a” shall apply automatically unless the awarding agency indicates in the terms and conditions another alternative on the award or the recipient is subject to special award conditions, such as:
   1. A history of poor performance
   2. Is not financially stable
   3. Has a management system that does not meet the standards prescribed in OMB A-110
   4. Has not conformed to the terms and conditions of a previous award, or
   5. Is not otherwise responsible, Federal awarding agencies may impose additional requirements as needed, provided that the Institute is notified in writing as to:  the nature of the additional requirements, the reason why the additional requirements are being imposed, the nature of the corrective action needed, the time allowed for completing the corrective actions, and the method for requesting reconsideration of the additional requirements imposed
       
6. Unless Federal awarding agency regulations or the terms and conditions of the award provide otherwise, recipients shall have no obligation to the Federal Government regarding program income earned after the end of the project period
    
7. Proceeds from the sale of property shall be handled in accordance with the requirements of the Property Standards of OMB A-110 at Sections C30 through C37
    
8. Unless Federal awarding agency regulations or the terms and condition of the award provide otherwise, recipients shall have no obligation to the Federal Government with respect to program income earned from license fees and royalties for copyrighted material, patents, patent applications, trademarks, and inventions produced under an award.  However, Patent and Trademark amendments (35 USC 18) apply to inventions made under an experimental, developmental, or research award.