Award Terms and Conditions
Guideline Date: September 2017 Revision: 1 Last Review: August 2017
Understanding all funding source requirements and restrictions is critical. The principal investigator (PI) must thoroughly understand what the sponsoring agency expects in managing the project. These expectations are explained in the award terms and conditions. PIs should always carefully read the award terms and conditions and consult Sponsored Projects for clarification of anything that is unclear. Note: When individual award terms and conditions are stricter than applicable federal guidelines and University policy, the award terms and conditions take precedence. For example, while travel expenses are allowable under federal guidelines and University policy, they may be specifically excluded or limited by your specific award.
When managing an award, pay close attention to the key award terms and conditions detailed below.
The PI prepares a budget and justification for the project. The budget must be in accordance with allowable cost principles including application of the appropriate facilities and administrative (F&A) rate, also referred to as indirect cost rate. As the project progresses, PIs should compare the initial, sponsor approved budget to actual expenditures on a regular basis.
When budget category overruns or shortfalls occur, re-budgeting may be necessary. Below are some general re-budgeting rules; however, the award terms and conditions should be consulted before re-budgeting to ensure that prior sponsor approval is not required.
- Modest re-budgeting is generally allowable without approval of the awarding agency.
- Absent specific award terms to the contrary, re-budgeting of more than 25 percent generally represents a change of scope requiring pre-approval from the granting agency.
- Significant re-budgeting of key personnel effort indicates a change in scope that requires pre-approval from the granting agency. (Consult award terms and conditions for thresholds that constitute "significant" re-budgeting of key personnel effort.)
Some sponsoring agencies require pre-approval for certain types of expenses. For example, foreign travel may require sponsor pre-approval as might the purchase of equipment. Be sure to check the award terms and conditions or consult your Sponsored Projects post-award grant accountant for information about what purchases require sponsor pre-approval.
As a general rule, expenses must be incurred during the award performance period in order to be considered allowable. The exception, though, is that some federal agencies allow pre-award spending 90 days prior to the start date of the award (with prior written approval from the federal sponsoring agency) for extenuating project circumstances. For example, pre-award spending might be requested to purchase a piece of equipment in advance of the actual project start date so that it will arrive and be ready for use on the project start date. For information on whether pre-award spending is allowed for you particular award, consult your post-award grant accountant in Sponsored Projects for guidance.
On occasion, funding may be delayed when the project is ready to commence. If a delay in funding is anticipated, a memo account may be requested to enable the charging of project costs in the absence of the sponsor issued award document. Memo accounts must be requested through Sponsored Projects, and the PI, department chair/director and dean/vice president must guarantee that if the proposal is not awarded, all expenses incurred while the account is on memo will be covered by departmental or other discretionary funds.
Expenses incurred after the end of the performance period are not allowable. If there is reason to believe a project will not be completed by the performance period end date, a no-cost extension should be requested from the sponsor through Sponsored Projects. Be sure to check the award terms and conditions for information regarding no cost extension request procedures as failure to follow sponsor procedures may result in the request being denied.
As defined in the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, §200.80, program income is defined as "gross income earned by the non-federal entity that is directly generated by a supported activity or earned as a result of the federal award during the period of performance . . . ." Program income can be generated in a variety of ways including (but not limited to) income derived from the following:
- Fees for services performed
- The use or rental or real or personal property acquired under federal awards
- The sale of commodities or items fabricated under a federal award
- License fees and royalties on patents and copyrights
- Principal and interest on loans made with federal award fund
If program income is anticipated as part of a proposed project, it should be disclosed in the project proposal. If program income arises during the life of the award that was not anticipated at the proposal stage, Sponsored Projects must be notified so that the proper method to account for the income can be established. All program income and related expenses must be reported to the sponsoring agency along with the award financial activity.
Who to ContactSponsored Projects
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