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CHAPTER NINE

PROGRAM ADMINISTRATION OF AWARD

The Principal Investigator’s programmatic responsibility may involve a variety of administrative tasks that are necessary to ensure full compliance with terms and conditions of the award. Chapter Nine covers the following topics related to program administration:

  • Technical or Programmatic Reports
  • Changes to a Grant or Contract
  • Subcontracts and Consulting contracts
  • Transfer of Contract or Grant
  • Project Equipment
  • Suspension and Termination

TECHNICAL OR PROGRAMMATIC REPORTS

Many sponsored projects require both interim reports and a final report.  Unlike the donors of unrestricted gifts, sponsors expect to be informed of results on grants and contracts.  Failure to submit reports on a timely basis may adversely affect the Principal Investigator’s (and the Smithsonian’s) eligibility to receive further support from the sponsor, and may result in a loss of payment for costs already incurred.  Therefore Principal Investigators must take responsibility for submitting technical reports timely and for ensuring that OSP receives a copy for the award file or record. Report requirements are usually negotiated in the initial award agreement.  OSP normally requests 90 days to submit the final financial and technical reports after the completion of a project.

CHANGES TO A GRANT OR CONTRACT

As with many projects, sponsored projects are subject to changes.  The most common changes to a grant or contract usually occur in the following:

  • Principal Investigator
  • Project Plan
  • Budget
  • Time

Change of Principal Investigator

During a sponsored project, circumstances may arise that warrant the designation of a new Principal Investigator.  Such a change in appointment can be made with the approval of the department head, unit director, OSP Director, and the sponsor.  The request for designation of a new Principal Investigator must be made through OSP to the sponsor and should include the reasons for such a change and the curriculum vitae of the proposed Principal Investigator.

Change in Project Plan

Project shifts that create a redirection of the statement of work in the original proposal must be discussed with and approved by the sponsor.  To obtain sponsor approval, the Principal Investigator should prepare a letter explaining the proposed change to the project plan and any adjustments to the budget as a result of the change.  The Principal Investigator and the OSP Director must sign this letter.

Change in the Budget

External Sponsor Budget

If sponsor approval is required to transfer budget from one line item cost category to another, the Principal Investigator must request such action from OSP in writing.  OSP works with the Principal Investigator to obtain sponsor approval before revising the budget. 

Internal Smithsonian Budget

If sponsor approval is not required to transfer budget from one line item cost category to another, the Principal Investigator must request such action from OSP in writing when the transfer is twenty percent or more.  Budget revisions are not required for deviations of less than twenty percent unless the sponsor requires approval.  OSP is not seeking to approve or disapprove the budget but to be notified to update SIERP and to be aware of the units projected spending.

Other changes to the planned budget may include:

  1. Supplemental funds - Requests for supplemental funds include a budget (reflecting both direct and indirect costs) and a justification that describes how the funds will be spent, and demonstrates the relevance to the project.  The PI prepares such requests, which OSP reviews and approves prior to submission to the sponsor.
  2. Cost overruns - Because Principal Investigators serve as the budget managers for sponsored projects, it is their responsibility to keep the budget in order and within the limits provided by the award.  However, Principal Investigators have no authority to exceed project budget(s).  If it appears a cost overrun is likely, the Principal Investigator should immediately contact the OSP Grant and Contract Administrator.
  3. Carryover of funding - Sponsor policies vary in their handling of funds unspent at the end of a budget period.  Principal Investigators working under multi-year awards must check with the OSP Grant and Contract Administrator to avoid potential losses.  Requests for the carryover of funds must be routed through OSP to the sponsor, and must explain why such funds exist and how they will be used during the next budget period.  Early planning, in consultation with OSP, is the key to a successful transition to the next budget period.

Change in Time

A Principal Investigator may request a no-cost extension if the completion of grant or contract work requires more time than originally specified and no additional funds are necessary.  In this case, the Principal Investigator may request a no-cost extension by a brief memorandum to OSP at least 90 days prior to the project expiration date, to allow for any required sponsor approval. Include an explanation of why the additional time is needed.

SUBCONTRACTS AND CONSULTING CONTRACTS

Frequently, the Smithsonian enters into subcontracts with private businesses or academic institutions and/or enters into consulting contracts with individuals to allow the Principal Investigator to complete the terms and conditions of the award agreement.  OSP-issued subcontracts or consulting contracts should be described in the proposal with justification and explanation of the work needed, and approved by the sponsor in the award document.  When not approved in the award document OMB Circular A-110 requires prior federal sponsor approval before a subcontract or consulting contract is executed.  Further, to the extent practical, such transactions shall be conducted to provide free and open competition, as provided in Office of Contracting (OCON) policy and procedures.

