The Joy of Contracts… Or… When Did I Sign Up To Become A Lawyer? Division of Sponsored Research...

The Joy of Contracts… Or… When Did I Sign Up To Become A Lawyer?

Division of Sponsored Research & TrainingPresented by:Dawn Boatman, Director ([email protected])Alexia Lewis, Assistant Director of Pre-Award ([email protected])(904) 620-2455

April 20, 2006

Overview of Presentation

Award mechanisms definedDSRT InvolvementElements of different types of contractsWhich agreement is appropriate?

Summary – Keep it Easy!! Elements of a Statement of Work

Example & Discussion

Credits for Information presented

OMB Circulars A-133: Audits of States, Local Governments, and Non-Profit Organizations

OMB Circular A-21: Cost Principles for Educational Institutions

UNF DSRT Policy Manual NSF Grants Policy Guide NIH Grants Policy Statement Free Advice Web site Illinois Institute of Technology

Award mechanisms defined

Financial AssistanceGrants Cooperative Agreements

Acquisition / ProcurementContracts

Research Agreement / Contract for Services Subcontract / Subaward / Consortium / Subagreement

Prime Recipient / Lead / Pass-Through entity Subrecipient / Subcontractor

DSRT Involvement - Why?

Compliance with RegulationsFederal

OMB CircularsCFRFARs

State Florida Statutes

UNF policyAgency specific guidelines

DSRT Involvement – Why?

The root of all evil - OMB A-133 Outlines requirements to ensure compliance and

good stewardship of agency funds Applicable regardless of source of funds

NIH GPS says it best The grantee, as the direct and primary recipient of

grant funds, is accountable for The performance of the project The appropriate expenditure of grant funds by all parties All other obligations of the grantee

DSRT Involvement – Why?

Advocate for PI & UNF Submission of proposals we can endorse/fulfill Protection of PI/UNF rights Obtaining most favorable terms Advising of meaning of terms & conditions (T&C)

Provide good stewardship of agency funds Point of contact

Administrative versus technical contact

DSRT Involvement – When & How?

Proposal StageBig Picture

Good work at proposal stage saves time! Reduces misunderstandings Makes negotiations easier at the award stage Clear definitions of expectations and cost Appropriate commitments made


Proposal StageCan UNF endorse the proposal?

Performance of workCommitments

Effort / Time Space / UNF resources Appropriate to UNF/College/Dept mission Other agencies

BudgetTerms & Conditions


Proposal Stage - Requirements Subcontract:

Letter from Institution’s Authorized Official Clearly defined SOW Budget for subrecipient Anything else lead agency requires

Contract for Services / ICA: Define services to be provided (SOW) Price Quote / Total Cost / Per Task Cost (Budget) Some agencies require letter of commitment / quote

Both should be named in the proposal if known


Award StageBig Picture

Written contract is formalization of projectUNF’s President “is authorized to negotiate,

enter into, and execute research contracts; to solicit and accept research grants and donations”

Delegated to the Director of the DSRT Florida Statute 1004.22


Award StageProcessSome agencies do not have standard

contracts Input is gathered from PI

Prior to negotiations As needed during the process

What are we looking for? Taking exception to?


Award Stage Important Points

Never lost an award due to not reaching agreement on terms

Negotiations can be complex and lengthy Working with DSRT early can reduce this Don’t forget about Preliminary Accounts!

DSRT Involvement

Summary -Best to involve DSRT

Early and often!For any non-technical discussions with agenciesWhen any UNF commitments are made

Use of space Use of time/effort Budgetary information

When any type of legal language is involved

Elements of Contracts

Questions before moving on?

Elements of A Contract

NIH GPS definitionA formal written agreement Addresses the negotiated arrangements

Meeting the scientific, administrative, financial, and reporting requirements of a project

Ensuring compliance with all applicable regulations and policies

Goal is to facilitate a smoothly functioning venture


Legal Elements: LACC Legal

Cannot be for illegal activities Assent

This means that each side must be clear as to the essential details, rights, and obligations of the contract

There is no assent if both sides have made a material mistake as to the terms or details of the contract

Competency Both parties must have mentally capacity to enter agreements

Consideration Both parties must give and get something

Agency gives money to get results UNF gives results or performs project to get money


Types of contracts: Fixed Price

Consideration = Agency gets deliverables Tangible items Can be reports or results

UNF Paid for delivering deliverables Lump sum payments

Agency doesn’t care how money is spent Basis for payment is either

SOW / Schedule of Deliverables Set schedule if only deliverable is at end of project

12% Revenue F&A (will be changing) Unexpended funds may be able to be retained


Types of contracts: Cost Reimbursable

Consideration = Agency gets research performed Reports are not considered deliverables

Considered report of progress to show work was done May be required for payment

Contractor paid for performing project Reimbursed for costs incurred

Agency does care how money is spent Line item budget basis for payment

PI or DSRT must certify payments made to others 45% SWF F&A (will be changing) or agency’s rate No excess funds to be retained


Gets a little fuzzy…Reports – deliverable or not?Payments based on what?

