RCR Part 7

RESPONSIBLE CONDUCT OF RESEARCH

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Award Terms and Conditions

Institutions receive funding from hundreds of different sponsors, including federal agencies, foundations and for-profit companies. Each of these has the right to establish its own general and award specific terms and conditions. The terms of an individual award take precedence over the provisions of Office of Management and Budget (OMB) Circular A-21, Cost Principles of Educational Institutions. For example, although travel is not defined as unallowable in A-21, your particular award may designate travel, or more likely foreign travel, as unallowable. In that case, you may not charge those expenses to that project. Similar types of provisions may pertain to the acquisition of equipment.  Where required by the terms of the award, you MUST have the written approval of the sponsor's Grant or Contract Officer before charging specified expenses. The Sponsored Programs Office and the Post Award Office can assist with proper documentation of these approvals.  It is important to note that all sponsor terms and conditions specified in an award "flow down" to any recipients of sub-awards.

Awards may also contain requirements for advance notification of certain conditions. For federal grants, OMB Circular A-110 requires prior approvals of changes in PI status (including reduction of effort by 25% or more) or significant changes in scope of work. The Sponsored Programs Office and the Post Award Office can assist with proper documentation of these approvals.

Cost-type contracts oftentimes have other requirements. Many of these requirements need sponsor approval, which, when required by the sponsor, must be in writing to the sponsor’s Grant or Contract Officer and submitted via the SPO.

Finally, award notices specify requirements for reports. PIs who fail to submit timely technical or progress reports, for example, risk losing their funding, and jeopardize other funding at the institution.

Administrative Salaries and Other Clerical Expenses

The September 1, 1994, revision of Circular A-21 established the principle that administrative and clerical expenses are normally indirect costs. The Circular permits them to be charged directly to federal sponsors in “major proposals” as defined:

A-21 defines this term to mean "administratively intensive," where the nature of the technical work requires administrative/clerical support significantly above the routine level. A-21 provides several examples.

The proposal, and in particular the budget justification, are critical to the allowability of these types of costs. If you are proposing clerical/administrative costs, the proposal must state that the PI considers the project to be "major" and the justification must be explicit and detailed. See sample language below:

The PI has determined that this is a major project, as defined by OMB Circular A-21, and it meets A-21 requirements for direct charging of administrative expenses. All effort and expenses charged to this project will be for services specific to the project, and not for general support of the academic activities of the faculty or Department. In addition, effort charged to this project can be specifically identified to the project.

You are encouraged to discuss this subject with your research administrator, administrative support staff, or your Sponsored Programs Office staff when preparing proposals that include such costs.

Even if administrative costs are budgeted and allowed by the sponsor, they may not be charged directly to a federal sponsor except in the case of "major projects."

The specific criteria for charging administrative costs to “major projects” are:

  1. The expense is for the performance of one or more of the activities/projects defined as "major;"
  2. The expense is specifically identified with and directly benefits the project;
  3. The expense is specifically budgeted and approved by the sponsor;
  4. The expense is supported by an explicit budget justification in the project proposal.

Financial Management

Audit Realities

This topic deals with another aspect of the regulatory environment - that concerned with the management of project funding. Just as with the conduct of research, there are externally-imposed requirements on the individual researcher and on the institution related to the management of research funds.

The objectives of good research management are twofold:

  1. to make best use of available funds to achieve research outcomes;
  2. to avoid problems of fraud, waste and abuse of sponsor support.

Increasingly, requirements related to the use of federal funds create serious exposure for an institution and individual researchers. One purpose of this presentation is to minimize that risk.

Audits focus today on the direct costs of research, including the thousands of individual transactions in which PIs authorize the expenditure of sponsor funds for salaries, supplies and other costs of research. Recent audits have highlighted particular areas where regulations and compliance are complex and sometimes difficult. Pay close attention to the issues, and if you have any further questions, feel free to contact your Post Award Office.

