Policy for Externally Funded Projects: Grants, Contracts and Agreements

Op4.02 Policy for Externally Funded Projects: Grants, Contracts and Agreements

Introduction

Seeking external funds is essential for Missouri State University (University) to supplement existing revenues and to meet its research, teaching, and service goals. At the center of this effort is Missouri State University faculty and staff who compete for external funds and who serve as principal or co-principal investigators.

The Divisions of Community and Global Partnerships and Financial Services at Missouri State University assist University personnel in securing and managing external funding to support research, scholarly and educational programs, as well as other activities.

The Office of Research Administration (ORA), a unit within the office of Community and Global Partnerships, is responsible for reviewing all sponsored proposals, contracts, memoranda of understanding, consortium agreements, and subawards intended for external sponsors prior to their submission. This comprises determination of agreement mechanisms, negotiation of all business terms and conditions, including the budgeting of facilities and administrative costs. This is necessary to ensure that requests for support are compliant with institutional policies and all relevant regulations.

The ORA assists faculty and staff in identifying potential funding sources, as well as communicating funding opportunities to the University community, assisting potential applicants in developing contacts with potential sponsors, and in developing proposals to funding agencies. The ORA also has responsibilities to coordinate various aspects of grant and contract administration, functioning as the liaison between the funding agency, the Principal Investigator, and Grants and Contracts Accounting. The ORA is also responsible for coordinating requests for approval of non-financial changes to a project’s approved scope of work, deliverables, key personnel, and extensions of the contracted period of performance.

Grants and Contracts Accounting (GCA), a unit within the Financial Services Division, is responsible for the post-award administration of all sponsored awards and contracts, memoranda of understanding, consortium agreements, and subawards. This is necessary to ensure that the administration of sponsored awards is compliant with award documents, University policies and procedures, and all relevant regulations.

GCA provides assistance with fiscal matters dealing with project administration. The primary function of GCA is to coordinate the administration and financial management of all grants and contracts awarded to the University. This includes providing budgetary advice, if required, during proposal preparation, as well as the financial management of the funds awarded to the University to ensure compliance with direct and indirect costing directives of the sponsoring agency.

GCA should be contacted for clarification of policies related to financial administration of grants and contracts.

Project Directors/Principal Investigators (PD/PI’s) are ultimately responsible for defining the scope of work of a project, and its day-to-day operation, both programmatically and administratively, for grants in which the sponsor has named them PD/PI.

Purpose

This policy applies to:

1) all Missouri State University faculty, staff, and administrators who seek external support for research, scholarly and educational projects, and other activities.

2) all agreements that involve a defined exchange of services by Missouri State University for funds or other renumeration by an organizational entity external to the institution. These agreements can be titled grant applications, research agreements, sponsored research agreements, subcontracts/subawards, contracts, memorandum of understanding, or consulting agreements. All agreements are entered into between the Board of Governors of Missouri State University as the applicant, and the external entity as the sponsor. The PD/PI serves as the Technical Representative. Agreements that name the PD/PI as a Party to the agreement, or those which the PD/PI, or their departmental administrators have negotiated terms and conditions, or sign an agreement on behalf of the University can be held null and void.

To ensure the proper review and approval for all grant applications and contracts, this policy sets forth the timelines and guidance necessary to ensure that grant applications and contracts are crafted in the best interests of the institution and the PD/PI.

Definition of common terms

Allowable Costs – the tests of allowability of costs under 2 CFR 200.403, costs must meet the following general criteria to be allowable. They must: (a) be necessary and reasonable for the performance of the award and be allocable thereto; (b) conform to any limitations or exclusions set forth in the award as to types or amount of cost items; (c) be consistent with policies and procedures that apply uniformly to both federally funded and non-federally funded projects; (d) be accorded consistent treatment. A cost may not be assigned to an award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to an award as an indirect cost; (e) be determined in accordance with generally accepted accounting principles (GAAP); (f) not be included as a cost or used on a federally funded program to meet cost sharing or matching requirements of another federally-financed program in either the current or a prior period; (g) be adequately documented; and (h) be incurred during the approved budget period.

