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Business and Financial Policies and Procedures

Section 16.1.5 - Sponsored Projects Administration

Urbana-Champaign Campus Supplement

Sponsored Projects

The University conducts sponsored research, teaching, and other projects funded by sponsors outside the University. For additional information on the policy governing acceptance of contracts and grants, refer to the General Rules Concerning University Organization and Procedure. The homepage for the Grants & Sponsored Projects Office provides links to various regulations, policies, and forms. Refer to the Grants & Sponsored Projects Office homepage for updates and pending changes and to access the most current Facilities and Administrative and Fringe Benefit rates.

Sponsored projects are supported by entities outside the University, have a defined scope or objective, and include reporting requirements. They result from proposals submitted by the University and funded by an external organization, such as a federal, state, local, or foreign unit of government, a foundation, an association, or a commercial entity.

Sponsored projects such as grants, contracts, and cooperative agreements are solicited and/or accepted for purposes which are consistent with and enhance the teaching, research, and public service mission of the University. Sponsored activities are undertaken by the University with support from outside sponsors that expect an outcome that either directly benefits the sponsor or serves a public purpose the sponsor wishes to promote. At a minimum, the sponsor requires the University to report on how the funds are spent and what progress has been made in accomplishing the goals of the activity. All proposals for support under the category of sponsored activities must be submitted to the sponsor through the Grants & Sponsored Projects Office.

Sponsored project awards can take the forms described below. The distinction between sponsored project awards and gifts is defined in Section 11.2, Distinctions Between Gifts and Sponsored Activities (Grants & Sponsored Projects) of the Business and Financial Policies and Procedures. Gifts are contributions made to the University for which the donor receives no direct benefit and requires nothing in exchange beyond a general assurance that the intent of the contribution will be honored.

Grants - Grants are used when the principal purpose of the award is to accomplish a specified public purpose of support or stimulation authorized by Federal statute. Grants are also used by state agencies, local governments, foundations, associations, corporations, and other private entities. Grants differ from gifts in that they entail reporting requirements, and differ from contracts in that they do not typically involve specific deliverables. Grant terms and conditions are typically sponsor or program regulations that are referred to but not included in the grant document itself. Refer to Appendix I - Typical Terms and Conditions for Federal Research Grants for a summary of federal terms and conditions for grants.

Cooperative agreements - Cooperative agreements have the same principal purpose as a grant but are chosen as the instrument of award when conduct of the work involves substantial participation by the federal sponsor.

Contracts - Contracts are used when the principal purpose is procurement, i.e., acquisition of property or services for the direct benefit of the sponsor. Contracts entail specific deliverables, and terms and conditions are incorporated directly into the contract document.

Standard research agreements - The University has developed standard research agreements for commercial and other non-federal sponsors (including local governments and State of Illinois). These agreements have been developed in conjunction with the University Counsel and contain provisions that protect the University's interests. They can be obtained from the Grants & Sponsored Projects Office Website.

Sponsor-originated agreements - When sponsors furnish agreements to be used instead of standard agreements, they must be reviewed and approved by the Grants & Sponsored Projects Office, and as needed by the Office of Research Administration (ORA) in the Office of the Vice Chancellor for Research, and University Counsel. Where necessary, the ORA or the Grants & Sponsored Projects Office will negotiate with the sponsor to reach mutually satisfactory terms and conditions for conducting the work.

Subawards - Subawards are awarded by a pass-through entity using funds it received from a prime sponsor, rather than its own funds. Subawards are typically subject to the same terms and conditions of the prime award to the pass-through entity, plus any additional terms and conditions the pass-through entity feels it needs for the effective administration of the subaward.

Technical testing agreements - The University conducts specified tests on a service basis for external parties when the University has special or unique facilities not elsewhere available or accessible. Guidelines for acceptance and approved formats for Technical Testing Agreements are described in Section 16.4.2, Technical Testing Agreement - UIUC Supplement.

Intergovernmental personnel agreements (IPAs) - IPAs may be extended to permanent University employees who are given temporary work assignments at federal agencies. These University employees must be faculty or academic professionals who have been employed by the University for at least one year before serving on the IPA assignment, and who are eligible to return to a University appointment at the end of the IPA service. While on IPA assignment, University employees continue to participate in the University's benefits coverage.

Scholarships and Fellowships - Scholarships are gratuitous payments to students to provide financial assistance during the period of their training. Fellowships are awards involving cash stipends for graduate students or postdoctoral scholars. Fellowships are not awarded for carrying on specific research, and the University requires no services of a fellow. When provided by external entities, scholarships and fellowships are managed in one of the following ways:

  • Awarded directly to students by external sponsors
  • Awarded by the University through the University Office of Student Financial Aid or the Graduate College
  • Received by University departments as gift funds and subsequently awarded to eligible students;
  • Administered by the University as "agency accounts" as a matter of convenience for entities that wish the University to manage payment to a particular student
  • Received as a grant and awarded to eligible students selected by the sponsor
  • Received as a grant when the sponsor imposes terms and conditions for which the University is responsible for compliance, irrespective of whether the sponsor or University selects the recipient

Only the latter two cases above are considered sponsored projects and covered by these sponsored project policies.

Sources of Policies, Rules, and Guidelines Applicable to Sponsored Projects

Sponsored project funds awarded to and administered by the University are to conform to University policies and guidelines and those of the sponsor. Projects where the University is a subawardee are subject to applicable policies of the sponsor providing the funding, as well as whatever other terms and conditions are specified by the prime awardee.

Federal

When the sponsor provides federal funding for the project, either directly or indirectly as pass-through funds, there are specific compliance requirements.

Statutory Requirements are created when laws are enacted, and these requirements take precedent over all other policies and regulations related to sponsored projects. A summary of statutory requirements is maintained by the Federal Demonstration Partnership (FDP) in the document entitled FDP Operating Procedures, Appendix A.

Office of Management and Budget Circulars for government-wide sponsored project management are as follows:

OMB A-110, Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals and Other Non-Profit Organizations, applies to grants and cooperative agreements and provides guidance in such areas as property standards, procurement standards, reports and records. (Note that federal contracts are subject to Federal Acquisition Regulations rather than A-110.) Individual agencies implement this Circular in the Code of Federal Relations, which is typically the same as their grant regulation documents.

OMB A-133, Audits of States, Local Governments and Non-Profit Organizations, provides uniform requirements for audits of Federal awards. The University of Illinois is audited annually to ensure compliance with laws and regulations and maintenance of adequate internal controls. Audit reports for recipients subject to Circular A-133 are available at the Federal Audit Clearinghouse.

OMB A-21, Cost Principles for Educational Institutions, applies to grants, contracts, and other agreements with educational institutions and provides principles for determining costs applicable to federal sponsored agreements. (Note that A-21 applies to contracts and to subrecipients performing work under federal awards.)

Cost Accounting Standards are applied to educational institutions through OMB Circular A-21. The Cost Accounting Standards Board, an entity within the U. S. Office of Management and Budget, publishes Cost Accounting Standards (CAS) for commercial contractors and subcontractors. The four Cost Accounting Standards to which universities are subject to through OMB Circular A-21 are the following:

  • Consistency in estimating, accumulating, and reporting costs. This means that proposed budgets should not include costs at a lower level of aggregation for which the University's financial accounting system can account. For example, scientific supplies can be budgeted, but not separate items for reagents, chemicals, and pipettes.
  • Consistency in allocating costs incurred for the same purpose in like circumstances. This requirement is fully described in Section 16: Grants and Research Contracts - Cost Transfers.
  • Accounting for Unallowable Costs. This requirement is fully described in Section 16: Grants and Research Contracts - Cost Transfers.
  • Cost Accounting Period. This is the University's fiscal year-July 1 through June 30.

Due to CAS application to the University of Illinois, a Cost Accounting Standards Board Disclosure Statement was filed describing accounting practices for assigning direct and indirect costs to federal sponsored projects.

The disclosure statement must be amended if there are changes in cost allocation policies. UIUC is subject to periodic audits to determine if it is consistently applying its policies. For this reason, individuals responsible for the assignment of costs must be fully aware of the applicable policies, and conform with them diligently. Noncompliance with UIUC's established policies could lead to cost disallowances, refunds with interest and penalties, and increased audit surveillance by federal audit agencies and Inspectors General.

Federal Demonstration Partnership Terms and Conditions. UIUC is a member of the Federal Demonstration Partnership (FDP). Therefore, certain research awards from the major federal agencies shown in the table below are subject to FDP General Terms and Conditions and FDP Agency Specific Requirements, rather than the agency grant regulations. Awards received from an FDP agency as a subaward are subject to FDP terms and conditions only if the pass-through entity is an FDP institution. For example, a National Institutes of Health grant provided to the University of Illinois by Harvard University is subject to NIH policies that apply to Harvard (the NIH Grant Policy Statement), as well as to whatever requirements Harvard stipulates. As a non-FDP institution, Harvard cannot apply FDP terms and conditions to its awards to the University of Illinois.

Agency Award Types Covered
Air Force Office of Scientific Research (AFOSR) Research and research-related grants to FDP participating institutions or organizations. The FDP T&Cs do not apply to cooperative agreements, contracts, or any other kind of transaction.
Army Medical Research and Material Command(AMRMC) Research grants and cooperative agreements to FDP members
Army Research Office(ARO) Research and research-related grants to FDP participating institutions or organizations. The FDP T&Cs do not apply to cooperative agreements, contracts, or any other kind of transaction.
Cooperative State Research, Education, and Extension Service U.S. Department of Agriculture Research and research-related grants to FDP participating institutions or organizations. The FDP T&Cs do not apply to cooperative agreements, contracts, or any other kind of transaction.
Department of Energy (DOE) Research and research-related grants to FDP participating institutions or organizations. The FDP T&Cs do not apply to cooperative agreements, contracts, or any other kind of transaction.

Environmental Protection Agency (EPA)
Research and research-related grants to FDP participating institutions or organizations. The FDP T&Cs do not apply to cooperative agreements, contracts, or any other kind of transaction.
National Aeronautics and Space Research and research-related grants to FDP participating institutions or organizations. The FDP T&Cs do not apply to cooperative agreements, contracts, or any other kind of transaction.
Administration (NASA) Research and research-related grants to FDP participating institutions or organizations. The FDP T&Cs do not apply to cooperative agreements, contracts, or any other kind of transaction.
National Institutes of Health (NIH) Research and research-related grants to FDP participating institutions or organizations. The FDP T&Cs do not apply to cooperative agreements, contracts, or any other kind of transaction.
National Science Foundation (NSF) Grant awards made to participating FDP organizations. The FDP Terms and Conditions do not apply to NSF cooperative agreements and fellowship awards.
Office of Naval Research (ONR) Research and research-related grants to FDP participating institutions or organizations. The FDP T&Cs do not apply to cooperative agreements, contracts, or any other kind of transaction.

 

There is an FDP Terms and Conditions Website that provides the actual terms and conditions along with associated information.

Policy manuals, handbooks, and general grant conditions documents (for grants and cooperative agreements not covered by FDP terms and conditions.)
Links to many of these federal agency grant policy documents are found on the OBFS Website. A summary of FDP and non-FDP terms and conditions is found in Appendix I - Typical Terms and Conditions for Federal Research Grants. In the case of subawards from institutions that are not participants in the Federal Demonstration Partnership, these grant policy documents apply.

Federal Acquisition Regulations (FAR) are the primary regulations used by federal sponsors to govern contracts for supplies and services, including research services. FAR incorporates OMB Circular A-21 for the purpose of defining allowable costs. FAR is not applied to grants and cooperative agreements that are governed by OMB Circular A-110, agency grant regulations, or FDP terms and conditions. Federal contracts typically incorporate all of the FAR clauses applicable to a given project.

State/Private

Projects sponsored by State of Illinois and other non-federal sponsors must comply with applicable sponsor policies and the terms of individual sponsored agreements.

All Sponsors

Deviations from either University or sponsor policy must be explicitly negotiated and approved by authorized officials of the University and the sponsor.

