Lee, we had that problem a long time ago.  We solved it for many situations
by moving to fixed price or fixed unit price agreements.  We use them quite
extensively when dealing with for-profit sponsors, and often when dealing
with state agencies (we're state, and in the capital, so there are a lot of
intertactions -- you have your own set of closely connected sponsors!).
For profits always like to know the cost up front.  If you can't price by
the "product", provide a fixed amount of effort for a fixed price.

But for cost reimbursement contracts, a materiality clause would be a
benefit, so I, too, would like to see one if anyone has one that sells well.

Chuck

At 01:29 PM 2/18/99 -0800, you wrote:
>Colleagues,
>
>Our Grant & Contract Accounting shop here at Stanford University is
>bedevilled by the necessity of refunding to sponsors trivial balances of
>funds remaining after the completion of contracts and some grants. Because
>our contracts very seldom contain a materiality clause, we are bound to
>send a refund check for even a few cents if that's what remains when we
>close the books. On the other hand, we'll absorb a small overdraft just to
>avoid the paperwork of fixing it "the hard way". I'm sure our sponsors'
>accountants feel the same way.
>
>Let's face it -- the "deal makers" (PIs and sponsors) don't even have that
>sort of thing on their radar screen when contracts are solicited and
>offered. Contracting officers don't consider it, either, when negotiating
>the contracts. Not until 'way down the line does the question come up in
>the accounting shop -- and then it's too late. But it can cost both the
>paying organization and the collecting organization hundreds of dollars all
>together just to process a check for a few dollars or cents.
>
>I want to prepare a suggestion to our Sponsored Projects Office that they
>include in our contract negotiations a materiality clause which would agree
>that negative or positive balances within some agreed-upon range would be
>acknowledged as immaterial and neither billed nor reimbursed. But not being
>a trained contract officer, I don't know how that could be best phrased.
>
>Would readers who have such materiality clauses in their standard contract
>language (or have seen good examples in other organizations' contracts)
>please share with me the language they use?
>
>I'll be eternally grateful if we can find a way to shake off some of this
>inconsequential "busy work".
>
>Lee
>
>
>*****************************************
>R. Lee Wood
>Team Lead, Medical School Team
>Grant and Contract Accounting
>Stanford University
>651 Serra Street, Room 110
>Stanford, CA 94305-6215
>Phone: (650)723-5681
>Fax:   (650)725-4598
>Email: xxxxxx@stanford.edu
>*****************************************
>
>
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Herbert B. Chermside, CRA
Director, Sponsored Programs Administration
Virginia Commonwealth University
PO BOX 980568
Richmond, VA  23298-0568
Express Delivery Only:
 Sanger Hall, Rm. 1-073
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 Richmond, VA  23219
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