Authorized Organizational Representative (AOR) – the individual or individuals who are authorized by the University’s Board of Governors to sign grant proposals, grant awards and externally funded contracts. The AOR for the University is the Vice President for Community and Global Partnerships or their designee.

Budget – the financial plan for a proposed or awarded project, that provides information about the University’s projected costs for conducting the project. It may contain both funds requested, and cost-sharing (matching) funds. Most often a narrative accompanies this financial information in which justification is provided for the various cost categories.

Compliance – refers to governmental laws and regulations, and University policies related to the project. Depending on the funding agency, formal approval by internal committees may be required prior to submission of the proposal, or sometimes prior to official receipt of an award. Compliance areas most often associated with externally funded projects include:

• Animal Care and Use
• Biosafety
• Conflict of Interest
• Export Control
• Human Subjects Protection
• Research Misconduct
• Responsible Conduct of Research

Information on governmental regulations and University policies associated with each of these, as well as other areas, are provided in the Compliance policies.

Cost-sharing or matching – refers to project costs not paid by the sponsor/funding agency that include commitments of cash or in-kind services. Cost-sharing or matching must consist of expenses that can be documented.

Grants, Contracts, and other Funding Agreements – this includes formal agreements between the University and an external sponsor. All forms of funding agreements that necessitate work to be performed and deliverables provided to the sponsor. The latter would normally include technical reports and other products, as well as an accounting for the expended funds. For purposes of this policy, the term “grants” will be used to refer to all forms of agreements with external funding entities.

Grant – A legal instrument of financial assistance between an awarding agency and the University, whose principal purpose is to transfer anything of value for a public purpose, and not to acquire property or services for the awarding agency or pass-through entity’s direct benefit or use. For an award to be considered a grant, it normally will contain the following elements:

• The statement of work must be phrased in general terms to allow the project director a significant amount of freedom to change emphases within the general area of work as the project progresses.
• Deliverables are minimal, usually consisting of reports only.
• Separate accounting procedures are required.
• Reimbursements from a grantor are dependent on the expenditure of funds for approved purposes.

Contract – An agreement to acquire, purchase, lease, or barter property or services that primarily benefits the sponsor. For an award to be considered a contract, it normally must contain all the following elements:

• Detailed financial and legal requirements must be included in a specific statement of work to be performed.
• A specific set of deliverables and/or reports to the sponsor is required.
• Separate accounting procedures are required.
• Legally binding contract clauses must be included.
• Reimbursements from the contractor are based on the agreement and not the expenditure of funds.

Gift – A donation of money, property, or anything of value to the recipient for the recipient's ownership and use in accordance with the donor’s wishes and restrictions. In accordance with Missouri State University Board of Governors policies, gifts are received and managed by the Missouri State University Foundation (Foundation) through the Office of the Vice President for University Advancement and normally contain only the following elements:

• If there are any restrictions on use, they are limited to the University, a unit, a program, or an activity.
• The amount of a gift may or may not bear any relation to the total cost of the program or activity.
• There are usually no deliverables and/or reporting requirements.
• Funds may be commingled with funds from other sources within the same accounts.
• Endowed gifts restrict the use of the gift to income generate and paid out in accordance with the Foundation’s spending policy.
• The expenditure of funds derived from gifts are not covered by Grants and Contracts policies.

Other Funding Agreements – can include Cooperative Agreements, Consulting Agreements, Memorandum of Understanding, Purchase Orders, etc.

Intellectual Property – refers to inventions created by persons that could be subject to patent or copyright protection with ownership dictated by sponsor’s regulations, grant requirements, and University policy. Sponsors may have specific requirements for reporting of inventions.

Internal Approval Form – document that will be submitted by a potential principal investigator to all unit supervisors and senior administrators that are responsible for resources (individuals, facilities, equipment) that are to be committed to the project. See section 4.02.3 Proposal review and submission.