Policies and Procedures for Proposal Development and Submission

All proposals for sponsored projects, regardless of whether funds will be awarded to the University of Illinois or the University of Illinois Foundation, must follow these proposal approval guidelines. Certain Foundation sponsors, by charter, can award only to particular kinds of non-profit organizations, and are precluded from making awards directly to the University. This is the only circumstance under which a grant can be made to the Foundation.

Personnel Authorized to Submit Proposals

Subject to the approvals described below, faculty members or administrators (in the case of non-instructional units) may submit proposals as Principal Investigators or Project Directors (PI/PDs). Other personnel, including professors emeritus (with zero-time appointments), may do so with the permission of the unit head who must assure that should the individual become unavailable to complete the work proposed, the unit will either accept responsibility for the completion of the project or return funds as provided by sponsor policy or agreement. New University employees whose appointments have not yet started can also submit proposals through the University, with the permission of the unit head.

Approvals Required for All Proposals

Before submission to sponsors for consideration, all proposals must have approval from the following:

Campus Department / Unit

This approval confirms that the project can be integrated with the department's / unit's regular educational, research, or service functions. The unit approves the proposed budget and confirms its commitment to make unit personnel and facilities described in the proposal available for the project should it be awarded, and to administer the award in conformance with the applicable terms and conditions. The department/unit is responsible for compliance issues such as: use of human subjects or live vertebrate animals, chemical hazards, biological hazards, patent considerations, consultant payments, potential conflicts of interest, and copyright issues. These issues must be noted on the back of the Proposal Transmittal Form.

Schools and Colleges

Schools and colleges may stipulate that they are also to review and approve any proposal originating in their units.

Grants & Sponsored Projects Office

This approval confirms that the proposal budget has been constructed in conformance with University and sponsor policy, that any proposed subawards are reflected properly, that the usage of University facilities and demands upon University resources have been approved, and that proposal administrative information/approvals conform to University, State, and sponsor policies.

Campus Research Board

This approval confirms consideration has been given to those compliance items listed on the Proposal Transmittal Form, including but not limited to policies for conflict of interest and the use of human subjects and animals, and that the campus' interest would be served by the proposed activity. Further, it confirms that all commitments of resources by campus units other than the proposing unit have been formally documented.

After approval by the Campus Department/Unit, School/College, and the Grants & Sponsored Projects Office, the chairperson of the Campus Research Board or designee considers the proposal for final approval. Proposals with certain special characteristics also require additional approvals, as described below.

A fully approved proposal constitutes the formal offer of the University to carry out the project. The institutional approvals are obtained by having the appropriate official either provide a letter confirming approval, or by the signature affixed on the Proposal Transmittal Form.

Additional Approvals Required for Proposals with Particular Characteristics

Before submission to the Grants & Sponsored Projects Office, the following types of proposals require approvals in addition to the Campus Department/Unit:

  • Proposals involving resources from other units must be approved either by a letter of support or a signature on the Proposal Transmittal Form by the unit(s) providing these resources. Such resources may be in the form of funding, personnel, space, facilities, or other resources under control of that unit.
  • The Vice President for Academic Affairs must also approve proposals involving resources from another campus.
  • All proposals that have a significant international component are to be approved by the Director of International Programs and Studies.
  • Proposals for graduate fellowships must be reviewed and approved by the Graduate College.
  • The Chancellor, Provost, or the Vice Chancellor must approve proposals that include a commitment of campus funds. The Vice President for Academic Affairs must approve proposals that include a commitment of University funds.
  • The Provost must approve proposals that seek funds for a summer or academic-year institute, a new research or public service program that would require Illinois Board of Higher Educations (IBHE) approval.
  • Proposals that would result in the establishment of new units must be approved by the Provost and the Vice President for Academic Affairs, and must conform with provisions of Article VIII "Changes in Academic Organization," University of Illinois Statutes.
  • The Provost or designee must approve proposals that require the acquisition, renovation, or allocations of space beyond that which the unit or college can provide. Both the Provost and the Vice President for Academic Affairs must approve proposals that require construction of a new building.
  • In those instances where the sponsor requires a University Board Officer's signature, the transmittal will be signed with the University Comptroller's name by authorized Grants & Sponsored Projects Office staff. ( Business and Financial Policies and Procedures, Section 1, What Approving or Signing a Document Means)

The Grants & Sponsored Projects Office will consult with the Office for Research Administration and/or University Counsel for advice on proposed terms and conditions that may be of questionable legality or inconsistent with University policies or interests.

Sponsor Limitations on the Number of Submissions from an Institution

Those intending to submit proposals under programs where sponsors limit the number of proposals a campus may submit must inform the Negotiations Section of the Grants & Sponsored Projects Office at least 30 days prior to the submission deadline. The Negotiations Section seeks guidance from campus officials about the process for deciding upon which proposal(s) will be submitted.

Requests for Proposals (RFPs) and Program Announcements

RFPs are solicited proposal packages that normally include representations and certifications to be completed and executed by the University and may include proposed contract terms and conditions. Most of these types of proposals have firm deadlines applicable to their receipt by the sponsor. A copy of the entire proposal solicitation instruction package should be forwarded to the Grants & Sponsored Projects Office when it is received by the investigator or department, along with an indication of who intends to submit a proposal under the RFP, so that appropriate internal reviews and approvals may be accomplished before specified submission deadlines.

Program announcements should also accompany proposals when they are forwarded to the Grants & Sponsored Projects Office, except for those programs that are governed by standard and well known sponsor requirements.

Representations and Certifications

Required assurances, representations or certifications are detailed in the proposal instructions. Proposals are considered incomplete if required endorsement signatures are omitted, or if required certifications are not provided. The Grants & Sponsored Projects Office will obtain the required signature of the authorizing official for the University when the proposal is routed to the Grants & Sponsored Projects Office.

Federal funding agencies require certification that the University is in compliance with the Drug free Workplace Act; that the University has not used and does not intend to use federal funds for lobbying activities; and that the University is not debarred or proposed for debarment. For proposals that would result in federal contracts or subawards of $550,000 or more, the Certificate of Current Cost or Pricing Data is also required.

Federal requirements on lobbying activities - The Lobbying Disclosure Act of 1995 forbids using federal funds to lobby the federal government. This certification must be submitted along with any proposal requesting $100,000 or more.

The Act defines lobbying activities as "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." Lobbying contacts encompasses any communication to executive or legislative branch officials covered by the Act and made on behalf of a client with regard to legislation (including legislative proposals); rules, regulations, executive orders, or any other program, policy, or position of the United States Government, the administration or execution of a federal program or policy (including the awarding of federal contracts and grants); or the nomination or confirmation of a person for a position subject to confirmation by the Senate.

Anybody contacting a federal official in a way that may be covered by the Act should inform the Director of Federal Relations for the University of Illinois who must include lobbying contacts made by University of Illinois personnel in the semi-annual report required under the Act.

The 1995 Act specifies that the following contacts made by university personnel are not considered lobbying contacts:

  • Communications made in speeches, articles, or through any medium of mass communication.
  • Routine requests for meetings or for the status of an action as long as there is no attempt to influence covered executive or legislative branch officials.
  • Communications made in the course of participation in an advisory committee, testimony given before a congressional committee or submitted for the public record of a congressional hearing.
  • Information provided in writing at the request of a covered legislative or executive branch official, as long as it is provided to the federal official who made the request.
  • Communications required by subpoena, investigation or otherwise compelled by law or congressional or agency action.
  • Communication made in response to a notice in the Federal Register, Commerce Business Daily, or other similar publication soliciting public communications.
  • Communications made on behalf of an individual concerning his or her own benefits, employment or other personal matters involving only that individual.

Debarment and suspension - Federal funds cannot be used to support an individual or organization if a federal agency has debarred, suspended, or otherwise excluded (to the extent specified in the exclusion agreement) that party from participation in a federal activity. This means that any type of reimbursement (travel, honorarium, consulting, etc.) to such a party is an unallowable charge to a Ledger 5 federal project.

A debarment certification must be a part of the agreement signed by each subawardee or consultant when a third party performs a portion of the scope of work. For procurement contracts (purchase orders) for goods or services, the certification is required for transactions in excess of the federal Simplified Acquisition Threshold, currently $100,000.

Drug Free Workplace - In order to receive State or federal grants or contracts, the University must agree to provide a drug free workplace by establishing drug abuse policies and programs. When an employee engaged in the performance of a state or federal grant or contract is convicted of a criminal drug statute for a violation occurring in the workplace, they must inform the University no later than five (5) days after such conviction, and the University must then notify the sponsor within ten (10) days of the notification by the employee. The University must either sanction the employee or require the employee to enroll in a drug abuse assistance or rehabilitation program. Most federal agencies require a drug free workplace certification at the time the proposal is submitted, in the format prescribed by the sponsor. State agencies also require a certification at the time they award a contract or grant of $5,000 or more.

Certificate of Current Cost or Pricing Data - The threshold for submitting cost or pricing data and certification with a proposal is $550,000, for a contract or sub-contract of any tier.

Subawards

Subawards are made by the University to other organizations who will perform a part of the scope of work for a project awarded by the sponsor to the University. Subawards may be sub-grants, sub-cooperative agreements, or sub-contracts, and are generally of the same type as the award to the University. Agreements to obtain goods or routine services are purchases and not subawards, and subject to all relevant University procurement policies.

Subrecipient's proposal is incorporated in the University's proposal to potential sponsors, subject to the following procedures:

  • The Grants & Sponsored Projects Office determines whether a proposed subaward is "scope of work" or procurement of goods or routine services, and checks to see that the work is budgeted and described appropriately in the proposal.
  • The Principal Investigator (PI) should incorporate prospective subrecipient's work statements, budgets, administrative approvals, in the sponsor's format if the sponsor so requires, with the University's initial proposal to the potential sponsor. Failure to identify a subrecipient in a proposal can necessitate sponsor approval or competitive selection before the subaward can be executed.

Contact with Commercial Sponsors

When developing proposals to commercial sponsors, issues concerning intellectual property (patent and copyright) provisions, publications restrictions, and confidentiality should be directed to the Grants & Sponsored Projects Office as early as possible, preferably prior to extensive exchanges with such sponsors. These issues must also be indicated on the Proposal Transmittal Form. The Negotiations Section will consult with Office of Research Administration staff in the Office of Vice Chancellor for Research concerning the special considerations that usually enter into University/commercial sponsor negotiations

Proposal Deadlines

To ensure the submission of proposals by prescribed deadline dates, campus units should normally allow at least three (3) working days for a proposal to be processed by the Grants & Sponsored Projects Office. Because many sponsors use a first of the month or middle of the month deadline, campus units should allow five (5) working days for proposals due on these days of any month. If a proposal reaches the Grants & Sponsored Projects Office with insufficient time for review, the Grants & Sponsored Projects Office will perform a post-submission review and make the sponsor aware of any needed revisions. Proposals with serious deficiencies may be withdrawn.

Transmittal of Proposals

Units should inform the Grants & Sponsored Projects Office of any special handling instructions desired by attaching a separate note to the Grants & Sponsored Projects Office copy of the proposal. As an example, this note should include the following types of instructions or information:

  • Special agency deadlines (postmark or receipt date) and delivery points (pre-printed mailing labels will expedite handling).
  • Whether the unit wishes the proposal to be picked up for special mailing by the unit after the Grants & Sponsored Projects Office review has been completed.
  • If the proposal is to be sent by overnight mail service, the special mailing expense is the unit's responsibility. The unit must provide a non-sponsored project account number to be charged. If special instructions of this type are not received by the Grants & Sponsored Projects Office with the proposal, the proposal will be sent by First Class Mail.

Overnight express mail sometimes fails to reach the sponsor the following day. The federal government will only accept express mail sent two days before the deadline assuming the delay is the fault of the shipper. However, items shipped one day ahead of the deadline will not be accepted.