The Cost Principles: OMB Circular A-21

  1. Anyone authorizing the expenditures of federal funds needs to be well-versed in the cost principles contained in OMB Circular A-21.
  2. These principles shall be used in determining the allowable costs of work performed by institutions under sponsored agreements (any grant, contract, or other agreement between the institution and the Federal Government). The principles shall also be used in determining the costs of work performed by an institution under sub-grants, cost reimbursement subcontracts, and other awards made to us under sponsored agreements. And as a guide in the pricing of fixed price contracts and subcontracts.
  3. Any costs being charged to a sponsor must be allowable, allocable, reasonable and consistent, as defined by OMB Circular A-21.
  4. Allowability: The tests of allowability of costs under these principles are:
    • They must be reasonable;
    • They must be allocable to sponsored agreements under the principles and methods provided herein;
    • They must be given consistent treatment appropriate to the circumstances;
    • They must conform to any limitations or exclusions set forth in these principles or in the sponsored agreement.
  5. Reasonable costs: A cost may be considered reasonable if the nature of the goods or services acquired or applied, and the amount involved, reflect the action that a prudent person would have taken under the circumstances prevailing at the time and the actions taken are consistent with established institution policies and practices.
  6. Allocable costs: A cost is allocable to a sponsored agreement if
    1. it is incurred solely to advance the work under the sponsored agreement;
    2. it benefits both the sponsored agreement and other work of the institution, in proportions that can be approximated through use of reasonable methods, or
    3. it is necessary to the overall operation of the institution and assignable to sponsored projects.
  7. Any costs allocable to a particular sponsored agreement may not be shifted to other sponsored agreements in order to meet deficiencies caused by overruns or other fund considerations, to avoid restrictions imposed by law or by terms of the sponsored agreement, or for other reasons of convenience.
  8. Any costs allocable to activities sponsored by industry, foreign governments or other sponsors may not be shifted to federally sponsored agreements.

Efforts, Salaries and Cost Share

Federal regulations require that specified employees’ activity be periodically reported and certified (Office of Management and Budget Circular A-21).

Cost Sharing - effort contributed towards Sponsored Agreements in which salaries are not borne by the sponsor in part or in total.

It is reasonable for agencies to know what direction their funds are going in. The question more simply put is: ‘What did you do with what we gave you’?

The commitment of effort made in proposals is the starting point for a significant amount of project cost. It also has significant implications for cost sharing. The following principles apply:

  • At most institutions, salaries are allocated on the basis of distribution of total effort (FTE, or Full-Time Equivalent), including instruction, organized and sponsored research activities, departmental administration, etc.
  • No one has more than 100% FTE.
  • Any effort committed in a proposal, awarded by the sponsor, and expended on the project must be charged directly to the sponsored agreement account or reported by the department as cost-share as part of the effort certification process. These dollars are included in an institution’s research base and become part of the indirect cost rate (F&A) calculation.

A commitment of effort is usually made in the proposal budget, but it may also be made in the narrative or in direct communication with the sponsor (e.g. phone, e-mail). When effort is committed, awarded, and expended, corresponding salary must be directly charged or cost-shared.

In January 2001, the Office of Management and Budget issued a clarification of Circular A-21, confirming that voluntary uncommitted effort should not be accounted for separately and included in the organized research base for the calculation of indirect costs.

Note: It is not allowable to cost share federal funds without statutory approval to do so.

Once an expense has been used for cost share, you cannot use that same expense as cost share on another grant (i.e., no double-counting).

Proposed voluntary cost share becomes mandatory/committed cost share if accepted as part of the award agreement, so be careful not to over-commit yourself.

Documenting Allocability

An expense is allocable to a project if the item being charged, e.g., salaries, supplies, travel, student tuition, etc., benefits the project. Allocability is one of the cost principles defined in A-21, and expenses that are not allocable may not be directly charged. A-21 allows that PIs may allocate costs among different projects, as long as the allocation method reasonably approximates the degree to which each project benefits. Allocation methods must be documented and available for review.

Allocability is a focus of audit activity. Project expenditures must be supported by evidence of direct benefit to the project. The availability of funds to pay an expense, or its inclusion in a budget, is not evidence of the allocability of that expense to the project. For supplies and other non-salary expenses, allocability can usually be documented through purchase/payment records or other files, as well as through the certification of expenditures. A knowledgeable person in the department must review each month's project expenditures. Any errors or requests for clarification should be brought to the PI's attention and, if necessary, corrected promptly.

If an expenditure statement includes an error, the department initiates a transfer to move the charge to the right account. Department staff will do this based on information provided by the PI. This needs to take place as soon as possible after identifying the need for a correction and be sufficient to document the benefit to the project being charged. Transfers are fertile ground for audit activity, and they will be reviewed carefully -- first by institution staff, and then often by an external auditor.