Internal Award Notice – formal notification of the University’s acceptance of a grant from an external sponsor. Usually contains critical information that is needed by the principal investigator, other named individuals, unit supervisors, senior administrators, and central administrative units to implement the funded project.

Letter of Intent – notice to the funding agency that the institution will be submitting a proposal to a specific program. Often used by these agencies to gauge the number and types of proposals that are to be submitted. These are especially useful in arranging for reviewers in sufficient numbers and with appropriate expertise.

Program Manager or Program Officer – These are individuals designated, at the sponsoring agency, as having responsibility for handling inquiries regarding externally funded programs. The term point of contract (POC) will be used throughout this policy.

Pre-proposals – preliminary proposals submitted to sponsors that may or may not contain formal institutional commitments in the project narrative and budget sections.

Project Director / Principal Investigator (PD/PI) – University faculty or staff with primary responsibility for all aspects of the grant including technical and financial matters.

Co-Project Director / Co-Principal Investigator (Co-PD/PI) – other key University personnel with responsibilities delegated by the PD/PI. The term PD/PI or Co-PD/PI will be used throughout this document to refer to lead person(s) developing and submitting proposals, as well as managing a grant.

Pass-through entity (PTE) – means a non-Federal entity that provides a subaward to a subrecipient to carry out part of their externally funded program.

Proposals – formal applications by the University to sponsors containing commitments to a scope of work, deliverables, time frame, and budget.

Sponsor – governmental agency, non-profit or for-profit entity that is to be the source of funds provided to the University under a grant.

Subawards – means an award provided by a pass-through entity to a subrecipient for the subrecipient to carry out part of an award received by the pass-through entity. It does not include payments to a contractor or payments to an individual that is a beneficiary of the funded program.

Subrecipient – means an entity that receives a subaward from a pass-through entity to carry out part of an award. For the University a subrecipient would be a third-party organization performing a portion of Missouri State University’s externally funded projects. The terms of Missouri State University-subrecipient relationships are documented in subawards.

Policy

General guidelines

All Awards are sought in the name of and awarded to the Board of Governors of Missouri State University.

All requests for support, and award acceptance, from external sponsors must be submitted through, and approved by, the ORA. Vice Presidents (other than the VP for Community and Global Partnerships), Deans, Department Heads, Directors, and individual faculty or staff members are not authorized to submit applications for grants or contracts, nor are they authorized to accept awards, contracts, subcontracts, or agreements on behalf of the University. The authorized University representative for submission of proposals and acceptance of grants and contracts is the Vice President for Community and Global Partnerships or their designee(s).

If a sponsor requests direct submission from the PI (e.g., for a fellowship or scholarship), the proposal must still be processed through normal procedures and will be submitted by the PI on behalf of the University.

Preliminary discussions with funding sources

Preliminary discussions of program objectives or project scope with a potential funding agency are encouraged. Pre-proposals need not be processed formally through the University. However, unauthorized commitments must not be made by pre-proposals or informal communication of any kind. Valid commitments of grant or contract supported projects or programs can be made only through the established proposal submission process.

Proposal preparation

Proposals are prepared by the PD/PI. Before beginning the proposal writing process, the PD/PI should contact the ORA to obtain guidelines for proposal preparation. ORA is available to provide proposal templates and can provide guidance with interpreting proposal instructions and following all applicable regulations. A potential PD/PI must check with the appropriate Department Head, Director, Dean or Vice President to determine the appropriateness of the project or program to be proposed before the proposal writing process begins.

The PD/PI should allocate sufficient time for planning, coordinating, and preparing a proposal. Accordingly, the potential PD/PI should take advantage of the experience of colleagues and members of the faculty and staff who have knowledge that can be useful in program or project design and proposal preparation. As a proposal is being formulated, a potential PD/PI should consult with the ORA, GCA, and any other such offices as may be appropriate for a specific proposed project (e.g., Office of Human Resources, Procurement Services).

Proposals must be prepared according to the requirements or specifications of the potential sponsor and within the format stipulated in the sponsor’s program guidelines. In the absence of specific format or content specifications, the PD/PI should seek assistance from the ORA.

