NEGOTIATION AND ACCEPTANCE OF AWARD
Chapter Eight describes the next steps once a sponsor has accepted or rejected a proposal in the following sections:
- Award notification
- Responsibilities of award administration
- Award review
- Negotiation and approvals
- Acceptance of award
- Advance funds
The Office of Sponsored Projects normally receives notification of a sponsor’s acceptance or rejection of a proposal. If award notices or letters of rejection come directly to the Principal Investigator, the originals are forwarded to OSP, the unit responsible for maintaining the file of record for grants and contracts for the Smithsonian. It is important for OSP to know that proposals have been rejected in order to maintain accurate records.
All correspondence from sponsors must be brought to the attention of an OSP Grant and Contract Administrator so that an accurate evaluation of the proposal status san be made.
The award document defines the relationship of the Principal Investigator and the Smithsonian to the sponsor and is legally binding. Principal Investigators and OSP must carefully evaluate the agreement before it is signed by OSP. The determination of whether an award is a grant or contract is determined by OSP, based on the definitions outlined in SD318.
RESPONSIBILITIES OF AWARD ADMINISTRATION
The Principal Investigator has primary responsibility for the technical, programmatic, and financial management of his or her sponsored project(s). With this responsibility comes the obligation to plan and manage each project with care and diligence, to adhere to all terms and conditions of the award, and to document all expenditures adequately in accordance with sponsor regulations. Effective project management requires coordination and cooperation among the Principal Investigator, the unit or office, the Fund Manager, OSP, and other administrative staff.
The following entails the responsibilities for each of the following involved parties:
- Principal Investigator
- Fund Manager
- Office of Sponsored Projects
The Principal Investigator:
- Recruits and hires appropriate personnel in accordance with Smithsonian policies, including affirmative action
- Ensures the program is carried out in a timely fashion and that all proposed objectives are achieved
- Consults with department or unit director, as appropriate
- Ensures appropriate level of effort by designated staff members in accordance with grant or contract provisions
- Supervises project personnel
- Manages the budget and is responsible for keeping within budget
- Prepares and submits interim and final project reports to the sponsor, as required
The Fund Manager:
- Maintains current and accurate fund balances and financial records
- Informs the fund approver of the availability of funds before obligating any documents
- Becomes familiar with the administrative requirements for obligating and committing funds
- Serves as the project’s principal financial liaison with OSP
- Performs monthly fund reconciliation, and promptly resolves discrepancies between unit records and the monthly accounting reports received from OC
- Provides guidance on projects expenditure and other project activity to promote adherence to Smithsonian and sponsor guidelines
- Works with Principal Investigator and OSP to close out the project account at the end of the project
The Office of Sponsored Projects:
Once an award is made, the Principal Investigator’s Fund Manager, the OSP Grant and Contract Administrator, and the OSP Financial Analyst work together to assist the Principal Investigator in managing the award. Specifically OSP:
- Informs the Principal Investigator and Fund Manager of the award and its terms and conditions
- Assigns a designated code, and sets up the approved budget in the accounting system
- Reviews aspects of the award with Principal Investigator, when needed
- Negotiates contract or grant terms and conditions with sponsor
- Acts as liaison among Principal Investigators and Smithsonian support offices, as required
- Provides advice and problem resolution services regarding post-award administration
- Prepares and distributes an OSP Award Summary and copy of award
- Obtains prior approval from sponsor to reclassify expenses
- Provides guidance on project expenditures and other project activity to promote adherence to Smithsonian and sponsor guidelines
- Prepares, approves, and signs sponsored project consulting agreements and sub-contracts
- Requests and receives payment from sponsors
- Prepares interim and final financial reports
- Handles negotiation in matters of property title and disposition, or transfer at conclusion of project
- Advises on project close-out
- Works with Principal Investigator and administrative staff to close out the project financially
These OSP responsibilities are discussed in this and the following chapters.
Upon receipt of an award, the Grant and Contract Administrator consults with the Principal Investigator to review the award ensuring that it conforms to the proposal and is acceptable from a technical and business perspective. The OSP Grant and Contract Administrator negotiates any changes to the award document that may be needed.
A sponsor may suggest various revisions to the proposal before making a decision. If the Principal Investigator receives such suggestions from the sponsor, OSP must be informed so that proper formal action can be taken.
The Grant and Contract Administrator consults with other Smithsonian offices as necessary, (as discussed in Chapter Six “Proposal Submission”) prior to acceptance of award.
NEGOTIATION AND APPROVALS
OSP Grant and Contract Administrators negotiate all terms and conditions of the award with sponsors. The OSP Grant and Contract Administrator consults with the Principal Investigator, as necessary, to ensure that technical provisions of the award are acceptable and in accordance with the proposal.