Will be clearer as we exploreStatements of WorkDeliverables Schedules

Hang in There!


At a minimum, contracts include the following Preamble

Identifies the parties and states their ability/the reason for their involvement

Basic Project Information Performance dates Project title Key Personnel involved Amount of funding Administrative / Technical Contacts

Statement of Work Within contract or as an attachment to define deliverables

and reporting requirements


At a minimum, contracts include the following (Continued) Financial Information

Type of mechanism (FP or CR) Invoicing information and schedule line item budget or deliverables schedule Types of supporting documentation required

Certifications and Assurances Lobbying Debarment Conflict of Interest Audit reports

Termination / Breach / Disputes language


At a minimum, contracts include the following (Continued) Ownership

Intellectual Property / Data Rights / Copyrights Publishing Rights / Publicity Ownership of Equipment

Independent Contractor Status Non-Indemnification Clause No Warranty for intended use Confidentiality Non-assignment Modifications State of Florida Provisions Waiver of Breach Clause


Signatures of Authorized PartiesAttachment A usually Statement of WorkAttachment B usually Budget or

Schedule of DeliverablesOther attachments for

Special terms and conditionsPrime Award for incorporationSpecific forms / policies / etc…


Should be clear why successful negotiation is a collaborative effort between PI and DSRT

PI for technical and performance reasonsDSRT for legal and administrative reasons

PI must understand termsDSRT must point out and clarify terms

Which Agreement is Appropriate?


Which Agreement Is Appropriate? Subcontracts

Definition: The granting of funding from an award to a recipient to an eligible subrecipient or by a subrecipient to a lower tier subrecipient Subcontract is formalized written agreement

between the University and the subrecipient Subcontract versus Subaward UNF can be

A recipient (have awards directly to UNF) A subrecipient (have subcontracts from awards to others) … But not on the same award!


Specific prior approval of the sponsor is generally required before an activity on a sponsored project may be subcontracted to a third party Inclusion in proposal usually fulfills this

requirementStatutory “Sponsored Research Exemption”

exempts us from competitive bid process if not named in proposal

Florida Statute 1004.22


The subcontract agreement will state The activities to be performed Time schedule Reports to be delivered General provisions applicable to the subcontractor

including flow-down provisions from the prime sponsor

Dollar limitation of the agreement Any additional policies and procedures applicable

to the project The mechanism (FP or CR)


Subcontract with Non-Profit entity: Lead entities must ensure in subcontracts with federal funds: Appropriate federal information is provided to subrecipient. Advise subrecipients of flow down requirements of Federal laws,

regulations, the award terms/conditions and the prime agency terms/conditions.

Monitor subrecipients to ensure that awards are managed in compliance with laws, regulations, and awards terms, and that performance goals are achieved.

Ensure that subrecipients have met their audit requirements and take appropriate actions in the case of bad audit findings.

Most are subject to same OMB circulars and we just request proof of audits being conducted and do a cost analysis for the project.

Ensure that the pass-through entity and auditors to have access to the all necessary records for the pass-through entity to comply with appropriate OMB Circulars and with Sunshine laws.


Subcontract with For-profitThe same OMB Circulars do not apply to

for-profits as apply to UNFThe lead entity must establish requirements to

ensure compliance The contract should describe applicable compliance

requirements and the for-profit subrecipient's compliance responsibility

Methods to ensure compliance may include pre-award audits, monitoring during the contract, and post-award audits


DSRT Policy Manual: Subcontracts/Subrecipient Agreements A subcontract is an agreement, written under the authority and consistent with

the terms of a prime award, that transfers a portion of the research or substantive effort to another organization.

A subrecipient relationship exists when a third party: Performs a substantive portion of the programmatic work, which is defined as

project activities that support the primary purpose of the prime award; Has responsibility for programmatic decision making

Jointly responsible for directing performance of project Uses the funds provided to carry out the program as opposed to providing

goods or services for the program of UNF; Is responsible for helping the UNF meet the requirements of the prime award;

Award is flowed down to subrecipient Has its performance measured against whether the objectives of the program

are met or has responsibility for adherence to applicable program compliance requirements

Jointly responsible for portion of Statement of Work Lead determines who is eligible to receive financial assistance

Compliance / Audits / Cost AnalysisBased on OMB Circular A-

133


What’s this mean to me?A subcontract is appropriate when:

The agreement is with another legally separate entity, not an individual

Individual is using institutional resources

The entity is performing a significant part of the scope of work and is involved in programmatic decision making

The entity is not just providing goods or services that enable UNF to perform the SOW

Which Agreement Is Appropriate?Contract for Services

DefinitionFormalized written agreement for an outside

entity or person/consultant to produce a product or service that is necessary for the performance of the project

Similarities to subcontractFunded by a sponsored agreement Is a contract with a SOW

SOW and invoicing requirements are Complex and cannot be easily managed via an ICA Agreement


Differences from subcontract Procurement Contract / Vendor relationship

Vendor is providing goods/services Consultant providing professional services or highly

technical advice *** Not responsible for portion of main award SOW ***

Contractual language Provisions of the prime award do not flow down to the

recipient Language regarding timing of payments, travel, Equal

Opportunity law included Fixed Price only


Characteristics of a vendor (1) Provides the goods/services within

normal business operations; (2) Provides similar goods/services to many

different purchasers; (3) Operates in a competitive environment; (4) Provides goods/services that are

ancillary to the project; and (5) Is not subject to compliance

requirements of the Federal program.