Some budgetary matters are particularly critical to proposal preparation and the potential PD/PI must be aware of these matters and must integrate them into the proposal preparation process from the beginning. Two very critical factors are:

1. Cost sharing and matching. The specific conditions for cost sharing and matching required by a sponsoring agency must be carefully identified and evaluated. The University discourages including cost share/match within a proposed budget unless it is a requirement of the funding agency. All cost sharing and matching requirements must be approved by appropriate Director, Department Head, Dean and/or Vice President, in writing, through the Internal Approval Form.
2. Indirect costs. Indirect costs (also referred to as facilities & administration (F&A) costs) represent a substantial outlay on the part of the University. The rate of indirect costs charged is determined by formal negotiations with the Federal government. Established indirect cost rates must be included in every proposal unless it is prohibited by the funding agency or has been approved for exemption by the Department Head, Dean and/or Vice President, and the VP for Community and Global Partnerships.

Proposal review and submission

All proposals to external funding sources, must be submitted to ORA for review. The ORA is charged with administering proposal submission procedures. The ORA reviews each proposal to ensure compliance with guidelines established by the funding agency to which the proposal is to be submitted and with the appropriate University and State guidelines. Proposals that are consistent with the definition of a “gift” will be forwarded to the Missouri State University Foundation for processing.

Grant applications require receipt of the full proposal and Internal Award notice by ORA a minimum of three (3) business days prior to submission deadline. Proposals must be approved by the unit Director, Department Head, Dean and/or Vice President, and the ORA prior to submission.

As part of the proposal review process, when a Principal Investigator plans to include Missouri State University’s resources or external entities' resources as cost sharing, it must be specifically identified in the budget and on the Internal Approval Form. In cases where the cost sharing commitments involve external entities, a letter of commitment from each entity, along with a detailed budget identifying these commitments, must be received prior to proposal submission.

General administration of externally funded projects

Project implementation begins with the University's formal acceptance of an award which is approved by the Vice President for Community and Global Partnerships.

Formal acceptance of awards

Awards are to be accepted only by the Vice President of Community and Global Partnerships or by those to whom he/she has delegated signatory authority. No other individuals are authorized to commit or otherwise bind the University unless specifically delegated to do so by the Vice President of Community and Global Partnerships.

Upon receipt of the official award notification, the award and all related documents should be forwarded to the ORA who will disseminate the information to all appropriate parties.

Upon receipt of the award transmittal, the following steps will be taken:

• Assign a Contract or Grant Account Number; and
• Establish the line-item budget that is congruent with the University's Chart of Accounts.
• The PD/PI will be notified via email of the account number and other pertinent information. This also designates the responsible Missouri State University Grant and Contract Accountant.

The PD/PI does not have authority to expend funds on a sponsored project until the Grant account number is set up. No charges can be made against existing accounts that are not permanent charges. More specifically, charges may not be transferred later as a mechanism for starting the grant in advance. Furthermore, Pre-Award Costs cannot be incurred unless the exception is specifically recognized, defined, and authorized in the grant/contract.

Pre-award negotiations

In some cases, before an award is made to the University, it is necessary to negotiate final contract or grant terms (e.g., scope of work, understandings on proposed expenditures, billing and financial provisions, or contract and grant amounts). Negotiations of this nature must be coordinated with the ORA and may require reprocessing through Department Heads, Deans, and/or Vice Presidents or General Counsel.

When the funding agency does not have a pre-determined funding mechanism, ORA will make the official determination of what type of agreement should be used, depending upon a review of the scope of work and terms proposed by an entity external to the University.

Post award administration

All awarded projects are administered through GCA. The Director of GCA is the official Fiscal/Business Officer for sponsored awards accepted by the University. Deans, Department Heads, and individual faculty or staff members are not authorized to submit financial budgets, reports, estimates, or invoices to award sponsors. This policy does not include fixed price contracts. Changes that are required by an external funding agency to the approved scope of work, budget, or terms and conditions of project, must be coordinated through the ORA to ensure that the Institutional obligations are officially approved by the Authorized Organizational Representative. Communications between the University and agencies relative to financial management of projects are to be coordinated through GCA. Communications between the University and agencies relative to programmatic management of projects are to be coordinated through the ORA. See Op4.02-1 Communications with External Funding Agencies for more detailed information.