This section explains the following procedures and requirements of subcontracts and consulting contracts:

  • Overview
  • General Terms and Conditions
  • Required Documentation
  • Selection Criteria for Consultants
  • Sub-recipient Versus Vendor

Overview

The Office of Contracting (OCON) issues and administers standard procurement subcontracts and consulting contracts.  OSP issues and administers some non-standard subcontracts and consultant agreements under authority delegated to its Director from the Director of OCON, but these subcontracts are the exception rather than the norm.  The rationale for OSP’s issuing and administering certain subcontracts, rather than OCON, is that OSP is uniquely familiar with the terms and conditions of sponsored project grants and contracts and can rapidly execute standard form scientific or project related non-competitive subcontracts (or service agreements) in order to meet sponsor imposed deadline requirements, scopes of work, and other terms and conditions.

Requests for consulting contracts should be reviewed by OSP staff prior to determining whether OSP or OCON should draft and sign a subcontract or consulting contract.  In complex grant/contract procurement matters, OSP staff will consult with OCON to determine the most appropriate action.

Subcontracts issued by OSP are awarded to organizations; consulting contracts are awarded to individuals.  An OSP subcontract or consulting contract must be linked to the proposal and the award.  Therefore, OSP-issued subcontracts or consulting contracts must be described in the proposal with justification and explanation of the work needed, and must be approved by the sponsor in the award document.

General Terms and Conditions

Each OSP subcontract or consulting contract must reference the prime award. (e.g., Catalog of Federal Domestic Assistance title and number, and awarding federal agency agreement number) and the terms and conditions.  This ensures that the same terms and conditions that are applied to the Smithsonian by the award, are also applied to the subcontractor or consultant.  OSP subcontracts are usually not with "for profit" companies.

Required Documentation

When a non-standard OSP subcontract or consulting contract is necessary, Principal Investigators should complete the Subcontract/Consultant Contract Checklist for Principal Investigators, found in Appendix W on OSP’s website, which requests the following information:

  • Name, address, phone number, and social security number of the consultant.  If the subcontractor is a corporation, provide the state of incorporation and employer identification number .
  • Proposal of Work from the consultant or subcontractor
  • Curricula vitae, or equivalent, of a consultant
  • Time schedule for performing the work outlined in the subcontract or consulting contract, including start and completion dates
  • Budget for the subcontract or consulting contract and payment schedule (advance payment is discouraged)
  • Concise statement of the scope of work, and items or reports to be delivered
  • Completed Smithsonian Form 655 for a consultant
  • Justification for any sole source award
  • List of special or technical requirements, as appropriate
  • List of personnel to be employed by the subcontractor who are essential to the sub contract performance

Selection Criteria for Consultants

Since consultants provide expertise from outside the Smithsonian, selection of consultants must be done carefully.  (see Appendix F, "Matrix of Employee and Consultant Distinctions").  In addition to the list of required material noted above, the Principal Investigator must insure the consultant selection meets the following criteria.

  • Consultant services are essential and cannot be provided by persons receiving salary support under the grant.
  • A selection process was employed, resulting in the selection of the most qualified consultant.
  • No agreements with consultants are motivated by potential personal gain or even give the appearance of a conflict of interest.  The CFO must approve the recruitment and selection process involving consultants who have a personal relationship with employees of the Smithsonian.  Further information about potential conflicts of interest can be found in SD 103, "Standards of Conduct;"
  • Charges to the sponsored program are commensurate with the qualifications of the consultant, comparable with fees charged by other consultants in the area of expertise, and correlate with the nature of services rendered.  The Federal government has established limits of reimbursement that cannot be exceeded without OSP approval prior to engaging a consultant.  The established Federal daily rate for consultants is frequently used as a limit by private sponsors as well.
  • OSP consulting contracts are with independent consultants and are not to be used as a substitute for hiring.  Whenever an employee-employer relationship exists with the Smithsonian for work performed on grants and contracts, payment must be made through the Smithsonian payroll process.

Sub-recipient Versus Vendor

As used in this section of the Guide, subcontracts and consulting agreements are considered "sub-recipient agreements," as opposed to vendor or procurement arrangements. A sub-recipient is defined in OMB Circular A-133 as, "any person or government department, agency, establishment, or nonprofit organization that receives financial assistance to carry out a program through a primary recipient of other sub-recipient but does not include an individual that is a beneficiary of such a program. A sub-recipient may also be a direct recipient of federal awards under other agreements." According to PCIE Position Statement No. 6, Question 46, "a sub-recipient may have some or all of the following characteristics: responsibility for applicable program compliance requirements, performance measured against meeting the objectives of the program, responsibility for program decisions, and determining eligibility for assistance."