Monitoring Project Spending

Two common situations in which the allocability of an expense will be critically reviewed are those where expenses are incurred before the start of a project period, and those where expenses are incurred just before the end of a project period. During the project period, while the work of the project is being carried out, sponsors may also look closely at the rate of project expenditures.

When a new award is assured but the funding is delayed, it may be necessary to open an account immediately, so that personnel can be assigned, pre-award costs can be allocated, etc. This may be done as a Guarantee through the Post Award Office.

It is not appropriate to charge these costs to other sponsored accounts, even if it is intended to transfer them later. Costs should not be charged to non-sponsored accounts and then transferred later. A guarantee account, prevents having to transfer expenses onto a new account when the award arrives, thus avoiding both administrative burden and audit exposure.

During the project period, PIs can jeopardize their funding when spending either accelerates at an unanticipated rate or falls significantly behind project projections. While there may be very good programmatic reasons for accelerated or decelerated levels of spending, it is always a good idea to keep the sponsor - both technical and administrative officers - informed in these situations.

Sometimes it is necessary and appropriate to purchase equipment, supplies or incur other expenses late in the project period. In these cases, it is particularly important to document the allowability -- and particularly the allocability -- of the expense. It is also a good idea to get the written approval of the Sponsor’s Grant or Contracting Officer whenever an expenditure might appear to be questionable.

Expenses incurred after the project period has ended are unallowable, unless the award contained provisions permitting them to be charged to the award. This includes expenses incurred for the production of final project reports. If you have work left to do on a project, but have run out of time, request a no-cost extension. This request must be coordinated through the Sponsored Projects Office.

Subcontracts

Many large grants and contracts have subcontracts associated with them. When invoices are forwarded to your department for approval, it is imperative that the PI review these invoices for appropriateness (allowability, allocability and reasonableness). The provisions of awards typically flow down to subcontractors. Therefore, the subcontractor(s) must follow the terms and conditions set forth in the agreement, especially as related to cost. For example, if the purchase of equipment is not allowed unless specifically approved by your sponsor in writing, then the subcontractor must also have such permission.

Equipment

Make sure to check the terms and conditions of your particular award document (and any general terms and conditions it may incorporate by reference) for information related to equipment. The following discussion includes many of the common problems that result from acquiring and using equipment in a grant-funded project. Any of these conditions require careful attention from time award is established through project completion.

All purchases funded by sponsors are subject to university policies and procedures.

Normally, there are four ways orders for equipment may be committed to vendors: by purchase order, department order, purchasing card transaction or blanket order. The direct buy limit is typically $2,500. Equipment and supplies costing in excess of that limit are competitively bid or ordered from a sole source vendor with the appropriate documentation.

Many institutions use a Property Inventory System as a point of audit focus. The proper identification and use of equipment are critical to the institution’s management of both the direct and indirect costs of research. The integrity of the system depends on individuals throughout the institution’s campuses paying proper attention to the acquisition, use, tracking, physical inventory and disposition of equipment.

At many institutions, capital equipment is defined as equipment having an acquisition cost of $5,000 or more, being non-consumable (doesn’t change form with use) and having a useful life of more than one year. Fabricated equipment, where the aggregated cost of the components is $5,000 or more and where the fabricated asset has a useful life of more than one year, is also defined as capital. Capital assets are typically shown as received in the institution’s property inventory system within 10 days from receipt of inventory tag.

Some awards may also require advance notice or prior written approval from the Sponsor’s Grant or Contracting Officer before equipment can be purchased. This is particularly important during the beginning of a project (don’t order equipment prior to the effective date of the award unless authorized). It is equally important during the last 90 days of the award period.

If you intend to use a piece of equipment to support multiple projects or to support both sponsored and unsponsored activities, there should be an appropriate, documented allocation of the cost. However, if scientific or other equipment is purchased to carry out a particular project, A-21 allows that the expense may be charged fully to the project, even if that equipment is used for other purposes after the award has ended.

In addition, purchase of “general-purpose” equipment (for instance desktop computers) for a project, may need prior sponsor approval. Include a particularly clear justification in the proposal, and consider carefully the appropriate allocation of the cost of such equipment. As with administrative costs, the direct charging of “general-purpose” equipment or non-technical equipment is subject to significant audit scrutiny by the institution and possibly external reviewers. Such acquisitions are often unallowable.