Proposal Budget Development

The budget is the financial plan for the project or program. It may include both the sponsor and non-sponsor share, or only the sponsor share, depending upon the sponsor's cost sharing requirements. (See Proposed Cost Sharing.) Proposed project costs are comprised of allowable direct costs, facilities and administrative (F&A) costs, and cost sharing. For costs to be allowable as charges to sponsored projects, they must be reasonable, allocable to the sponsored project, allowable under University and sponsor policy, accorded consistent treatment with respect to whether they are charged directly or included in the F&A rate, and conform to limitations or exclusions set forth by the sponsor.

The investigator should prepare a budget narrative to explain how budgeted costs relate to the work proposed. The investigator should use the narrative to clarify any special requirements, describe the basis of estimates or rates, specify equipment to be purchased, justify restricted costs, and justify the use of consultants, subrecipients, etc. This information will assist the sponsor in determining whether the proposed costs are reasonable and appropriate, and constitutes sponsor approval to incur the costs if the award is made without specifically eliminating any of the costs.

The use of computerized budget forms is encouraged, and many common federal agency budget forms are available on the OBFS Website, customized for the University by incorporating approved University Facilities and Administrative (F & A) and fringe benefits rates. Proposal developers may submit budgets for pre-review by the Grants & Sponsored Projects Office negotiators prior to submitting the completed proposal. To be effective, the pre-review should be accomplished prior to the internal proposal deadline of three to five days.

Direct Costs

Direct Costs to Be Provided by the Sponsor

Direct costs are those costs that can be identified specifically with a particular sponsored project. The investigator should use the direct cost categories provided on the sponsor budget form. If no forms are provided, estimate project costs in the following categories: personnel, fringe benefits, materials and supplies, travel, services, consultants, equipment, subawards, and the tuition remission of graduate assistants (and training grants, scholarships and fellowships, etc.). Do not budget a cost expressly prohibited by the sponsor. For costs essential to the completion of a federally funded project (including State of Illinois pass-throughs) that the sponsor restricts, provide justification in the budget narrative.

See Section 16: Grants and Research Contracts - Cost Transfers for detailed information on items of cost that are either unallowable or restricted by federal sponsors. OMB Circular A-21 restricts charging certain types of costs directly, though in some instances they are permitted if there is explicit justification. Examples include administrative salaries, memberships, postage, office supplies, and telephone monthly line charges.

See Section 16.1.4, Equipment, Equipment Leases, and Expendable Supplies - UIUC Supplement for detailed information about procuring and managing equipment, equipment leases, and expendable supplies.

Graduate Assistant Tuition Remission

Since fiscal year 2000, graduate tuition remission has been a direct cost for proposal budget purposes. The tuition remission rates are established through negotiation with the federal government. The appropriate approved rates are to be applied to the salaries of graduate assistants with tuition waivers. Refer to the Grants & Sponsored Projects Office Website for the most up-to-date rates. Where possible, tuition should be shown as an identified line item called "tuition remission", or otherwise included as an item under "other direct costs." In either case, F&A is not assessed on this amount, and tuition is not to be included in fringe benefits. Where allowed by a sponsor that provides full, negotiated F&A rates, tuition remission should always be included in proposal budgets unless it is known with a certainty that the graduate assistant(s) who would be hired for the project would not be eligible for an assistantship tuition waiver. When a sponsor provides reduced or no F&A, the sponsor's policies or the Request for Proposal should be reviewed to determine if tuition remission is unallowable. If tuition remission is not specifically disallowed, the initiator of the proposal may request tuition remission, but is not required to do so. When requested, it should be budgeted as described above. The campus has elected not to charge tuition remission on State of Illinois projects with reduced F&A rates. By federal statute,U.S. Department of Agriculture Cooperative States Research, Education, and extention Service grants and certain Agricultural Research Service Grants are prohibited from providing graduate assistant tuition remission.

Fringe Benefits Rates

Fringe benefit rates are established annually and approved by the federal government near the beginning of each fiscal year. All proposals should use the most recent rates available. The rates for the retirement component for the upcoming fiscal year is announced some months before the beginning of the fiscal year, and should be used when the proposed project begins after July 1. The appropriate fringe benefits rates must be applied to all salaries shown in a proposal budget. Changes in fringe benefit rates are assessed immediately when they become effective, even if the budgeted rates are different. Fringe benefits costs are not subject to waiver. Refer to Grants & Sponsored Projects Office Website for the most up-to-date rates.

Proposed Cost Sharing

Follow any sponsor instructions about how to show cost sharing in the proposal. All proposed cost sharing, including any proposed cost sharing not mandated by the sponsor or in excess of that mandated by the sponsor, must be formally accounted for if it is in the budget or budget narrative. See the section on Cost Sharing for additional information.

Cost sharing can take the form of contributed effort of academic employees working on the project, or other direct project costs. When allowed by the sponsor, it can also be foregone indirect costs. When required by the sponsor, cost sharing is shown on the budget form or identified in the budget narrative. Whenever cost sharing is indicated in the proposal, whether mandated by the sponsor or not, it must also be reflected on the accompanying Proposal Transmittal Form. (The Proposal Transmittal Form is available from the Grants & Sponsored Projects Office Website.

Cost sharing to meet the National Science Foundation's "1% statutory" requirement is not to be shown on line "M" of the NSF Proposal Budget Form 1030 in the proposal, but must be shown on the Proposal Transmittal Form.

When a proposal submitted from one unit indicates resources contributed by another, including contributed effort, the unit providing the cost sharing must either sign the transmittal form or provide a separate letter acknowledging its responsibility to provide what is committed should the proposal be funded.

When committing or volunteering cost sharing, the amount of the contribution includes the appropriate on or off-campus F&A rate, as determined by whether the cost shared activity will take place on campus or at an off-campus site.

It is important to distinguish in proposals between cost sharing and existing resources-facilities, equipment, services, etc., which may be mentioned to demonstrate that there is sufficient infrastructure to support the proposed work. No cost sharing should be shown in the "resource" section of a proposal. A cost sharing commitment cannot include expenses that are recovered through the facilities and administrative rate.

Application of Facilities and Administrative Rates

Facilities and administrative cost rates are established by negotiation with the federal government. There are separate rates for Sponsored Instruction, Organized Research, and Other Sponsored Activities, and for each of these, there are rates for on-campus and off-campus projects (see Use of On-Campus and Off-Campus Facilities and Administrative Cost Rates). F&A rates are distributed to deans, directors, department heads, business administrators and survey chiefs and posted on the Grants & Sponsored Projects Office Website.

Modified Total Direct Costs (MTDC)

MTDC includes salaries and wages, fringe benefits, materials and supplies--including expensed equipment, travel, services, and the first $25,000 of each sub-award (sub-grant or sub-contract) where a portion of the scope of work is sub-contracted to a party external to the University (object codes 5651-5699). It excludes scope subawards in excess of $25,000 (object codes 5601-5649) and leases and rentals (object codes 43XX and 5700-5899), and any costs recorded in object codes higher than 6299 (equipment, tuition remission, scholarship and fellowship, student aid).

Total Direct Costs (TDC)

Total Direct Costs includes all direct costs, even those excluded from MTDC. Facilities and administrative costs for a sponsored project are computed by multiplying (1) MTDC by the applicable MTDC facilities and administrative cost rate or (2) TDC by the TDC rate specified by the sponsor and agreed to by the University.

The campus administration may elect to exclude certain costs from assessment (see the current F&A rates).

Determining Which Facilities and Administrative (F&A) Rates to Use in Proposal Budgets

The applicable current facilities and administrative cost rates should be used in all new and renewal proposals. The awarded rates are to be used in continuation proposals. Rates are established for different types of activity; e.g., Instruction, Research, and Other Sponsored Activities, and for on -and off-campus projects. These rates are published on the Grants & Sponsored Projects Office Website.

The conditions under which a rate other than the negotiated can be used in a proposal are:

State of Illinois agencies where the rate is determined by the source of funds - Principal Investigators and/or units are responsible for determining the source of funding prior to submitting proposals to State of Illinois agencies or entities.

  • For projects supported entirely with State of Illinois funds (agencies of the state and Illinois Local Governmental units), the rate is 10% of Total Direct Costs (TDC) unless the sponsor specifies higher rates, in which case the higher rate will be utilized. Tuition remission is not charged to these projects.
  • For projects supported with combined state and federal funds, the rate is 20% of Total Direct Costs. Tuition remission is not charged to these projects.
  • For projects administered by state agencies supported totally with federal funds, use the current full facilities and administrative rates. Tuition remission should be requested as a direct cost.

Federal sponsors where sponsor applies an F&A rate other than the negotiated rate, such as National Institutes of Health (NIH) training grants.
The amount requested for facilities and administrative costs should be computed in accordance with the funding agency's guidelines. A copy of the sponsor's facilities and administrative cost policy should be provided with the proposal unless previously provided to the Grants & Sponsored Projects Office.

Non-Federal sponsors - the unit must make a written request for an F&A waiver (full or partial) to the Vice Chancellor for Research, who may approve the waiver when--

  • The sponsor is a non-federal governmental agency or not-for-profit entity that formally limits the rate it provides for facilities and administrative costs, and applies this limitation consistently to all its recipients, or
  • The Vice Chancellor for Research, in consultation with the unit head and the Grants & Sponsored Projects , determines that the waiver would be in the best interest of the University and public.

If the VCR approves the waiver for all awards from a particular sponsor, the Grants & Sponsored Projects Office adds that sponsor to its list of approved waivers, and proposal developers do not need additional approval for the waiver. Contact the Grants & Sponsored Projects Office to determine if a particular sponsor has been placed on the list.

When a reduced facilities and administrative rate is approved, the graduate assistant tuition remission rate is normally waived. However, the originating unit has the option of requesting the tuition remission when the sponsor does not expressly prohibit this cost. Tuition remission is not charged to State of Illinois projects that use the 10% or 20% Total Direct Cost Rate.

Use of On-Campus and Off-Campus Facilities and Administrative Cost Rates

Application of the appropriate On-Campus or Off-Campus F&A rate(s) is determined at the beginning of each sponsored agreement and is to be equitably adjusted if the circumstances that determined the application change materially during the period of performance.

The On-Campus rate is to be assessed except when a portion of the sponsored agreement is performed at an off-campus site. The criteria for utilization of the off-campus rate are:

  • Performance at the off-campus site must be on a continuous basis; intermittent performance is not sufficient;
  • The University personnel working or engaged on the project must be physically located at an off-campus site; and
  • The off-campus performance must be of sufficient duration; normally a full semester, summer term, or the period of performance of the sponsored agreement

Direct charges to off-campus projects are the same as those for on-campus projects, except that off-campus projects can also include direct charges for facilities costs such as rent, utilities, janitorial, maintenance, and administrative salaries when administrative support cannot otherwise be provided. Travel to and from an off-campus site is considered an off-campus cost.

Where the University funds facilities costs (janitorial, utilities, or maintenance, for example) for a non-University building, the on-campus rate is usually appropriate, and facilities costs cannot be charged directly to the project.

If a project has different components that are conducted on and off-campus, separate subsidiary ledger accounts will be established so that the on-campus rate will be applied to the work on campus, and the off-campus rate to that component which is conducted off-campus.

Allowances

Sponsors may choose to provide educational allowances for certain student support and training projects. Sponsors may also provide administrative allowances, usually in lieu of F&A cost recovery. These allowances should be shown in the proposal budget in accordance with the sponsor's instructions. Do not apply the F&A rate to allowances.

National Science Foundation (NSF) FastLane Requirements

FastLane is an interactive real-time system used to conduct NSF business over the Internet. It provides a quick, secure, paperless record and transaction mechanism for all NSF awards, from program announcement to award closeout.

Access to FastLane for the Urbana-Champaign campus is coordinated through the Grants & Sponsored Projects Office. Instructions for obtaining access to FastLane and for using FastLane at the University are on the Grants & Sponsored Projects Office Website. These instructions include UIUC's specific requirements for proposal submission and approval. For more information on how to use FastLane, refer to the FastLane Website.

The Grants & Sponsored Projects Office performs the electronic submission of the proposal after units provide signed internal transmittal forms and one paper copy of the proposal to the Grants & Sponsored Projects Office. FastLane users authorized to see the proposal can determine whether or not the Grants & Sponsored Projects Office has submitted it by selecting the option to view submitted proposals.

Negotiation of Awards

Sponsors indicate the scope of work they wish the University to perform, the amount they wish to award, and the terms and conditions under which they wish the project to be conducted. The University determines whether it is willing to accept awards. Negotiation between the University and the sponsor may be required in order to arrive at an award that is acceptable to both the sponsor and the University.

Formal negotiations are conducted by various parties at the University, depending on the issue to be negotiated. The Grants & Sponsored Projects Office will attempt to negotiate the removal of as many objectionable elements in an award as possible before turning the matter over to other campus units for resolution.

Staff members may conduct preliminary and informal negotiations with prospective sponsors. These negotiations are to be with the prior knowledge and consent of the department head and/or other appropriate administrators. However, these staff members have no authority to bind the University to enter into an agreement.

Amount of Award/Scope of Work

If the amount awarded is less than the amount proposed, or if the sponsor adds tasks or responsibilities to those proposed, the proposing unit (or the principal investigator/project director, with the knowledge of the proposing unit) may enter into informal negotiations with the sponsor. The proposing unit is responsible for determining whether or not it will accept an award that differs from that proposed. 

When the award is substantially less than the request and the proposal included University cost-sharing, either the principal investigator/project director, the unit, or the Grants & Sponsored Projects Office should attempt to negotiate a commensurate reduction in the University's contribution.

Terms and Conditions

Terms and conditions that directly affect the conduct of the project - When the sponsor proposes terms and conditions for the project which have a direct impact on the way the project is to be conducted, the unit must determine whether it wishes to accept these terms and conditions. These conditions include such elements as exceptions to the intellectual property policy, restrictions on publications, restricted access to information, confidentiality, limitations to participation of foreign nationals, and unusual reporting requirements. When the sponsors proposes such terms, the assistance and approval of the Vice Chancellor for Research, Grants & Sponsored Projects Office, and the responsible unit head, must be sought. In novel situations, the advice of University Counsel is sought by the Vice Chancellor for Research.

In the case of awards containing terms and conditions that directly affect the conduct of the project, the Grants & Sponsored Projects Office obtains the explicit acceptance of the unit and/or principal investigator/project director.

Terms and conditions that affect the administration of the project - Elements such as payment terms, financial reporting, property management, and intellectual property reporting, are typically negotiated by the Grants & Sponsored Projects Office, with cooperation from the proposing unit and other campus units as necessary. One such condition is the sponsors need for more than standard documentation with billings. Another is the University's need to obtain payments in advance to the extent possible, particularly from sponsors whose credit worthiness is difficult to determine. Electronic payments are preferred whenever possible. The Grants & Sponsored Projects Office also negotiates any other award provision that may not be in the best interest of the University.

Exemption from sponsor or University terms and conditions - The sponsor or University must explicitly approve the exemption from any of its terms and conditions.

Federal Acquisition Regulations (FAR) Clauses

Grants & Sponsored Projects Office negotiators work with sponsors (or pass-through entities, in the case of sub-awards to the University) to ensure that only the appropriate FAR clauses are included in Federal contracts.

Terms and Conditions Set Forth in the General Rules Concerning University Organization and Procedure

Publications - The University undertakes research with the intention of making the results freely and fully available to the research community and ultimately the public. The University has the exclusive right to publish, at its discretion, the results of scientific investigation and research, unless provided otherwise in contracts with agencies of the United States Government, and agreed to by the University on the advice of the committee stipulated in Article II Section 6 (f) of The General Rules Concerning University Organization and Procedure. This committee is composed of the Vice Chancellor for Research or designee, a representative of the appropriate research unit or department carrying on the project, and a representative of the Office of Business and Financial Services Grants & Sponsored Projects Office.

Records - The General Rules Concerning University Organization and Procedure, Article II, Section 6 (c) provides that: "The original records of any investigation shall be held by the University, but reports or copies of such records may be furnished to the sponsor."

Intellectual property - The results of scientific research conducted by the University, including inventions and discoveries, are the property of the University. The sponsor may receive preferential consideration in conformance with Article III, Section 7 (p) of The General Rules Concerning University Organization and Procedure.

The University agrees to waive its established policies only when that action is clearly in the public interest. Such waivers receive appropriate approvals and are part of the accepted award document (for example, grant or contract).

Acceptances

Any formal acceptance of awards (or award related documents) required by the sponsor may be made by persons in the Grants & Sponsored Projects Office who are authorized to sign the University Comptroller's name. (See Business and Financial Policies and Procedures, Section 1, What Approving or Signing a Document Means).

Policies and Procedures Applicable to the Conduct of Sponsored Projects

This section sets forth the considerations necessary for proper administration of sponsored projects by principal investigators and unit administrators.

Assigning Costs to Sponsored Projects

Project costs are all allowable direct and facilities and administrative costs incurred by the University, including the value of the in-kind contribution (cost sharing) made by the University or third parties in accomplishing the objectives of the sponsored agreement during the project period. A project cost is:

  • Reasonable if the nature of the goods or services and the amount involved therefore, reflect the action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made.
  • Allocable to a particular sponsored project if the goods or services involved are chargeable or assignable to the project in accordance with the benefits received.
  • Allowable when it is permitted by sponsoring agency guidelines, terms of a given sponsored agreement, and University policy. Unallowable or restricted costs are those defined as such by University policy. (See Section 16: Grants and Research Contracts - Cost Transfers).

Federal cost principles explicitly forbid subsidizing projects supported by commercial or foreign sponsors with funds provided by the federal government. For example, cost transfers from commercial or foreign projects to federal projects are rarely justifiable, and require extensive documentation.

Direct Charges to Sponsored Projects and Related Documentation Requirements

Expenditures can be charged directly to a sponsored project when the goods or services involved advance the work on the project and provide benefits commensurate with their cost. If an expenditure benefits two or more projects or activities in proportions that cannot be determined because of the interrelationship of the work involved, the cost may be allocated or transferred to benefited projects on any reasonable basis. Salaries and wages are charged and documented in accordance with the policies and procedures in Section 16.1.3, Compensation for Personal Services Charged to Sponsored Projects. Other costs are charged directly to sponsored projects using any of the appropriate mechanisms described in Section Seven, Purchasing of the Business and Financial Policies and Procedures. Special requirements for assigning certain types of costs are found in Section 16: Grants and Research Contracts - Cost Transfers. Policies and procedures for transferring costs are found in Section 16: Grants and Research Contracts - Cost Transfers. All direct charges and cost sharing are confirmed in the semi-annual expenditure confirmation process described in the Post-Award Administration section below.

Cost Sharing Documentation Requirements

Cost sharing is that portion of project costs not borne by the sponsor that are incurred during the period of performance. These costs are not recorded in the sponsored project account, so the documentation requirements for them are different.

Table - Cost Sharing Types and Documentation Requirements
Type of Cost Sharing Resulting Institutional Responsibilities for Documenting Contributed Effort
Committed: offered in proposal budget or budget narrative, or reflected in the award, whether or not required or suggested by program announcement.
  • Shown on the Proposal Transmittal Form 
  • Included in Cost Sharing Commitment File 
  • Confirmed in Semi-Annual Confirmation 
  • Documented in the Activity Reporting System (ARS) maintained by the division of Management Information 
  • Included in Organized Research base 
  • Reported to the sponsor if required in the award
National Science Foundation statutory cost sharing: 1% on all unsolicited research proposals. (An unsolicited proposal is one submitted to any of the funding programs under the terms of NSF's Grant Proposal Guide.)
 
 

 

  • Shown on the Proposal Transmittal Form 
  • Included in Cost Sharing Commitment File 
  • Confirmed in Semi-Annual Confirmation 
  • Documented in ARS 
  • Included in Organized Research Base 
  • Not reported to the sponsor, but confirmed by an annual internal report
Imputed: not offered in proposal budget or award, but imputed in the Organized Research base (for indirect cost rate calculation purposes only) to meet the federal requirement than some amount of effort be assigned to each federal research project when the indirect cost rate base is calculated.
  • Not included in the cost sharing commitment file 
  • Not confirmed in the Semi-Annual Confirmation 
  • Not reported in ARS 
  • Imputed for inclusion in Organized Research Base. 
  • Not reported to the sponsor
Excess: Effort that is over and above that which is committed in the proposal budget or budget narrative, stipulated in the award, committed for NSF statutory cost sharing, or imputed for F&A base calculation purposes, but for which no corresponding reduction in other University duties is made.
None

The documentation for cost sharing should demonstrate that:

  • It is verifiable from the recipient's records.
  • It was incurred during the period of performance of the award.
  • It is not included as contributions for any other federally-assisted project or program.
  • It is necessary and reasonable for proper and efficient accomplishment of project or program objectives.
  • It is allowable under the applicable cost principles.
  • It was not paid by the federal government under another award, except where authorized by federal statute to be used for cost sharing or matching.
  • It was provided for in the approved budget when required by the federal awarding agency
  • It was consistent with federal cost allocation principles (for example, cannot include costs recovered through facilities and administrative cost pools).

Other requirements related to cost sharing include:

  • Unrecovered facilities and administrative costs may be included as part of cost sharing or matching only with the prior approval of the federal awarding agency. This prior approval is waived in awards made under Federal Demonstration Partnership terms and conditions.
  • Principal Investigator's effort, whether fully reimbursed or contributed, cannot be reduced by 25% or more without prior approval by the sponsor when the sponsor is federal.
  • Cost sharing in the form of volunteer effort or contributions from third parties must be accounted for in terms of the "market value" of the effort or contribution. FDP sponsors permit the valuation of capital assets, such as equipment and buildings, to be market value, but other sponsors may value the contribution at net asset or "book" value.

In accepting an award where the proposal indicated institutional cost sharing, the University is committing itself to formally documenting that the cost sharing was actually applied to the project. If the award level is significantly lower than the requested level, a corresponding reduction in cost sharing should be negotiated.

Activity Effort Plans and Documentation of Contributed Effort

Committed and statutory cost sharing of academic employee effort for sponsored projects is to be reported on the Activity Effort Plan, as is effort charged directly to a sponsored project. For academic employees whose appointments are in classifications that are included in facilities and administrative cost pools (for example, campus officers, deans, directors, library faculty), a portion of their effort must be recorded in the function from which the cost sharing is taken. For example, the director of a unit whose appointment is 100% time as an administrator, should record some effort as departmental research, organized research, or thesis supervision in order to contribute effort to a sponsored research project. A campus or University of Illinois System Offices staff person who provides contributed effort to a project must have a portion of her/his salary on a non-administrative account (that is, an account with a NACUBO function code other than 1500).

Generally, the activity must be related to the type of sponsored project. Cost sharing cannot be recorded against paid leave, alumni development, community and public relations, and general and special service facilities. A full description of NACUBO functions is found on the Division of Management Information Activity Reporting Website. Most commonly, departments report cost sharing as follows:

1If this activity is more than nominal or intermittent, a Function 1000 account should be established in the unit. 1If this activity is more than nominal or intermittent, a Function 1000 account should be established in the unit.
Table - Relationship between the NACUBO Function of the Account Charged and the Account to Which the Effort is Contributed
NACUBO Function Code of account providing appointment (Payment line) NACUBO function code of sponsored project account for which cost sharing is being provided (shown in the cost sharing box)
1000 (Instruction) 1100 (Research) 1200 (Public Service) 1300-1600 (Academic Support, Administration, and O&M)
1000 Non-thesis instruction

Thesis supervision

Indirect instruction

Thesis supervision

Departmental Research

N/A Admin.,

Technical & Library

1100 Non-thesis instruction1

Thesis supervision1

Indirect Instruction1

Organized Research N/A Admin.,

Technical & Library

1200 N/A N/A Extension/public service  
1300-1600 N/A N/A N/A Admin.,

Technical & Library

1If this activity is more than nominal or intermittent, a Function 1000 account should be established in the unit.

If an academic employee commits a larger percentage of cost sharing than is available, the Grants & Sponsored Projects Office will work with the faculty member and/or the sponsor(s) either to negotiate a reduction in committed cost sharing effort or an increase of effort reported in those categories allowable for cost sharing.

The following effort by a principal investigator or other senior project personnel may be considered as cost sharing:

  • Initiation of appointments, requisitions, and vouchers,
  • Reviewing expenditures and effort,
  • Preparing technical and non-technical reports,
  • Recruiting, training and supervising project personnel,
  • Evaluating equipment specifications, and
  • Preparation of continuation and renewal proposals.

When a faculty member is on sabbatical, the only allowable cost sharing is for a nominal amount of time spent in the supervision of graduate assistants who are working on sponsored projects. This amount should be recorded under thesis supervision.

In those cases where a proposal submitted by one unit includes contributed effort for one or more people whose Activity Effort Plan is accounted for by another unit, the unit submitting the proposal is responsible for coordinating the activity reporting with the home unit.

Cost sharing other than the contributed effort of academic personnel is permissible, but must be accounted for in a separate University account number established specifically to document the University's cost sharing for a particular sponsored project. Units must establish these accounts, and notify the Grants & Sponsored Projects Office, Accounting Section so that these accounts can be identified as cost sharing accounts. For more information on this account attribute, contact the Grants & Sponsored Projects Office, Accounting Section.

Facilities and Administrative Costs

Facilities and administrative costs (also called "indirect costs") are costs that are incurred for common or joint objectives and cannot be identified specifically with a particular sponsored project. These costs are aggregated into a facilities and administrative (F&A) cost rate and assessed against sponsored project accounts by application of the appropriate F&A cost rate. Costs incurred for these purposes cannot normally be charged directly to sponsored projects or offered as cost sharing. The facilities and administrative cost categories for sponsored projects are:

Facilities

  • Use of Equipment
  • Use of Buildings and Improvements
  • Interest on Buildings, Major Construction, and Equipment completed after July 1, 1982
  • Costs incurred by units, Campus Administration, and University of Illinois System Offices for Operation and Maintenance of Physical Plant
  • Costs incurred by the University Libraries and Departmental Libraries
  • Costs incurred by the Environmental Health and Safety Office

Administrative

  • General Administrative and General Expense costs incurred by University and Campus Administration units
  • Academic computing costs incurred by Computing and Communication Services Office
  • Sponsored project administrative costs incurred by the Grants & Sponsored Projects Office and units of the Vice Chancellor for Research
  • Administrative and sabbatical leave costs incurred by Colleges, Schools, and Departments
  • Student Services costs (which are included only in the Sponsored Instruction rate)

These costs are charged to sponsored project by application of the facilities and administrative cost rate, and cannot be charged directly except when facilities costs or costs of providing administrative support not otherwise available are incurred for off-campus projects.

The F&A is assessed at the rate(s) awarded by the sponsor.

F&A is charged to sponsored projects, and the resulting revenue is placed in a campus account for distribution by campus administration. Any questions about the distribution of F&A recovery should be directed to the Provost's Office.

Graduate Assistant Tuition Remission Costs

Graduate assistant tuition remission costs are charged as direct costs to sponsored projects by the application of the graduate assistant tuition remission rate. This rate is applied to the salaries of graduate assistants with tuition waivers. To receive a tuition waiver, a student must hold an assistantship between 25 and 67 percent time for 91 calendar days in each semester (41 calendar days during the summer session). When the monthly payroll is posted to UFAS, the salary of a graduate assistant with a tuition waiver in the Registration By Mail (RBM) file is recorded in object code 1211, 1221, or 1291. When a student registers late, or when the first payment of an appointment is processed in an off-cycle payroll, or when a student's appointment is changed during the semester in such a way that the current appointment indicates fewer than the number of days or percentage appointment required for a tuition waiver, the change in the student's waiver status may not be reflected in the RBM file and therefore the salary may not be recorded in the correct object code in UFAS.

Each month, the Grants & Sponsored Projects Office compares individuals charged to the object codes for graduate assistants without tuition waivers with the tuition waiver file. When an assistant with a waiver is incorrectly charged to a non-waiver object code, the Grants & Sponsored Projects Office initiates a correcting journal voucher. Units should inform the Associate Director for Post Award Administration in the Grants & Sponsored Projects Office if further corrections are necessary.

Tuition remission is charged to sponsored projects, and the resulting revenue is placed in a campus account for distribution by campus administration.

Allowances

Allowances are charged to sponsored projects in a similar way as F&A. They are captured in a central account, then reallocated. On training grants, allowances for educational costs in lieu of tuition are transferred to the Graduate College. Administrative allowances are credited to an administrative allowance revenue account, and distributed to departments according to the agreements in place for each project or type of project.

International Projects

Projects performed entirely or partially outside the United States are normally subject to special requirements. It is essential that all permits, licenses, and duty-free status forms required by the host country in which the project will be performed are obtained and that project personnel abide by all laws of host countries. Principal investigators/project directors contemplating such projects should contact the International Programs and Studies Office for campus policies and guidelines, obtaining passports and visas, and for information concerning the necessary licenses or permits required by host countries. However it is the principal investigator's/project director's responsibility to ensure that all necessary permits or licenses required by host countries have been obtained prior to undertaking the sponsored project.

Program Income (Excluding Income Earned on Intellectual Property and Interest Earned on Cash Advances) and Other Credits

Program income means gross income earned by the recipient that is directly generated by a supported activity or earned as a result of the award. Program income includes, but is not limited to, income from fees for services performed, the use or rental of real or personal property acquired under federally-funded non-research projects, the sale of commodities or items fabricated under an award, license fees, and interest on loans made with award funds.

Program income must be deposited in the sponsored project account in which the expenses were originally incurred, if the account is still active. Similarly rebates, refunds, proceeds from the sale animals, etc. must be credited to the project account. If the project is no longer active when the income or other credit is received, it is to be treated in conformance with the sponsor policy. Note that under federal policy, the University has no obligation to the federal government for license and royalty income, and income received after the termination of a project.

Occasionally an activity occurs that generates supplemental revenue that may be recorded in a grant account. If any such revenue-generating activity occurs, units must inform the Grants & Sponsored Projects Office. The Grants & Sponsored Projects Office will coordinate with Office of Business and Financial Services, Accounting Division to determine if the activity produces unrelated business income. If a determination is made that the activity produces unrelated business income, the department may be required to provide detailed information on revenue and expenditures.

Changes in Projects that Require Explicit Sponsor Approval

In circumstances when principal investigators or project directors wish to make a change in a project that requires the sponsor's explicit approval, they (or their unit's support staff) are to prepare the request to the sponsor, providing necessary justification, obtain unit approval, and submit the request to the Grants & Sponsored Projects Office. The Grants & Sponsored Projects Office will review the request to make sure the content and justification are suitable, and then forward it to the sponsor, or pass-through entity, in cases where the University of Illinois is a subawardee. Since the sponsor may reply directly to either the principal investigator/project director, the unit, or the Grants & Sponsored Projects Office, each should inform the other when they receive a reply from the sponsor.

Changes that can never be made without the sponsor's explicit approval are:

  • Change the scope or the objective of the project or program
  • Change a key person specified in the application or award document
  • Absence of the project director/principal investigator for more than three months
  • Reduction in time devoted to a federal project by 25% or more
  • Change in circumstances whereby additional Federal funding is needed to complete the project

Changes in Federally Supported Research Grants and Cooperative Agreements that Do Not Require the Sponsor's Explicit Approval Unless the Approval Requirement is in the Award or in Agency Regulations

Other after-the-fact changes that may require sponsor's explicit approval are shown in Appendix I - Typical Terms and Conditions for Federal Research Grants. Federal sponsors allow recipients to take the following actions without obtaining explicit approval from the sponsor. Note that the no-cost extension requires that the sponsor be notified.

Although no sponsor approval is required for these changes, departmental officials are responsible for determining that when these changes occur, that they do not alter the scope of the project.

No-Cost Extension

The University is authorized to approve a single no-cost extension of up to 12 months for eligible federal grants, provided it notifies the sponsor that it has elected to take such an extension, explains why the extension is needed, and provides this notification at least 10 days before the expiration date specified in the award. This one-time extension cannot be exercised merely for the purpose of using unobligated balances. The PI sends the justification letter to the Grants & Sponsored Projects Office. The letter is to include the length of the extension, the amount to be carried forward, and the plans for completing the project. The Grants & Sponsored Projects Office will notify the sponsor of the extension by countersigning the letter and forwarding it to the sponsor granting officer. For National Science Foundation grants, no-cost extensions are initiated through FastLane.

Any subsequent no-cost extension and any no cost extension greater than 12 months must be approved in advance by the sponsor. The request includes the same information provided for University-approved no-cost extensions, but must be countersigned by the sponsor before it can take affect.

Sample letters to sponsors for both kinds of no-cost extensions are available from the Grants & Sponsored Projects Office Website.

Carry-Forward of Unexpended Funds to Subsequent Budget Period

Multiple-year projects can carry-forward unexpended funds to subsequent budget periods.

Incurring Pre-Award Costs

At the unit's risk, project costs can be incurred up to 90 days prior to the starting date of a project. The procedure to establish an account for this purpose, or to use the expired account of a predecessor project, is described in the Project Account Management section above.

Other Prior Approval Requirements of Federally Supported Grants and Cooperative Agreements that are Typically Waived

In addition to the three conditions described above, most federal sponsors also waive the prior approval requirements for the following actions. The document entitled "FDP Prior Approval and Other Requirements" describes how the participating Federal Demonstration Partnership agencies implement these and other requirements for research projects. For non-research grants and cooperative agreements from FDP agencies, and all grants and cooperative agreements from non-FDP agencies, consult the sponsor grant policy documents, many of which can be accessed through the Grants & Sponsored Projects Office Website, or contact the post-award staff at the Grants & Sponsored Projects Office. Sponsors are considered to have approved an item or action if it was included in the proposal and not explicitly addressed as unacceptable in the award.

Rebudgeting

Sponsors can allow budget transfers among direct cost categories, rebudgeting of direct to F&A costs and vice versa, and transfer of funds allotted for training allowances to other categories. Note, however, that NSF still requires prior approval to rebudget funds provided for participant support costs, and other agency terms and conditions can limit rebudgeting. Rebudgeting is reflected in UFAS only when explicit sponsor approval has been obtained. Where sponsor approval is required for rebudgeting, units can use the sample letter on the Grants & Sponsored Projects Office Website for this purpose.

Costs that Require Prior Approval under Federal Cost Principles

Costs include equipment and improvements to equipment, alterations and renovations, and faculty consulting in excess of the base salary. Note that the Federal Demonstration Partnership agencies limit unapproved alterations and renovations to $25,000 (except for NIH which permits up to $300,000 before sponsor approval is required). The Army Research Office (ARO) still requires prior approval for all equipment.

Subawarding Work to a Subrecipient Not Named in the Proposal

Some sponsors place no restriction on a recipient's prerogative to subaward work to a subrecipient when such subawarding was not envisioned in the original proposal. Nevertheless, the University of Illinois requires that Principal Investigators/Project Directors obtain Grants & Sponsored Projects Office approval.

Sponsor Approvals for Projects other than Federal Research Projects

Federal projects other than research projects and projects funded by non-federal sponsors usually require sponsor approval for changes that federal research projects can make without explicit sponsor approval. When these situations arise, the requests are to be made as described above for changes requiring explicit approval.

Some federal agencies, including some of those participating in the Federal Demonstration Partnership, place restrictions even on research projects. Appendix I - Typical Terms and Conditions for Federal Research Grants provides additional information on conditions FDP participating agencies place on these actions.

Where the University's award is received from a prime awardee, rather than directly from the sponsor, all required prior approvals are sought from the prime awardee, and not the sponsor. In the case of subawards from institutions that are not participants in the Federal Demonstration Partnership, the sponsor's non-FDP grant regulations apply.

The Grants & Sponsored Projects Office Website has sample letters available for seeking sponsor prior approval for no-cost extensions, rebudgeting, carrying forward funds across project years.