On the other hand, a vendor is an entity generally responsible for providing required goods or services related to the administrative support of the federal award. These goods or services may be for the recipient or sub-recipient’s own use or for the use of beneficiaries of the program. The vendor’s only responsibility is to satisfy the terms of its contract.

Monitoring of Subcontractor or Consultant Performance

The Principal Investigator must maintain regular contact with the subcontractor or consultant during the period of performance, and consider the need for site visits to review operations and performance. Report observed performance or reporting deficiencies to the OSP staff point of contact.

Advances on Subawards

At the time of award, when the PI requests OSP to draft a subaward document, the PI must make a request to OSP supporting the subawardee's need for an advance, with accompanying documentation from the subawardee (which may be the letter of support from the proposal). This documentation should explain the reason for the advance, the timeline for such expenses and the cash flow requirements.

PROJECT EQUIPMENT

Non-expendable, tangible personal property (i.e., general and special purpose equipment) with a unit acquisition cost of $5,000 or more and a useful life of more than one year, that is purchased with federal funds and titled to the Smithsonian, may be charged directly to a project only with prior approval of the awarding agency. Such property is subject to special requirements. These include restrictions on usage, detailed recordkeeping, conduct of periodic inventories, and reporting when an item is no longer required for project use. Equipment records must include all of the following information.

  • Description
  • Mfg’s. SN, model #, NSN or other ID #;
  • Sponsoring agency and grant/contract #;
  • Title holder, recipient or government;
  • Acquisition date and cost (date received if federally owned);
  • Percentage of federal participation in total cost;
  • Location, condition, and date of last information report;
  • Unit acquisition cost;
  • Disposal date; and
  • Sales price or method used to determine current fair value for federal agency’s share where the government is compensated for its share.

Comparable restrictions and reporting apply to project purchased property titled to the government or government owned property furnished for use on the project. Refer to
SD 315, "Property Management" (the directive is currently under revision) for further details. Unless property needs and procurement plans are described and justified in the proposal and approved by the sponsor in the award document, free and open competition requirements apply as described in Chapter 12.

TRANSFER OF CONTRACT OR GRANT

The occasion may arise that a sponsored project may be transferred to or from another institution.

To Another Institution

A Principal Investigator, who is transferring from the Smithsonian, may wish to continue the sponsored project at the new institution. A request to transfer the sponsored project and any unspent portion of the award must proceed through OSP. This request must be approved by the Principal Investigator’s supervisor, department head, and unit director. Upon receiving the appropriate Smithsonian approvals, OSP will forward this request to the sponsor for review and approval.

From Another Institution

A Principal Investigator coming from another institution may wish to transfer a sponsored project to the Smithsonian. Such a transfer requires the approval of the original institution, the sponsor, and the Smithsonian. To initiate the transfer process, a new or revised proposal and budget may be requested by the sponsor; if so, an OSP Proposal Brief form is prepared and sent through the normal routing process for approval by the department head, unit, and OSP.

SUSPENSION AND TERMINATION

The "suspension" of a grant is an action that temporarily stops sponsorship pending corrective action by the recipients or pending a decision to terminate the grant. The termination of a grant means the cancellation of sponsorship, in whole or in part, at any time prior to the date of completion. Suspensions and terminations usually occur for convenience or cause.

Termination for Convenience

A sponsor may terminate a grant in whole, in part, or when it determines (after consultation with the grantee) that the continuation of the project would not produce beneficial results commensurate with the further expenditure of funds. The termination conditions, including the effective date (and in the case of a partial termination, the portion to be terminated), can be by mutual agreement in some cases. The Principal Investigator cannot incur new obligations for the terminated portion after the effective date, and must cancel as many outstanding obligations as possible. Depending on the award terms, a sponsor may allow non-cancelable obligations properly incurred prior to the termination.

Termination for Cause

When a grant recipient fails to comply with the terms and conditions of a grant, the sponsor may, with reasonable notice to the grantee, suspend the grant in whole or in part and withhold further payments or prohibit the grantee from incurring additional obligations of funds pending corrective action by the grantee or a finial decision by the sponsor to terminate the grant. The sponsor may allow necessary and or proper costs that the Principle Investigator could not reasonably avoid during the period of suspension, provided the costs are in accordance with terms and conditions of the grant. A sponsor may reserve the right to recover unexpended grant funds or grant funds for expenditures that are not in compliance with the terms and conditions of the grant. The retention of payments by the grantee or recovery by the sponsor under a terminated grant will be in accordance with legal rights and liabilities of the parties.