It is important to get prior written permission from the sponsor before you do anything with equipment to which you do not have clear title, especially disposition of property. Other actions involving equipment commonly requiring permission include trading it in, taking it to another project or institution, or declaring it surplus.  Before any equipment can be moved off-campus, all of the following officials and offices must approve the request:

  1. Responsible department chair
  2. Responsible dean or director
  3. Director of Sponsored Programs Services

One key to effective property management is the early involvement of your Equipment Coordinator. In particular, it is important to keep him/her informed about the condition and location of equipment, especially when equipment is moved to an off-campus site, stolen or broken beyond repair. (Never throw items broken beyond repair out. Typically, Destruction Certificates are available from your institution.)

Equipment Purchase

Taxation on purchases - In most states the purchase of goods and services is generally, taxable (so when you prepare your budget for equipment, don’t forget to include cost of shipping and applicable tax); however, certain equipment purchased for institutional research and technological development activities may qualify for exemption from state sales and use tax. The tax exemption provides a cost savings dependent on state tax rates. Careful attention must be given to certifying purchases for tax exemption.

Project Close-Out

There are three elements to project close-out:

  1. Physical completion - all work is completed under the project, all final reports/deliverables have been delivered and all property has been accounted for and/or returned to its owner or transferred as appropriate.  Such reports include:If it is required for reports from the sub-recipient to be included with reports to the sponsor, the sub-recipient’s deadline for report submission must be scheduled early enough so that his/her report can be included with the PI’s timely submission to the sponsor.
    • A final technical report - submitted by the PI
    • Final inventions report - submitted by the Post Award Office upon certification by the PI
    • Final financial report - submitted by the Post Award Office upon the certification of expenditures by the PI/Department authorized designee.
    • Final property report - compiled and submitted by the Post Award Office after reconciling with the on-line Property Inventory System.
  2. Final Acceptance - Projects are considered completed or terminated after the sponsor receives and approves all reports as required by the terms and conditions of the award, and notifies the institution of its acceptance and closure of the project.
  3. Final Payment - All billing issues are resolved and all payments have been received, or it has been determined that no further payments will be received.

Reports required at the close of a project are generally due within no more than 90 days of the project end date.

Frequently Asked Questions

What if a student works on my grant for less than 12 months?  Do they need to complete the basic RCR training? YES. All covered individuals must complete basic RCR training. Does a Responsible conduct of Research plan need to be included with my proposal? For NSF, NO. The institutional RCR plan (section 7009) is part of the institutional assurance and does not need to be included in the text of your proposal. However, a mentoring plan (section 7008) is required if you request support for a postdoc. For NIH, YES. See NIH guidance for more information. A template has been developed to assist you in drafting this part of your proposal. Is this the same training required for IACUC, IRB or IBC applications? NO. While animal welfare and human subjects protections are RCR topics, the online IRB and IACUC training modules do not meet the requirement for discussion-based contact hours. Can training sessions/courses taken last year be applied to these requirements? This decision will be left to the discretion of the PI. If the PI believes the session is recent enough and relevant enough to meet the requirement, they should simply document it on the RCR training documentation form. Are my summer REU students required to complete the RCR training? Based on the most recent REU information, NSF considers these students "supported" by NSF to conduct research. Therefore, they must complete the relevant phase(s) of the training program.

National Science Foundation RCR FAQ

National Institutes of Health RCR guidelines

Council of Graduate Schools Scholarly Integrity and Responsible Conduct of Research (RCR)

Sources

Some of these sections make use of a publication of the National Academy of Sciences, "On Being a Scientist: Responsible Conduct In Research." The National Academy of Sciences waives permission for the use of this material for educational purposes. Additional information has been adapted from “ORI Introduction to the Responsible Conduct of Research” and “Making the right moves, A practical guide to scientific management for postdocs and new faculty” from the Burroughs Wellcome Fund and the Howard Hughes Medical Institute.

Resources

The Office of Sponsored Programs will provide resources to support research programs and their implementation by the PIs. Resources available include:

  • Training opportunities for faculty involved in teaching RCR
  • ORC sponsored RCR workshops to complement college and departmental offerings
  • Individualized consultation and advice
  • Online resources:
    • Access to the CITI program
    • Teaching resources, such as slide shows and case studies, for RCR education
    • Online training modules
    • A list of upcoming RCR offerings available on campus

Research Ethics

 

RCR Part 6: Research Misconduct and Reporting

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