Responsibility for Compliance

According to Section C.4.d (1) of Cost Principles for Educational Institutions (U. S. Office of Management and Budget: OMB Circular A-21), the recipient institution is responsible for ensuring that costs charged to a sponsored agreement are allowable, allocable, and reasonable under these cost principles. This establishes the University's responsibility for compliance with these and other cost regulations.

The PI and department are responsible for complying with the applicable sponsor requirements for sponsored projects and for the prudent management of all expenditures and actions affecting the award. Documentation for each expenditure or action affecting an award must reflect appropriate organizational reviews or approvals which should be made in advance of the action. Organizational reviews are intended to help assure that expenditures are allowable, necessary and reasonable for the conduct of the project, and that the proposed action:

  • is consistent with award terms and conditions;
  • is consistent with sponsor and University policies;
  • represents effective utilization of resources; and
  • does not constitute a significant project change.

Principal Investigators and their departments are responsible for assuring that costs assigned to federal projects are compliant with sponsor requirements. Restricted cost categories and other inappropriate charges can be readily detected in audits, and resulting disallowances must be reimbursed to the federal government. In most cases, this will be the financial responsibility of the department. Final technical reports, where required, are the responsibility of the principal investigator. Payments withheld because of delinquent technical reports become the responsibility of the unit.

Sponsorship Acknowledgment and Disclaimers

All publications arising from work supported by the federal government must acknowledge support by the agency and award number, and provide a disclaimer that findings do not necessarily reflect the views of the awarding agency.

Non-federal sponsors may also have requirements for acknowledgments and/or disclaimers. Principal investigators must review the terms of their awards to determine if the sponsor requires disclaimers or additional acknowledgments, and to determine if the sponsor requires any specific wording.

Technical reports and other deliverables

Federally funded projects typically require a final technical report within 90 days of the termination of the project, and many also require interim progress reports. Non-federal sponsors normally have reporting requirements as well. Investigators must be cognizant of the need to submit reports required under the terms of the awards they receive or obtain formal approval to submit them at a later date. The letter requesting approval for a late submission is to be transmitted through the Grants & Sponsored Projects Office before the report becomes delinquent. Sponsors can withhold funding for projects when University project reports are delinquent.

Similarly, Principal Investigators/project directors must submit other deliverables according to the timetable established for the project, seek an extension, or formally explain why the deliverable cannot be provided.

Principal Investigators may be called upon to withhold technical reports and other deliverables if an issue arises about the sponsor's meeting obligations under the award. Such withholding can be done only with the approval or at the direction of the Grants & Sponsored Projects Office.

Post-Award Administration

This section sets forth the requirements for managing sponsored project accounts, including billing, financial reporting, and other administrative aspects of sponsored project management.

Project Account Management

New Projects

The Grants & Sponsored Projects Office provides notices of awards to the principal investigator's department. In those instances where the principal investigator or the department receive an official award notice from the sponsor, they are to forward it to the Grants & Sponsored Projects Office to become part of the formal record of the award. The Grants & Sponsored Projects Office cannot establish a budget without the official award notice. When the Grants & Sponsored Projects Offices receives notice of award electronically, it forwards the notice immediately to the PI and unit business administrator, even before the award is formally accepted or an account established. The Grants and Contract Office's official award notice is made after the award is accepted and the account is established.

Requests for new accounts - All project accounts are established by the Grants & Sponsored Projects Office, Accounting Section. These accounts include the project budget and incorporate numerous account attributes that facilitate the post-award administration of these projects.

Anticipation accounts - It is often beneficial to make staff appointments and incur other expenses prior to the formal notification of an award by the sponsor. When it can be determined with a high degree of certainty that an award will be made, campus units, at their own risk, may incur costs in anticipation of the award. Units should use the Revised Form GC70, Request for Anticipation Grant/Fund - Request to Use Expired or Overdrafted Grant/Fund to establish an anticipation account. Most federal agencies allow pre-award costs for 90 days prior to the formal starting date of a grant, provided that incurring these costs is in the best interest of the project. Others do not allow costs incurred before the project start date, though in some instances, the formal award is received after the project start date. Units should be informed about whether or not pre-award costs are permitted before requesting and placing charges on an anticipation account.

In cases where the funding period has ended and follow-up funding is expected but not yet received, units may elect at their own risk to continue charging the expired account for up to 90 days. Before doing so, they must either complete a Revised Form GC70, Request for Anticipation Grant/Fund - Request to Use Expired or Overdrafted Grant/Fund and obtain approval from the Grants & Sponsored Projects Office, or make an appropriate indication on the Notice of Terminating Accounts form and return it to the Grants & Sponsored Projects Office.

Continuation Projects

A continuation project exists when a project is initially authorized for an extended time (usually two to five years) but funds are provided by the sponsor on an annual basis, generally subject to satisfactory progress as indicated on the progress report and availability of funds.

Because of the difficulties associated with discontinuing and re-starting a project when funding is delayed, units may elect to continue a project pending receipt of delayed continuation funding. Should the funding not be awarded, or should it be awarded at a lower-than-anticipated level, units are responsible for any expenditures not covered by the sponsor.

Usually, the same general and subsidiary ledger accounts are used for all years of a multi-year, continuing project.

All of the major federal funding agencies and many other non-federal sponsors require project status reports before they will provide continuation funding. Principal Investigators are responsible for knowing the format and timing requirements of progress reports, and for providing them to the sponsor.

All major federal agencies allow unused grant funds to be carried forward into future budget periods, though some, like the National Institutes of Health, place some restriction on the amount or percentage that can be carried forward or subject large carry-forwards to special review.

Renewal Projects

A "renewal" exists when a project expires, and the proposal for continued support is subject to competitive review and results in a new award. This is different from a continuation project where continued funding is contingent only upon satisfactory progress and availability of funds. New general and subsidiary ledger accounts are established for renewal projects, except in those instances where the sponsor extends the funding period and provides additional funds to the existing award number.

Transferred projects

The Grants & Sponsored Projects Office provides assistance to faculty and departmental personnel when awards are transferred to and from the university. For specific guidance, please contact the Grants & Sponsored Projects Office when transferring awards to the university.

Semi-Annual Expenditure Confirmation

Twice each year the Grants & Sponsored Projects Office provides units a list of projects, with associated expenditures and contributed effort commitments for each PI, for the six month period ending the preceding December and June. The PI is to verify the expenditures (initiating any necessary corrections using the procedures outlined in Section 16: Grants and Research Contracts - Cost Transfers), then sign the confirmation and return it to the unit business administrator, who returns it to the Grants & Sponsored Projects Office. A full description of the semi-annual confirmation process is found in Section 16.1.3, Compensation for Personal Services Charged to Sponsored Projects.

Pre-Audit of Sponsored Project (Ledger 5) Vouchers

The Grants & Sponsored Projects Office pre-audits the Ledger 5 transactions listed below, because they represent a high risk for audit disallowances. Units must forward the following transactions directly to the Grants & Sponsored Projects Office.

  • Consultant and honorarium payments, object codes 5400 through 5499 (includes non-employee travel expenses)
  • Subaward payments, object codes 5600 through 5699
  • Earnings transfers
  • Cost transfers
  • Cash deposits (program income, refunds or reimbursements)
  • All leases (equipment, space)
  • Equipment Requisitions
    • $5,000 or more for State of Illinois projects
    • $25,000 or more for other sponsors

Post-Audit of Expenditures

The Grants & Sponsored Projects Office periodically post-audits certain categories of expenditures on federal projects for allowability under OMB CircularA-21. At least annually, it reviews transactions that charge any cost designated as unallowable or restricted under federal cost principles to a federal project (including projects from other entities that "pass through" federal funds). Unjustifiable transactions are transferred to appropriate departmental funds. If subsequently justified as allowable, they may be transferred back to the sponsored project account.

Billing and Financial Reporting

The Grants & Sponsored Projects Office is responsible for preparing and submitting the billings and financial reports for sponsored projects. Departmental assistance may be required in cases where the sponsor requires documentation that is extensive or unavailable to the Grants & Sponsored Projects Office. The basic sources of information used to prepare these reports are the official University accounting records and the cost sharing commitments.

Billings are usually required on a monthly basis for cost reimbursement projects, unless the terms of the award provide otherwise. Other projects may require billings based on a fixed schedule or technical progress. It is important that units provide the Grants & Sponsored Projects Office any "milestone" or progress information necessary to trigger a bill or financial report, to avoid any possible lapse of funds.

The sponsor may require financial status reports at the end of a specified reporting period, usually annually, and/or at project termination. Reports are due no later than 90 days after the end of the reporting period. Grants & Sponsored Projects will request departmental verification of the reports prior to submission to the sponsor.

Funding Methods

The University requests that sponsors, whenever possible, provide advance funding so that the University is not using its funds for sponsored projects. When sponsors provide funding on a cost reimbursement basis, the University obtains reimbursement as soon as practical after the expenditure is incurred.

Pooled Payment Management Systems (formerly Letters of Credit) - The University submits a pooled payment request for an identified group of federal awards when funds are needed to meet current expenses. Cash withdrawals are timed as close as is feasible to actual cash disbursements. Payments received under this method are deposited directly to the applicable sponsored project revenue account.

At the end of each calendar quarter a Federal Cash Transaction Report may be required in the sponsor's format to account for how the funds were utilized for the sponsored projects covered by each pooled payment management system.

Cost Reimbursement - Cost reimbursement is when the University can bill the sponsor for actual costs incurred up to the amount of the award. Payments are made by the following mechanisms:

  • Periodic billings submitted to the sponsor for costs incurred, as soon after the costs are incurred as practical (usually monthly).
  • A small amount provided in advance to cover working capital needs, followed by periodic billings based on costs incurred. The advance is normally applied to the final billing.
  • The entire amount provided in advance - any unused funds are returned to the sponsor at the conclusion of the project.
  • Fixed schedule of amounts to be paid on specified dates - sometimes the University is obliged to initiate payments by submission of an invoice, and sometimes the sponsor automatically sends the payment.
  • Amounts paid on completion of established milestones - units and PIs work with the Grants & Sponsored Projects Accounting Section to notify the sponsor of milestone accomplishments that trigger payments.

An Accounts Receivable is established for each project account. Payments are deposited directly to the revenue account and credited against the receivable.

Fixed Price - Predetermined payments are normally provided upon completion of tasks. The University seeks interim payments based on costs incurred whenever possible. However, final payment is normally based on submission of the final work product and final billing.

An Accounts Receivable is established for each project account. Payments are deposited directly to the revenue account and credited against the receivable.

Collection of Payments

The Grants & Sponsored Projects Office is responsible for obtaining and processing payments from all sponsors, and for following up on delinquent payments.

Units are expected to review the monthly General Ledger statements for cash deficiencies in projects funded by sponsors other than the federal and Illinois government. Where there are expenditures without a corresponding cash receipt, the deficiency will be apparent. In addition, a monthly report (UMO61 GL - General Ledger Fund Group summary) showing cash deficiencies is generated for each department's sponsored projects. The principal investigator, the department, and Grants & Sponsored Projects Office work together to identify and resolve problems. Units are responsible for all expenditures that are not reimbursed by the sponsor.

There can be many reasons for failure to pay, among them the following:

  • Lack of cash flow
  • Sponsor's mismanagement or intent to defraud
  • Grants & Sponsored Projects Office difficulty in preparing an acceptable billing
  • Dissatisfaction with the work being performed

If an issue arises about the sponsor's meeting obligations under the award, Principal investigators may be directed to withhold technical reports and other deliverables. This withholding can be done only with the approval or at the direction of the Grants & Sponsored Projects Office.

Subaward Processing

Grants & Sponsored Projects Office negotiators work with the principal investigator and/or the unit to process subawards to other organizations who are to perform a distinct scope of work for a project.

The first step is a preliminary assessment that:

  • Determines whether or not the subrecipient(s) must be selected competitively, and if sponsor approval must be obtained, based on the following:
    • Identified subrecipient. In those cases where (1) the University and the subrecipient have proposed jointly to the sponsor, (2) the proposed subrecipient has been included in the University of Illinois' proposal, and/or (3) the subrecipient has been approved by the sponsor as a condition of award; the subaward documents can be initiated without further sponsor approval or competitive selection.
    • No identified subrecipient. The University of Illinois must first ensure that subaward activity constitutes scope of work, rather than procurement of goods or routine services. The University must then competitively select a subrecipient subject to the terms and conditions of the prime award and the relevant University procurement regulations.
  • Establishes that the prime award has sufficient funding available for the subaward
  • Establishes that a Small Business/Minority subcontracting plan has been developed by the Unit (for subcontracts in excess of $500,000). The unit is responsible for achieving the goals set forth in the plan.
  • Establishes that all necessary approvals have been obtained.

Preparation of subaward documents includes the following steps:

  • Ascertain the contract or grant number assigned by the funding entity to the prime award
  • Assign a Subaward Number
  • Identify the Principal Investigator(s) for the subaward
  • Document the basis for subawardee selection
  • Choose the appropriate procurement instrument
  • Choose the appropriate payment terms, usually parallel to the payment terms of the prime award
  • Verify subawardee qualifications
    • Perform any financial analysis necessary to reasonably assure the subrecipient has the necessary financial viability to perform the work
    • Determine tax status of the subrecipient organization
    • Verify compliance with OMB Circular A-133 audit requirements, if subrecipient is a domestic, non-profit organization
    • Review subrecipient's budget and F&A rates
  • Utilize the University's approved standard format incorporating the following:
    • Applicable terms and conditions of the prime award, including applicable general provisions.
    • Any special provisions, including but not limited to (1) Truth in Negotiations (Public Law 87-653), and (2) a Small Business Subcontracting Plan by Subrecipient.
    • Required Certifications and Representations
    • Contractor's FEIN

Subaward approval

  • The subaward should be approved bilaterally by the authorized representatives of the University and the subrecipient.
  • The subaward should also be approved by additional University representatives, however, it is not mandatory that these representatives actually sign the subaward document. The University normally requires the following approvals:
    • Principal Investigator/Project Director
    • Department Head and/or Dean
    • Grants & Sponsored Projects Office
    • Legal Counsel (for subawards involving provisions not previously used)
  • If the sponsor requires a copy of the fully executed subaward document, the Negotiator provides it.

Subaward Budgeting and Accounting

When the Grants & Sponsored Projects Office establishes an account budget for a project with one or more subawards, it sets up a line item in the 5651-5699 object code range for up to $25,000 for each subaward. A second object code in the 5601-5649 object code range is set up for subawards greater than $25,000. This second range is exempt from the assessment of F&A (except for accounts where F&A is assessed on total direct costs, rather than modified total direct costs). The object code description identifies each subaward. Subawardee costs are to be charged to the appropriate object code.

Monitoring of Subrecipients

Responsibility for monitoring subrecipients is divided between the principal investigator, the departmental administrator, and the Grants & Sponsored Projects Office.

The principal investigator is responsible for identifying the subrecipient, and for determining whether the proposed scope of work meets the needs of the project and whether the proposed costs are reasonable in relation to the work to be performed. The PI is also responsible for approving subrecipient invoices after determining that the progress is satisfactory, and that the cost is reasonable in relation to the work performed. If the PI has concerns about either the performance of or amount requested by the subrecipient, they should be shared as quickly as possible with the Grants & Sponsored Projects Office, so that the issue can be resolved.

If the subrecipient is not performing satisfactorily, or issues of compliance with the terms and conditions of the award arise, the Grants & Sponsored Projects Office will work with the department and principal investigator to devise a strategy to correct the problem, including possibly withholding payments to a subrecipient.

In the case where a subrecipient institution fails to comply with relevant audit requirements, the Grants & Sponsored Projects Office may withhold new subawards to that institution and suspend payments under subawards until the requirements are met.

The role of the departmental business administrator in the subaward process is to assemble and provide such material as scope of work, budget, PI identification, and organizational contact information; work with the Grants & Sponsored Projects Office to request initiation or modification of a subaward agreement; review invoices from the subrecipient to look for any potentially questionable costs or practices (including the use of other than the approved F&A rates), to prepare the invoice voucher for submission to the Grants & Sponsored Projects Office Post-award Accounting Section, and where required, provide information to the Grants & Sponsored Projects Office about achievement of small and minority business utilization.

The Grants & Sponsored Projects Office is responsible for approving and submitting the voucher to University Payables for payment. It also verifies that the subrecipient has undergone any required audits, and works to resolve any audit issues. The Grants & Sponsored Projects Office also works with units and the Purchasing Division to complete the biennial reports on purchases from and subawards to small and minority businesses.

Overdrafts

Each month, units receive a list of accounts where expenditures exceed budget. Units are required to obtain Grants & Sponsored Projects Office approval if the over-expenditure is in anticipation of additional funding or if it represents the accumulation of costs that will ultimately be transferred to appropriate departmental accounts. This approval is sought by submitting a Request for Anticipation Account/Request to Use Expired or Overdraft Account. The resulting overdraft must be transferred to appropriate accounts designated by the unit within 90 days of project termination, or by the end of the fiscal year for projects that are overspent but not terminating. As part of the fiscal year closing, the Grants & Sponsored Projects Office will verify that these transfers have been made.

Expired Accounts

All deficits must be cleared within 90 day of termination. Only those charges originating and formally obligated before the expiration date, and costs associated with preparation of the final technical report can be charged to the account after its termination date. Any other charges originating after the expiration date may be processed only if the sponsored agreement makes a provision for the charges, or if the account is being used in anticipation of additional funding by the sponsor. In the latter case, approval must be sought either by completing GC-70 Form ("Request for Anticipation Account/Request to Use Expired or Overdrafted Account") or the Notice of Terminating Accounts. The department is responsible for any charges for which the sponsor does not provide funds.

Investment Income Earned on Cash Advances

Interest earned on cash advances that federal agencies make on grants and cooperative agreements is remitted on an annual basis to the federal government, in accordance with the internal procedures used by the Grants & Sponsored Projects Office.

Interest Earned on Non-Federal Cash Advances

Interest earned on advances made by other sponsors is included in the University's temporary investment pool. If there is an agreement with the sponsor, interest income is added to the project account. Otherwise, this income is distributed on the same basis as other earnings on temporary investments.

Project Closing Procedures

This section sets for the procedures for closing accounts, and describes the responsibilities of the PI, unit/department, and the Grants & Sponsored Projects Office in this process.

PI Responsibilities

The PI provides technical reports and/or deliverables to the sponsor within the specified time frame, or obtains the necessary extension. A copy of the report transmittal letter is to be sent to the Grants & Sponsored Projects Office.

The PI must disclose inventions in accordance with University regulations and as required by sponsor.

Unit Responsibilities

A computer-generated Notice of Terminating Accounts is sent to units 90 days before the expiration of a sponsored project. Units must inform the Grants & Sponsored Projects Office if they have information about continuation or renewal of a project. If not, the close-out procedures begin with the expiration date of the project. Generally, projects are to be closed within 90 days of expiration.

The unit responsible for the project is asked to provide the following information when it is applicable to the project:

  • Status of the final technical report
  • A listing of invention disclosures, or an indication that there were none
  • Final subaward invoice voucher(s) signed by an appropriate departmental representative
  • Final inventory of federally-titled equipment, if any
  • For Federal non-research projects only, an accounting of unused expendable supplies (including expensed equipment) with an aggregate value of $5,000 or more
  • An indication that all the charges to the project have been recorded or a listing of any pending and obligated costs
  • Program income reports

The unit is also responsible for clearing cost overruns within 90 days after the project has terminated. The write-off of overruns remaining at termination of federally sponsored projects to appropriate institutional funds must be identifiable in the financial accounting records.

A cost overrun is the excess of expenditures over funding for a given project after:

  • All corrections are made,
  • All unallowable costs are removed, and
  • All costs (except final report costs) incurred after the project termination date are removed

For a full description of the Cost Transfer policy, see Section 16: Grants and Research Contracts - Cost Transfers.

Grants & Sponsored Projects Office Responsibilities

The Grants & Sponsored Projects Office is responsible for assuring that all the University's obligations for the project have been met. This responsibility is fulfilled by coordinating with the units and principal investigators to provide the necessary reports and other documentation. In the case of projects with subawards, the Grants & Sponsored Projects Office ensures that subrecipients have submitted a final billing, and that it has been paid. The following final close-out documents are submitted to the sponsor, as required:

  • Final billing and/or expenditure report
  • Patent report
  • Equipment report
  • Release and assignment forms

The Grants & Sponsored Projects Office then closes general and subsidiary ledger accounts, and deobligates any unused balances, and returns funds to sponsor for all cost reimbursable awards.

Special Provisions for Closing Fixed Price Contracts

A fixed price award is one where the sponsor provides the University a fixed amount of funding to complete a mutually agreed upon scope of work. The amount of the award is based on an estimate of the costs of performing the work, using costing methodology that conforms to federal cost principles and University policy. Once the award is accepted, the Principal Investigator is obligated to perform the work, whether or not the funding provided is adequate, but is not obligated to return any unused funds. Fixed price contracts are subject to the following requirements:

  • All expenses associated with a fixed price project are to be charged to the project, even if they are in excess of the project budget. Expenses cannot be charged to any other source of funds.
  • If the cash funding is inadequate, the unit is to transfer the overdraft to discretionary funds and code the transfer as described above in the section on cost overruns. The Grants & Sponsored Projects Office freezes and deletes the account.
  • If there is a residual cash balance after the end of the project the principal investigator may expend the funds for research purposes until March of the fiscal year following the fiscal year in which the project ended including any no-cost extensions.
  • A balance in excess of 25% of the total funding must be justified to assure that the estimate used in arriving at the projected cost of the project was consistent with federal cost principles and University policy, and that costs associated with the project were not charged elsewhere.
  • Fixed price award accounts with positive cash balances will be frozen in March of the fiscal year following the fiscal year of the end date of the project.
  • Investigators will receive a reminder in January that the account will be frozen in March.
  • Fixed price awards with zero or negative balances will be closed out on the same schedule as other projects.

When closing an account with a positive cash balance, the Grants & Sponsored Projects Office will assess F&A on the unexpended balance at the rate calculated by dividing inception-to-date F&A earned by total costs. The residual balance is transferred to a unit fixed price allowance account established for this purpose in the institutional allowance account range.

Record Retention Requirements

State and Federal awards- All financial, technical, and other records pertinent to the project must be retained for three years following submission of the final financial report, unless the terms of the award provide for a different period. Electronic or copied paper versions of records may be used in place of the original records.

Record retention for other sponsors is as specified in the award or in sponsor policy.

If litigation commences within three years of the end of the project or project period, records must be retained until the litigation reaches its final outcome.

Access to Records

The Auditor General of the State of Illinois, the federal awarding agency, the agency Inspector General, Comptroller General of the United States, or any of their duly authorized representatives, have the right of timely and unrestricted access to any books, documents, papers, or other records of recipients that are pertinent to the awards, in order to make audits, examinations, excerpts, transcripts and copies of such documents. This right also includes timely and reasonable access to a recipient's personnel for the purpose of interview and discussion related to such documents. The rights of access in this paragraph are not limited to the required retention period, but shall last as long as records are retained.

When responding to a federal Freedom of Information Act (FOIA) request for research data relating to published research findings produced under an award that was used by the Federal Government in developing an agency action that has the force and effect of law, the University must provide, within a reasonable time, the research data so that they can be made available to the public through the procedures established under the FOIA.

Rights to Audit

The Auditor General of the State of Illinois employs a public accounting firm to annually audit federally funded sponsored project expenditures. This audit is conducted in accordance with the provisions of OMB Circular A-133 "Audits of Institutions of Higher Education and Other Non-Profit Institutions." In addition, the Office of Naval Research, the University's administrative cognizant federal agency, may engage federal auditors to assist them with their oversight responsibilities. At the request of ONR, these auditors conduct audits of the facilities and administrative cost study, the graduate assistant tuition remission rate, the fringe benefit rates, the Cost Accounting Standards Disclosure Statement, the procurement system, property accounting system, and potentially any aspect of internal controls of expenditures charged to federal funds. Moreover, federal and non-federal sponsors, if permitted by the terms of their awards to the University, may conduct or have conducted on their behalf, audits or "reviews" of expenditures and/or compliance issues related to their awards.

