Melinda –

 

You bring up a relevant feature of post-award that has for years gone undetected – that is, using a simple contract to “hire” someone from another institution without having to paying any F&A costs.   And for years, we have all wondered why some F&A is not captured because they do involve a lot handling from internal administration.

 

Remember that effective 12/26/14 with all new awards and new money mods on active awards that are federally funded OMB now requires the use of your negotiated rate.  There is no choice to not award IDC on the subcontract arrangement.  If your sub did not have a federally negotiated rate, then OMB requires the minimum 10% rate on these arrangements.

 

At issue here is whether the traditional “salary reimbursement agreement” should be called a subcontract at all.  In the Houston-Texas Medical Center culture, the SRA has gone undetected by auditors for years.  The benefit to the prime awardee is that they don’t have to hassle with fully employing the other institution’s post-doc or investigator.  Usually the arrangement is short-term to the prime award campus (although I’ve seen SRAs run consecutively for years for the same individual) and the prime award escapes paying IDC. The recipient benefits from someone getting hired on a federal grant more cheaply and in the minds of some investigators getting hired at all.

 

Under A-81, we can expect more scrutiny for the SRA arrangement.  There are three options under A-81: 

 

1.    hire someone as an employee on the grant through the prime’s payroll (justified under the consistency premise that an employee charge on a grant is handled in a consistent manner), or

 

2.    subcontract with full IDC is built and treated as independent from the prime, or

 

3.    the financial arrangement is as an independent “consultant” (doesn’t realistically match up to actual work being done)

 

 

The exact compliance wording from OMB:   https://www.federalregister.gov/articles/2013/12/26/2013-30465/uniform-administrative-requirements-cost-principles-and-audit-requirements-for-federal-awards#p-1139

 

“a pass-through entity must make case-by-case determinations whether each agreement it makes for the disbursement of Federal program funds casts the party receiving the funds in the role of a subrecipient or a contractor. The Federal awarding agency may supply and require recipients to comply with additional guidance to support these determinations..”

 

Also, see here….

 

 

https://www.federalregister.gov/articles/2013/12/26/2013-30465/uniform-administrative-requirements-cost-principles-and-audit-requirements-for-federal-awards#p-934

 

Some institutions outside of Texas just refer to the SRA work as a purchase order and would collect IDC within their prime grant. An SRA arrangement has been confusing for years because ordinarily we are dealing with students doing some temporary lab work on a grant across town and are NOT truly independent investigators or consultants.

 

What’s new in 2015 is that you must collect IDC and it must be your full rate – you don’t randomly decide on your own whether it will be reduced.  Remember the logic here is the federal govt wants to pay its full share of legitimate research.  An industry sponsored arrangement would follow your arrangement for for-profit sponsors.

 

 

 

 

Good morning colleagues,

 

Quick question for the group…offline responses to xxxxxx@rice.edu will be greatly appreciated.

 

Does your institution allow other institutions to mandate that F&A costs are not allowed on subawards which have a federal or industry as the prime source of funding?  The typical situation is that we will have a student working in a lab at other institutions (unaffiliated) so it is considered “salary reimbursement” with $0 indirects.  It seems at the very least, we should be collecting our off campus rate so I am interested in hearing how other institutions would handle this issue.

 

Thank you,

Melinda

 

Melinda T. Cotten          |   Director

PHONE: 713.348.6200   |    www.osr.rice.edu

OFFICE OF SPONSORED RESEARCH

WILLIAM MARSH RICE UNIVERSITY

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