JULY12, 2011 SESSION 7 OF AAPLS – BUDGETING FOR PROPOSALS WITH SUBCONTRACTS: ESTABLISHING RELATIONSHIPS APPLICANTS & ADMINISTRATORS PREAWARD LUNCHEON SERIES Module C: Budget Basics

Overview of this Session How to decide whether to budget for a vendor, a consultant or a subcontract? - Self assessment quiz Subcontract documents for proposals Budget calculations with subcontracts Subcontract agreements

Vendor, Consultant of Subcontract? The nature of the collaborative relationship determines the type of the agreement For Vendor and Consultant agreements Tufts uses the template “Contract for Goods and Services”. These are processed by Purchasing Subcontract agreements are prepared by ORA using several templates that are customized for each agreement

Vendor (Purchasing Relationship) Provides similar goods and services to many different purchasers Provides services within its normal business operations Operates in a competitive environment Provides goods and services that are ancillary to the grant program Has its performance measured against the deliverables Results produced by the vendor belong to Tufts

Consultant (Collaboration with an Individual) Provides professional advice or services Normally not an employee of the engaging party In unusual situations, an individual may be both a consultant and an employee of the same party, receiving compensation for some services as a consultant and for other work as a salaried employee Consultant agreement is typically with an individual not with the institution that employs him or her Results produced by the consultant belong to Tufts

Sub-recipient (Subcontract Relationship) Carries out a program rather than provides goods and services; has responsibility for making programmatic decisions Has its performance measured against whether objectives of the program are met Has responsibility for adherence to compliance requirements May collaborate with Tufts to publish results of the research Results developed by the sub-recipient are owned by the subcontract institution Subcontracts are with institutions not with individuals

Subcontract Documents for Proposals For proposals with subcontracts, Tufts should request from each collaborating institution a budget with budget justification and all the documents required by the sponsor agency If Tufts is a subcontractor, we must provide all necessary documents to the prime institution at the time of application submission Internal coordination form and financial disclosure(s) are routed at the time of the application Refer to the Subcontract Checklist for documents needed for submissions to NIH & Other PHS agencies

Budget Calculations with Subcontracts Both direct and indirect cost of the subcontract become part of total direct cost budget for Tufts NIH excludes indirect costs of the subcontracts from total direct cost budget cap NIH limits indirect cost budget of foreign institutions to 8% of their total budget less equipment

Budget Calculations with Subcontracts (cont) Base for F&A (overhead,) is the amount multiplied by F&A rate Base can be MTDC (modified total direct costs) or TDC (total direct costs) For federal awards use MTDC as base for F&A For federal budgets with subcontracts this means that the amount of each subcontract in excess of $25,000 is excluded from overhead cost calculations For non-federal awards use TDC as base for calculating F&A unless sponsor agency specifically requires excluding certain budget categories (for example, Gates Foundation)

Subcontract Agreements Must be executed when award is issued to the prime awardee Subcontract agreements are drafted, negotiated, signed and processed by ORA Subcontracts are normally issued as cost reimbursable agreements. Justification for deviation from the standard business practice is required. Allow additional time for drafting of subcontracts if customized payment terms are required.

More on Subcontract Agreements ORA flags awards with subcontracts for processing of the subcontract agreements and amendments An from the PI to ORA about the need to issue a subcontract or an amendment for another budget year will expedite the process The PI should verify that budgets for any subcontracts included with the application are still accurate at the time of the award Internal rebudgeting is necessary if the subcontract amount must be different from the amount awarded for the subcontract by the agency Agency approval may be required to modify subcontract amounts. This approval is requested by ORA

Information Needed by ORA to Issue a Subcontract Award number Internal account number (received from Sponsored Accounting via INOA) Start and end dates of the subcontract Name and full contact information of the other party’s Institutional Official Subcontract PI name and full contact information Subcontract budget Subcontract scope of work

Conclusions Subcontract arrangements formalize collaborative relationships between Tufts University and partner institutions to implement research and technical assistance projects Intent to enter into a subcontract should be documented at the time of the proposal After the award is made to Tufts, ORA will issue subcontracts for the project Tufts has responsibility to monitor performance under the subcontracts