Audit Coordination and Results

The annual audit of federal expenditures, conducted in accordance with OMB Circular A-133, is coordinated through the Grants & Sponsored Projects Office. Audit fieldwork generally begins in April and concludes in October. Departmental Business Managers are notified if a project in their unit is selected for audit as part of this process. Business managers, investigators and staff are expected to cooperate with the Grants & Sponsored Projects Office audit liaison to address auditor requests.

Sponsors occasionally request a program specific audit, expenditure review or other monitoring activity. Such requests should be referred to the Grants & Sponsored Projects Office. The Grants & Sponsored Projects Office will coordinate these types of activities, including the participation of the department and the PI.

In all cases of audits or "reviews" of sponsored projects, the Grants & Sponsored Projects Office is the official liaison between the auditors and any University unit. Grants & Sponsored Projects will contact appropriate departmental personnel if an auditor wishes to visit a department to obtain information. Units should alert the Grants & Sponsored Projects Office immediately, preferably before providing any information, if contacted directly by an auditor engaged in any of the above-mentioned audits or any other audit connected to sponsored projects.

Findings resulting from audits and monitoring activities can impact the University's ability to obtain future state and federal funding. It is imperative that the units and investigators actively participate in addressing audit recommendations. Disputed and disallowed costs resulting from an audit or review must be removed from the sponsored project account immediately and transferred to other appropriate university accounts.

Additional Policies Affecting Sponsored Projects

Business and Financial Policies and Procedures

Section 16: Grants and Research Contracts - Cost Transfers
Section 16.1.3, Compensation for Personal Services Charged to Sponsored Projects - UIUC Supplement
Section 16.1.4, Equipment, Equipment Leases, and Expendable Supplies - UIUC Supplement
Section 16.4.2, Technical Testing Agreement - UIUC Supplement
Section 17, Consultants, Independent Contractors, and Honoraria

Campus Administrative Manual

II-15. UIUC Policy Governing the Use of Human Subjects in Research (5/10/07)

II-16. UIUC Policy Governing the Use of Animals in Research (11/16/05)

V-B-8.1. General Statement on Biohazards (4/14/04)

For more information or help, contact the appropriate campus office:

Grants & Sponsored Projects
Main Office
109 Coble Hall
801 S. Wright St.
Champaign, IL 61820
(217) 333-2186
(217) 244-4757


Negotiations Section
122 Coble Hall
801 S. Wright St.
Champaign, IL 61820
(217) 333-2187
(217) 333-2189 (fax)


Vice Chancellor for Research
417 Swanlund Administration Building
601 E. John Street
Champaign, IL 61820
(217) 333-0034
(217) 244-3716
http://research.illinois.edu/


Division of Animal Resources
1 Observatory
Urbana, IL 61801
(217) 333-2564
(217) 244-7963 fax
http://dar.research.illinois.edu/


Institutional Review Board
417 Swanlund Administration Building
601 East John Street
Champaign, IL 61820
Telephone: (217) 333-2670
FAX: (217) 244-3706
Email: irb@uiuc.edu
http://irb.illinois.edu/


Office of Research Administration
(Negotiation of intellectual Property Terms in Contracts)
404 Swanlund
Phone (217) 333-7862
601 E. John St.
Champaign, IL 61820
Fax (217) 244-3716
Email: rtmo@uiuc.edu


 Office of Technology Management
(Intellectual Property Management)
404 Swanlund
601 E. John St.
Champaign, IL 61820
Phone (217) 333-7862
Fax (217) 244-3716
Email: rtmo@uiuc.edu
http://otm.illinois.edu/


International Programs and Studies
303 International Studies Building
910 South Fifth Street
Champaign, IL 61820
Phone (217) 333-6104
Fax (217) 333-6270
http://international.illinois.edu/

Appendix I - Typical Terms and Conditions for Federal Research Grants
Event or Action FDP Non-FDP
Requirements related to the scope and performance period of the project - -
Change the scope or the objective of the project or program Obtain sponsor's prior written approval Obtain sponsor's prior written approval
Change a key person specified in the application or award document. Obtain sponsor's prior written approval Obtain sponsor's prior written approval
Be absence for more than three months, or reduce time devoted to the project by 25% or more. Obtain sponsor's prior written approval Obtain sponsor's prior written approval
Need additional Federal funding to complete the project.  Obtain sponsor's prior written approval Obtain sponsor's prior written approval
Subaward, transfer or contract out any work under an award to a subrecipient that was not described in the application and funded in the approved awards. Obtain sponsor's prior written approval except as follows: DOE waives the prior approval requirement when the subaward is 25% or less of the award, and USDA waives it when it is 50% or less of the award. NIH waives the prior approval except for foreign subrecipients. Consult agency grant regulations and award-specific requirements.
Incur pre-award costs 90 calendar days prior to award No sponsor's prior approval required; follow university procedure for anticipation accounts or use of expired accounts. No sponsor's prior approval required; follow university procedure for anticipation accounts or use of expired accounts.
Incur pre-award costs more than 90 calendar days prior to award Obtain sponsor's prior written approval Obtain sponsor's prior written approval
Initiate a one-time extension of the expiration date of the award of up to 12 months without additional funds, upon the University's notification to the sponsor at least 10 days in advance of the expiration date AFOSR, ARO, and ONR require prior approval. DOE requires prior approval if the grant award indicated it was made from restricted year funds, and EPA requires it if the extension would result in a project period longer than five years. All others do not require prior approval. Consult agency grant regulations and award-specific requirements.
Initiate a subsequent extension of the expiration date of the award or extend the award more than 12 months Obtain sponsor's prior written approval Obtain sponsor's prior written approval
Carry forward unobligated balances to subsequent funding periods. DOE requires prior approval if the grant award indicated it was made from restricted year funds; NASA requires that the balances be included in continuation proposals if the are "substantial"; NIH reserves the right to review carry forwards of 25% or more of the award. Consult agency grant regulations and award-specific requirements.
Requirements related to budgets - -
Transfer funds among direct cost categories. No sponsor's prior approval is required. NIH reserves the right to review rebudgeting of 25% or more of the award. Consult agency grant regulations and award-specific requirements.
Transfer amounts budgeted for indirect costs to absorb increases in direct costs, or vice versa No sponsor's prior approval is required. Consult agency grant regulations and award-specific requirements.
Transfer funds between construction and non-construction portions of an award. Obtain sponsors prior written approval. Obtain sponsors prior written approval.
Transfer funds allotted for training allowances (direct payment to trainees) to other categories of expense. No sponsor's prior approval is required, except by NSF Consult agency grant regulations and award-specific requirements.
Requirements related to expenditures - -
Include as direct charges capital expenditures for general purpose equipment or special purpose equipment, when the equipment is primarily used in the actual conduct of the research No sponsor's prior approval is required, except by ARO. Consult agency grant regulations and award-specific requirements.
Include as direct charges capital expenditures for improvements to equipment that materially increases the equipment's value or useful life, when the equipment is primarily used in the actual conduct of the research No sponsor's prior approval is required. Consult agency grant regulations and award-specific requirements.
Include as direct charges capital expenditures for improvements to land and buildings that materially increases the value or useful life, when the land or building is primarily used in the actual conduct of the research Obtain sponsor's prior written approval Obtain sponsor's prior written approval
Include alterations and renovations under $25,000 No sponsor's prior approval is required; NIH doesn't require approval for alterations and renovations costing less than $300,000. Consult agency grant regulations and award- Consult agency grant regulations and award-specific requirements..
Include charges for faculty consulting on sponsored agreements that exceed a faculty member's base salary but only in unusual cases where: (a) consultation is across departmental lines or involves a separate or remote operation; and (b) the consulting work is in addition to the faculty member's regular departmental load  No sponsor's prior approval is required Consult agency grant regulations and award-specific requirements.
Incur costs not explicitly unallowable under Federal Cost Principles or University policy DOE does not allow charges for interest penalties for late payment; NIH requires prior approval of patient care costs. USDA does not allow non-working meals, compensation for harm to persons or property. For USDA awards made under the authorities of Sec. 2(b), 2(c)(1)(A), and 2(c)(1)(B) of Pub. L. No. 89-106, as amended, may not be used for the renovation or refurbishment of research spaces; the purchase or installation of fixed equipment in such spaces; or for the planning, repair, rehabilitation, acquisition, or construction of a building or facility. ARO requires prior approval for foreign travel. No other agencies have restrictions on these costs. Consult agency grant regulations and award-specific requirements.
Requirements related to cost sharing - -
Document University or third-part contributions to a project in accordance with approved budget. Any University or third-party contributions to a project offered in a proposal budget must be documented in conformance with University policy on cost sharing documentation. Any University or third-party contributions to a project offered in a proposal budget must be documented in conformance with University policy on cost sharing documentation.
Include unrecovered F&A costs as cost sharing No sponsor's prior approval is required, but University approval is required. Consult agency grant regulations and award-specific requirements.
Compute the cost of contributed assets at fair market value, rather than book value. No sponsor's prior approval is required. Consult agency grant regulations and award-specific requirements.
Requirements related to program income - -
Use program income earned during the project period Program income is to be added to the funds available for the project. Consult agency grant regulations and award-specific requirements.
Use program income earned after the project period No obligation to the sponsor or the federal government. Consult agency grant regulations and award-specific requirements.
Requirements related to property - -
Retain University title to supplies with value of more than $5,000 at the end of a project Prior approval is required by the DOD agencies; all other agencies give the University title to supplies upon acquisition. Obtain sponsor's prior written to retain these supplies.
Acquire real property Obtain sponsor's prior written approval. Obtain sponsor's prior written approval.
Encumber real property acquired with federal funds Obtain sponsor's prior written approval. Obtain sponsor's prior written approval.
Use real property acquired with federal funds for other non-federal projects rather than compensating the federal government for its fair market value Obtain sponsor's prior written approval. Obtain sponsor's prior written approval.
Encumber equipment acquired with federal funds Obtain sponsor's prior written approval. Obtain sponsor's prior written approval.
Trade in equipment purchased with project funds to by replacement equipment No sponsor approval is required. Consult agency grant regulations and award-specific requirements.
Own equipment upon acquisition without conditions or without obligation to the sponsor at termination of project No sponsor approval or any other special action is required. Consult agency grant regulations and award-specific requirements.
Requirements related to data - -
Obligation to provide data to funding agencies if so requested None of the FDP agencies waive their right to obtain, reproduce, publish or otherwise use the data first produced under an award and/or to authorize others to receive, reproduce, publish, or otherwise use such data for Federal purposes. This data must be provided to the funding agency upon its request.  Consult agency grant regulations and award-specific requirements.
Obligation to provide research data to funding agencies when the data was used by the agency to promulgate regulations with the force of law, and therefore obtainable by industry under the federal Freedom of Information Act. Provide the data and recover the incremental cost of providing it from the federal agency. Provide the data and recover the incremental cost of providing it from the federal agency.
Other project management responsibilities for Principal Investigators/Project Directors - -
Establish interrelationship among projects for purposes of allocating costs The interrelationship needn't be stipulated formally in advance, but must be demonstrable. Consult agency grant regulations and award-specific requirements.
Publish results. Provide acknowledgement of sponsor support: "This material is based upon work supported by the [name of awarding agency(ies) under Award No. [recipient should enter the awarding agency(ies) award number(s)]."
 
 

Provide disclaimer: "Any opinions, findings, and conclusions or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the [name(s) of awarding agency(ies)]."

Consult agency grant regulations and award-specific requirements. NASA and NSF exempt scientific publications from the disclaimer requirement.

 

Please send questions regarding this policy manual to OBFSPolicies@uillinois.edu.

Last Updated: January 9, 2017 | Approved: Senior Associate Vice President for Business and Finance | Effective: May 2002

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