Project closeout

To comply with federal regulations addressing project closeout (2 CFR 200.344), the University’s closeout process consists of the following steps:

• GCA will contact the PD/PI 30-60 days prior to the end of the project to outline actions to be taken for project closeout,
• The PD/PI is responsible for initiating any requests for extensions by the funding agency via the ORA. Prior to requesting the extension, an assessment of the budget status and the timeframe in which to complete the expenditures must be addressed with GCA. This will help assure that all fiscal matters, including matching, are appropriately considered in the request for extension.
• Accounts will be frozen after the project termination date so that transactions after that time can only be charged to the account after review and approval of GCA.
• The PD/PI will work with GCA to ensure that all transactions are completed and charged to the accounts within the prescribed sponsor deadline. At most this could be a 90-day period following the end of the grant.

Responsibility for externally funded projects

Upon award of an externally funded project, the University is responsible for promptly pursuing the scope of work detailed by that award, within the specified term.

The Office of Research Administration

The ORA is responsible for the review and submission of all proposals requesting external funding. Ensuring compliance with agency, University, State, and federal guidelines and regulations.

Once funding is awarded the ORA is responsible for reviewing terms and conditions of the award to ensure acceptability to the University and will coordinate that acceptance through the proper University administrative channels and the VP for Community and Global Partnerships.

The ORA is responsible for acting as a liaison between the project directors/principal investigators and the funding agency regarding all non-fiscal matters that may require the prior approval of the agency.

Grants and contract accounting

GCA is responsible for acting as a liaison between the project directors/ principal investigators and the funding agency regarding fiscal matters. This includes financial reporting and financial compliance monitoring.

GCA has the primary responsibility to provide the principal investigator with financial information necessary to effectively manage a sponsored effort and to assure that all parties comply with the financial terms of the award.

GCA monitors expenditures to ensure compliance with applicable rules, regulations, and directives. Expenditures related to sponsored projects are handled in the same manner as expenditures for other fund sources and are subject to the same routine processing, reviews, approvals, and other controls.

Project Director/Principal Investigator

PD/PI’s have primary responsibility for conducting the externally funded effort in accordance with award terms and conditions and within the funds allocated for such effort. They also are responsible for the programmatic direction of the project and for initial authorization of all expenditures charged to the awarded budget. The PD/PI is ultimately responsible for expending funds in compliance with all funding agency, State, and University regulations. The PD/PI is also responsible for tracking and providing cost share/match information to GCA.

The PD/PI must contact GCA to assist with questions or problems encountered in connection with any phase of the financial management of any externally funded project. The PD/PI must contact GCA about an actual or potential financial problem prior to contacting a sponsoring agency.

GCA should be consulted to determine if Institutional or Agency approval is required on fiscal matters. The ORA should be consulted on all non-fiscal matters that may require agency prior approval. In either case, proper documentation is needed for audit review. The project director/principal investigator will be responsible for providing GCA and the ORA any specifically requested information regarding these requests in a timely manner.

Department Heads, Deans, Unit Supervisors/Directors, and Vice Presidents

Department Heads, Deans, Unit Supervisors/Directors, and Vice Presidents are responsible for assuring that all externally funded programs conducted within their jurisdiction are consistent with agency, State and University policies and done so within available funding. Additionally, they will ensure that all stated resources listed as cost sharing/match are available for the use of the externally funded project.

The financial responsibility for any non-reimbursement, or requirement to return funds by the granting agency, of expenditures made by the PD/PI rests with the University unit, e.g., cost center having primary responsibility for the project. In the event of such non-reimbursement, the PD/PI, and the cost center with primary responsibility for the grant/contract will be accountable for partial or full reimbursement to the University for these expenditures.

Externally Funded Projects policies include: