Lee, you proposal has great merit.  The cost-benefit is obvious.  Our most
cantankerous "customer" is the U.S.Gvt.  I cannot think they would agree to
something so practical, because somewhere, somewhen, some poor schmuck who
signs such a clause will be castigated for waste fraud or abuse for
"giving" away Uncle's money.

Industrial sponsors might be a good market fot this approach.  We have not
considered it at VCU because almost every project we do for industry is
fixed price or fixed unit price (based on, essentially, a time-and-effort
model for reaching our estimate).

Chuck

At 12:42 PM 3/15/99 -0800, you wrote:
>Colleagues,
>
>[I sent this out to the list about a month ago and didn't get any replies,
>except for a couple of other list members who wanted me to share my results
>with them. If your organization has a materiality clause in their
>contracts, please take a moment and share your information with us.
>-- Thanks, Lee]
>
>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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