Ch. 9 - Post Award Administration
9.1 Commitment of Effort in Federally Sponsored Awards
9.2 Institutional Base Salary
9.3 Salary Cap for National Institute of Health Awards
9.4 Salary Restriction on National Science Foundation Awards
9.5 Direct Charging on Adminstrative Salaries to Federal Awards
9.6 Payroll Distribution Confirmation
9.7 Equipment Fabrication Implementation
9.8 Subcontracts, Subawards, and Subrecipient Monitoring
9.9 Cost Transfers to Federally Funded Awards
9.10 Program Income Related to Federally Funded Awards
9.11 Processing and Management of ARRA Awards
9.12 Responding to FOIA Requests
9.13 Sales Tax
9.15 Responding to External Auditors
A quantifiable level of personnel effort included in the budget, budget justification or narrative sections of proposals to federal agencies is considered to be a binding commitment. Awards resulting from such proposals include an inherent obligation to track, certify and report the effort either as salary charged to the sponsor or as cost sharing by the award recipient. See Section 6.4 Cost Sharing and Matching Contributions.
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The Principal Investigator is responsible for any cost sharing commitments included in federal proposal budgets. It also is the responsibility of the PI to fund the Facilities and Administrative costs related to voluntary committed salary cost sharing.
Generally, salary should be charged as was committed in the proposal (or as adjusted by award negotiations) as long as the actual effort devoted is at least equal to the committed effort.
If the effort required to meet the committed amount is not charged to the award, the difference represents voluntary committed cost sharing that must be tracked, certified, and reported.
Voluntary committed cost sharing must be identified on the Division Approval Form (DAF) and initialed by the Division Chair to acknowledge that the Facilities and Administrative (F&A) assessment on the cost shared amount will be met by non-federal funds. Mandatory cost sharing commitments must also be reflected on the DAF, and the specification of the fund source provided as an attachment to the DAF.
Caltech established Institutional Base Salary (IBS) to insure compliance with the requirements of OMB Circular A-21, Section J.10. IBS is the annual compensation paid by an organization for an individual's appointment, whether that individual's time si spent on research, teaching, patient care, or other activities. It applies to all individuals whose salary is charged to sponsored projects or who have committed to provide effort ona sponsored project in the form of mandatory or voluntary committed cost sharing, where the cost of such effort is based on the individual's institutional base salary (IBS).
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At Caltech, IBS is the annual compensation paid to individuals holding faculty appointments and used in connection with sponsored projects and payroll distribution reporting pruposed only. On an annual basis, faculty members receive a letter from the Provost that identifies their IBS for the coming fiscal year.
Caltech's IBS policy applies to faculty whose salary is charged to sponsored projects, in whole or part, and to all faculty members who have committed effort to a sponsored project but receive no salary support from the sponsored project, i.e., their salary is paid from Institute's funds and constitutes voluntary or mandatory committed cost sharing.
Policy regarding Institutional Base Salary for Faulty Members Working on Sponsored Projects
IBS includes regular guaranteed salary offered by Caltech regardless of the source of funds. IBS excludes second assignments such as Division Chair, Provost, Vice Provost, dean, Executive Officer, or any other duties for which an administrative supplement is paid. IBS may not be increased as result of replacing Caltech salary funds with sponsored project funds. IBS excludes merit, performance and lump sum bonus payments, honoraria, and extra compensation such as Faculty Housing allowance, tuition reimbursement, etc.
Since 1990 Congress has legislatively mandated a provision limiting the diret salary that an individual may receive from an NIH grant or cooperative agreement. The salary cap is currently set at the amount of direct salary paid to executive Level II of the Federal Executive Pay scale. NIH has clarified that for the purposes of the salary limitation, the terms "direct salary," "salary," and "institutional base salary" have the same meaning and are exclusive of fringe benefits and facilities and administrative (F&A, also known as indirect cost) expenses. The actual dollar amount may vary from year to year.
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At Caltech, NIH grant proposals are submitted with PI's actual Institutional Base Salary (Section 9.2, Caltech Guide to Sponsored Projects), adjusted for anticipated increases. When the grant is awarded, NIH adjusts the approved budget to reflect the salary cap in effect when the grant begins.
Health and Human Services (HHS) Audit Agency has determined that the difference between the PI's actual salary and the salary charged to the grant is to be treated as mandatory cost sharing and tracked separately in the financial system. To insure that Caltech is in compliance with this requirement, salaries of PIs whose Institutional Base Salaries (IBS) are over the NIH mandated cap are distributed to NIH grant and an associated salary cap companion account. The NIH grant is charged at the NIH salary cap rate and the difference is charged to the salary cap companion account which is funded from the Institution's general budget funds.
An on-line salary cap calculator is available in the IMSS Queries website.
NSF policy limits the charging of salaries of Senior Personnel on NSF awards to a maximum of two months in any one year. This limitation applies to each individual who is acting in the role of Senior Personnel, and it applies to any NSF award funding the individual may receive, directly from NSF or from other institutions. NSF does allow charging of Senior Personnel salaries in excess of two months provided the excess salary is included in the approved award (e.g., by inclusion of the excess salary in the proposal budget).