Characteristics of ConsultantsConsulting by its very nature implies a small

role or part in the researchA PI has responsibility for reporting, progress

and annual reports, etc. A consultant only handles the small aspect that

they are contracted to do

Angela Medyk, UF Research Administrator


MonitoringEnsure that the procurement, receipt, and

payment for goods and services comply with laws, regulations, and the provisions of contract

Vendor transactions are structured such that the vendor is responsible for compliance

Or vendor's records must be reviewed to determine compliance.


What’s this mean to me?A Contract for Services is appropriate when

Agreement is with individual or entityProviding goods/services that enable UNF to

perform the SOW Not performing substantial portion of SOW or involved

in programmatic decision making

Which Agreement Is Appropriate? ICAs

Just a few words…Similar to Contract for Services

Used for same purpose in same situationsDifferent from Contract for Services

Simple SOW Simple invoicing requirementsProcessed through Purchasing

If paid with grant/contract funds, must be submitted to DSRT for approval

Which Agreement Is Appropriate?Process

Process for Subcontract/Contract for Services: Request for Contract Document sent to

DSRT http://www.unf.edu/dept/research/request_for_contract.pdf

DSRT prepares contractForwards it to the PI for review and SOW input

Contract negotiated with other partySigned by authorized signatories

DSRT encumbers the funds

One Very Important Point

Can a UNF faculty member be a consultant on a UNF award? No! Intra-university consulting is assumed to be

undertaken as a university obligation requiring no compensation in addition to full-time salary

An exception to every rule In unusual situations, one may be consultant and

employee, receiving funds for both roles as long as those separate services are not related to and are not charged to the same project

One Very Important Point

Is allowable when the consultation is across departmental lines or

involves a separate or remote operation the work performed is in addition to their regular

workload

Under no circumstances can an individual be paid as a consultant and an employee on the same project!

Summary – Keep it Easy!!

So how do I know what to do?We need to think about

What is the intent of the arrangement?What protections need to be in place for both

PI/PDs and their institutions?We don’t need to think about

Which mechanism is the easiest?


OMB A-133 acknowledges the use of judgment in making this determination: “There may be unusual circumstances or

exceptions to the listed characteristics. In making the determination of whether a subrecipient or vendor relationship exists, the substance of the relationship is more important than the form of the agreement. It is not expected that all of the characteristics will be present and judgment should be used in determining whether an entity is a subrecipient or vendor.”

Easiest thing to do – contact DSRT


Ask these two guiding questions Is the collaborating party involved in the scientific

development or execution of the project? Yes = Subcontract No = Contract for Services or ICA

Does the collaborator need to use any of their home institution’s resources?

Yes = Subcontract / Contract for Services No = Contract for Services / ICA

Complex SOW and Invoicing = Contract for Services Not Complex = ICA

Elements of Statements of Work


Elements of a Statement of Work

Where do they come from?If agency provides:

DSRT can compare to proposalDSRT must rely on PI for approval

If UNF provides: DSRT must be provided with a SOW by PIDSRT can try to pull SOW out of the

proposal but need PI input


What it is:Must clearly define work / tasks to be

performedMust be measurable

Specific deliverables and requirementsDeliverables should be tied to payments

Should be as concise as possible Goal is to reduce proposal information into

list of deliverables


What it isn’t: Is not another version of the proposal

Although proposal may be used for grants or CR contracts

Is not specific to who at UNF is performing what activities

Key Personnel are defined in contract proper

Is not related to effort devoted That is CR mechanism

Is not related to customary administrative functions Things that UNF must do internally to perform


Examples in hand-outsAttachment A – which is good?Attachment B – Schedule of Deliverables

Working Exercise / DiscussionProposal Narrative & Activities Performed

Working Exercise

What is a good statement of work based on information provided?For fixed priceFor cost reimbursable

Attachment A - SOW

Attachment A / Statement of Work UNF will conduct a study to determine the

effects of Drug X versus Placebo on blood sugar levels in Hispanic diabetics and in Hispanics with normal blood sugar levels involving 20 subjects (50% in control group).

UNF will: Submit a written progress report on 6/30/07 Present research results at project meeting at

Johns Hopkins on 9/30/2007 Submit a written final report on 1/31/2008

Attachment A - SOW

If Cost Reimbursable can use First paragraph within contract properProposal narrative as attachmentReference to work “as outlined in proposal

dated…”

Attachment B

For Cost ReimbursableFor Fixed Price

Questions?

ContactsDawn Boatman

[email protected] 10, Room 1120

Alexia [email protected] 3, Room 1321

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The Joy of Contracts… Or… When Did I Sign Up To Become A Lawyer? Division of Sponsored Research...

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