Programmatic questions about proposals received by OSP are referred to the Principal Investigator. The Principal Investigator must be prepared to defend and explain the programmatic, scientific, or technical contents of the proposal.
Significant revisions in scope, personnel, facilities, or budget require Smithsonian approval. Principal Investigators should not agree to significant proposal revisions before such approval is obtained. If a Principal Investigator is not sure if a revision is significant, the OSP Grant and Contract Administrator is contacted for guidance.
The Director of OSP reserves the right to determine the extent of negotiations with any sponsor to protect the best interests of the Smithsonian.
NOTE: SI routinely does not provide receipts to sponsors. If a sponsor requests receipts, the Smithsonian will respond to the sponsor as follows:
“The Smithsonian Institution does not furnish individual receipts as support for invoices or sponsor required financial reports of expenditures. Our annual government grant and contract expenditures exceed $100 million, and providing payroll and vendor furnished documents in support of payment requests would not be possible.
The Smithsonian uses a fully developed enterprise resource planning system to segregate individual projects, record project transactions, and produce summary reports of project expenditures monthly. All project accounting is done in accordance with generally accepted accounting principles, and the annual financial statements are audited by KPMG LLP. Our financial statements receive clean audit opinions.
Further, all federal funds received as grant money (including federal court funds passed through Environ) are subject to the Office of Management and Budget uniform administrative requirements in Circular A-110; and federal cost-reimbursement grants are subject to the cost principles in Circular A-122. Because the Smithsonian expends more than $500 thousand federal grant dollars each year, it is also subject to the annual audit and reporting requirements in Circular A-133. As a federal grant, the Environ subaward would be included in the universe of awards from which KPMG LLP and the Defense Contract Audit Agency sample labor and expenditure transactions for allocability, allowability, and reasonableness.”
ACCEPTANCE OF AWARD
Once official notification has been received, the acceptance of an award from a sponsor represents and obligation by the Smithsonian. All awards, amendments, and modifications to existing awards are reviewed and accepted by OSP. As the Smithsonian Contracting Officer, the Director of OSP had delegated authority to accept incoming grant and contract awards. Acting in this capacity, the Director signs to indicate acceptance of an award in the name of the Smithsonian. Refer to Unauthorized Contracting Announcement 91-25 in Appendix R for further details.
The Director of OSP also signs all certifications and assurances that are required by the sponsor. A detailed listing of regulation and compliance issues is presented in Appendix N.
Once the award has been accepted, a copy is forwarded to the Principal Investigator and other appropriate staff. The original award document is maintained at OSP as the Smithsonian official record.
RESPONSIBILITY OF PRINCIPAL INVESTIGATOR
The Principal Investigator is ultimately responsible for conducting the project in accordance with the award provisions, seeking the necessary approvals, and ensuring that the program stays within budget.
Preliminary or informal notification of an award may precede official notification by several weeks or months. The Smithsonian normally does not initiate a project or incur costs until official notification of funding is received, and the award is formally accepted by the Smithsonian.
Occasionally, circumstances may delay the receipt of the award, impeding the start-up or the continuity of the program. In such cases, Principal Investigators may request advance funds so that they may incur expenses in expectation of receiving the award. See SD 308, “Advances and Investments in Trust-Funded Programs,” in Appendix S.
Procedures to Obtain Advance Funds
In order to obtain advance funds, Principal Investigators should take the following steps:
1. Submit a written request for advance funds through their department or unit director to the appropriate approving official;
Note: Allow two weeks lead time for review and approval of the request.
2. Include in the request:
- The amount of advance risk funds required, including applicable indirect costs
- A brief explanation of the need to go forward with the project or purchase at this time
- The source of anticipated funding
- The status of fund raising plans
- A copy of the formal request to the anticipated funding source, if available
- Any correspondence from the sponsoring organization about the proposed funding
- The expected date of the award
- A written repayment plan
- Confirmation of the sponsoring organization’s intent to award funding to the Smithsonian
- The unit’s guarantee of other fund availability to repay the requested advance funds if for any reason funding does not materialize
RESPONSIBILITY FOR REPAYMENT OF ADVANCE FUNDS
Approval of advance funding does not increase the income available to a fund, but rather allows the Principal Investigator to incur a deficit cash/fund balance in a specified trust fund up to the amount of the advance funding. The responsibility for repaying advance funds rests with the Principal Investigator’s unit, and must be approved by the unit director.
Delinquent Repayment of Advance Funds
If in any month the repayment of advance funds becomes delinquent when compared to the approved payment schedule, the Office of the Comptroller (OC) immediately requests the unit to take appropriate action to correct the delinquency. The unit must either:
- Provide appropriate funds to repay the advance funds
- Request that the approving official approve a revised repayment schedule.
The request for a revised payment schedule must include the reason for the delinquency. The request will be routed through the unit or office’s Director and OSP to the CFO.