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Any individual designated as Senior Personnel in a proposal to NSF is subject to the two-month salary limitation. Therefore, if the PI wishes to include salary for Senior Personnel in excess of the two-month limitation, the PI must justify the additional salary in the budget justification. Note that the term "Senior Personnel" does not apply solely to professorial faculty. It also applies to non-professorial individuals to the extent they are identified in the proposal as Senior Personnel (e.g., by inclusion in the Senior Personnel section of the NSF budget form).
Caltech Procedure for Implementation and Monitoring of the National Science Foundation Salary Cap on Senior Personnel:
On receipt of a NSF grant, the Office of Sponsored Research (OSR) will enter Senior Project Personnel in Oracle Grants Management (OGM) system. The NSF Salary Compliance Report in Cognos is made available to the Divisions to monitor compliance with this NSF requirement. A senior project person's salary distribution to all NSF awards can exceed 16.66% during a twelve month period, when the increased rate is reflected in the awarded budget and justified in the budget justification.
OMB Circular A-21 requires federal award recipients to establish procedures to track and certify the distribution of salary charges to sponsored projects.
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The Payroll Distribution Confirmation process is the formal verification of the reasonableness of the distribution of payroll charges to sponsored awards.
Payroll charges to sponsored awards must be reasonable for the work performed. A responsible person with suitable means of verification of work performed must confirm the reasonableness of such charges.
Payroll Distribution Reports are generated twice a year for certification. Two types of reports are distributed and certified: faculty who have payroll charges to sponsored awards receive the Faculty Payroll Distribution Report, and award managers receive the Award Manager Payroll Distribution Report which lists all non-faculty salaries charged to the award manager's sponsored awards.
Sponsored projects occasionally involve the fabrication or assembly of an equipment item or instrument from individual parts. When the end product will be owned by Caltech, expenses may be charged to a Fabrication Account. Indirect costs are not assessed on fabrication accounts.
If the item being fabricated is a deliverable, i.e., the equipment and its title will be transferred to the sponsor, then generally a Fabrication Account is not appropriate (see Caltech's Equipment Fabrication Policy for limited exceptions.)
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"Equipment fabrication" is the creation of an item of scientific equipment or scientific instrument that is built or assembled from individual parts by Caltech personnel, including internal or external shop staff and meets all of the following criteria:
- meets unique specifications (typically as outlined in a research proposal or award)
- has a total estimated cost of $5,000 or more;
- has an estimated useful life of 2 years or more
(note that a completed experimental or prototype device built to obtain data or to demonstrate the feasibility of a particular process may be considered a fabrication only if its initial useful life is two years or more);
- when completed, will not be affixed permanently to a building or structure;
- is tangible and capable of specific identification and continuous control through tagging and periodic physical inventory;
- is owned by Caltech when completed
In order to appropriately identify fabricated equipment in the accounting system, a fabrication account should be established in which to accumulate allowable expenses. The Equipment Fabrication Policy describes the types of costs that are allowable and not allowable on fabrication accounts.
Subawards or subcontracts are agreements under which a portion of the programmatic or scientific effort of an award is transferred, along with funding, to another organization. Both subawards and subcontracts are legal contracts that will include terms consistent with the prime award.
Federal regulations require award recipients to actively monitor the activities of subawardees in order to ensure productivity/performance, accountability for funds, and compliance with award requirements.
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Subrecipient monitoring responsibilities are shared among the PI, academic divisions, Procurement Services, and Project Accounting.
As a prime recipient and a pass through entity for federal awards, Caltech is required to monitor the activities of subrecipients. Responsibilities for monitoring reside primarily with the PI and the Divisions, but a number of offices act as resources to effectively evaluate subrecipients. The Office of General Counsel and Audit Services and Institute Compliance staff are available for consultation and assistance if issues arise as a result of subrecipient monitoring.
A cost transfer is an after-the-fact movement of costs already incurred from one PTA to another. With sponsored projects, the concern is largely with the transfer of costs to a federally-funded award. Federal sponsors require award recipients to make charges only to the award(s) that benefit from the charge. However, legitimate errors do occur, and when that happens, it is imperative that award recipients identify and correct the errors as quickly as possible.
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Costs should be charged to the correct federal award when first incurred. Errors identified later should be corrected within 90 days from the date the charge is first posted in OGM. Written justification is required in order to process the transfer. Cost transfers should be made only for the purpose of correcting an error in the original posting.
Caltech is committed to ensuring that cost transfers are made in accordance with federal and agency regulations and Institute policy. Timelines and completeness of transfer explanations are important factors in supporting allowability and allocability of the charges. Cost transfers made after the 90 day period will only be approved under extenuating circumstances. Cost transfers from overspent federal awards to another federal award that is not overspent are subject to a higher level of scrutiny and require additional justification and review. Requests for transfers from overspent awards to other federal awards must be approved by the Division Chair.
Non-labor cost transfers require justification forms signed by the Principal Investigator or cognizant administrator and submitted to Project Accounting along with supporting documentation. Labor cost transfers that are over 90 days old or transfers from overspent accounts to federal awards require review and approval of both the Division Chair and Project Accounting.
Cost transfers over 90 days are allowed only in extenuating circumstances, such as late issuance of award documents by the sponsor.
The American Recovery and Reinvestment Act of 2009 (ARRA) requires recipients of ARRA awards to segregate those funds from all other federal funds. In addtion, there is a requirement to produce quarterly reports on the impact of ARRA funding to the institute and region. The data are made available to the public via the website Recovery.gov.
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In order to satisfy the reporting requirements of ARRA, Caltech developed a procedure and system tools to minimize impact on PIs and division personnel.
The Office of Sponsored Research is responsible for receipt of ARRA awards, entering them into the financial system and for ARRA reporting. The Director of OSR is the ARRA Reporting Coordinator. Principal Investigators are responsible for management of their awards and for reporting the Project Status of their ARRA awards. Other campus units assume responsibilities for other data fields.
The Freedom of Information Act (FOIA) is a federal law that provides members of the public with the ability to request copies of "information in possession of the government," i.e., access to federal records. FOIA applies to the federal government, not to recipients of federal funds. When someone wishes to obtain copies of federal records, the request must be submitted to the federal agency that has those records, not to a grantee or contractor. While Caltech is not directly subject to FOIA, materials produced by Caltech researchers and then forwarded to the government may be subject to FOIA requests. Examples include:
- Research proposals, after the award has been funded
- Award documents, i.e., the actual grant or contract
- Interim and final progress reports
Not all government information is subject to FOIA requests. Examples of records typically not provided in response to FOIA requests:
- Pending or disapproved proposals
- Salary information on individuals working on grants or contracts
- "Confidential" or proprietary information
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We are required to respond to FOIA requests only if they come directly to us from a federal agency. As a matter of courtesy, we will respond to FOIA requests from members of the public, directing them to contact the federal agency that has the information they are seeking.
Whenever anyone at Caltech receives a FOIA request, regardless of the source, they should immediately contact the Office of the General Counsel and not respond directly to the request. OGC will coordinate Caltech's response.
Unlike some other states, California does not exempt colleges and universities, whether public or private, from the application of sales tax when taxable items are purchased by Caltech using federal grant or contract funds.
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In nearly all instances, purchases made with Federal funds awarded to Caltech are subject to California Sales Tax. This is particularly true of purchases made with Federal grant funds, where title to items acquired in this manner vests in Caltech at the time of purchase. The situation is a little bit more complicated with regard to purchases made with funds awarded under Federal contracts. If title in equipment or other materials vests in the Government upon acquisition, the item is exempt from California Sales Tax. However, if title vests in Caltech, the item is not exempt from California Sales Tax.
Vesting of title in materials and equipment is addressed in the Award Summary that OSR distributes with every award. Care should be taken to use the correct expenditure type when making purchases.
Additional information can be found at:
"Rebudgeting" is a term associated with grants and cooperative agreements, but not contracts. The term refers to the internal realignment of grant funds from one budget line (e.g., salaries, supplies, travel, equipment) in the approved budget to another budget line. When rebudgeting has occurred, the total amount of funding authorized for the grant has not changed, however, one or more line items in the budget have been increased while, at the same time, one or more line items in the budget have been decreased.
Over the years, Federal agencies have granted increasing authority to the Principal Investigator to make Rebudgeting decisions without the need for further approval from either the sponsor or the grantee institution. Restrictions regarding rebudgeting are addressed in the terms and conditions of the grant or cooperative agreement.
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Restrictions on rebudgeting, i.e., when it is necessary to get approval either to increase or decrease a particular line item in a grant budget, are summarized on the Award Summary issued by OSR with every grant and cooperative agreement. Award Summaries are provided to the Principal Investigator, Grant Manager, Division, Purchasing, Property, and other offices as needed.
When in doubt, contact the Office of Sponsored or the Project Accounting Office for guidance with respect to a particular grant.
Caltech is subject to financial audits from external agencies on an on-going basis throughout the year. Some of these audits are performed by PricewaterhouseCoopers, an independent audit firm retained by the Board of Trustees. Audits are also performed by government agencies including the Defense Contract Audit Agency (DCAA), the General Accountability Office (GAO), and the audit groups within individual federal agencies, e.g., NASA, NSF. Audits are conducted on a variety of topics, some of which relate directly to the externally funded research activities of the Institute.
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All audits at Caltech performed by external agencies should begin with an "entrance conference" at which the purpose of the audit and the proposed plan for conducting the audit are discussed with appropriate Institute officials. It is not appropriate for external auditors to just "show up" in offices or laboratories and start asking questions of Caltech faculty, staff, or students.
With the exception of audits related to the Institute's indirect cost rate proposals, all other financial audits are coordinated by the Audit Coordination Manager in Project Accounting, Office of Research Administration. The Audit Coordination Manager schedules formal entrance conferences, appoints a Caltech Lead for each audit, and coordinates Caltech's responses to audit reports and findings.
A formal protocol for dealing with external auditors at Caltech is found at: