CONTRACT SERVICES

Sponsors provide research funding to the University under a variety of mechanisms. The most common mechanisms are grants and contracts. These two funding mechanisms are similar in many ways, but in execution very different.

A research contract vs a research grant have significant differences. A research contract is a legally binding document outlining the obligations of two or more parties engaging together in a research project. Research contracts are conceived by the Sponsor or will benefit the Sponsor and is solicited through a request for proposal or quote. The solicitation is typically very prescriptive in regards to the Scope of Work (SOW) and may have specific deliverables and milestones that must be met in order to fulfill award requirements and/or receive full payment. Research contracts may be labeled in a number of ways including, but not limited to: Sponsored Research Agreement, Contract, Subaward, Memorandum of Understanding, or Master Agreement. When the document includes specific terms and conditions governing the agreement, it is considered by FAU to be a research contract and must be thoroughly reviewed prior to acceptance. Federal Contracts are subject to a strict set of terms and conditions, including clauses from the Federal Acquisition Regulations (FAR) and/or Defense Federal Acquisition Regulations (DFAR), and typically require frequent reporting and a higher level of responsibility to the Sponsor. Failure to accomplish the agreed-upon results or to deliver the agreed-upon product(s) on time and on budget may result in financial penalties.

A research grant is also a legally binding document, but it is generally a more flexible instrument designed to provide money to support a public purpose in hopes of achieving a particular aim. The scope of work is normally conceived by the Principal Investigator (PI), and there are fewer restrictions. Emphasis is placed upon using diligent efforts to complete the proposed research project, and there is typically flexibility as to the SOW, budget, and other changes.

A Fixed Fee or Fixed Price agreement is issued when there is a high degree of certainty that a particular research project can be completed within a certain amount of time for a specified cost. A detailed budget may be required at proposal submission, and it may need to be “certified” to indicate that costs have been based on verifiable estimates. Payment within a Fixed Fee agreement is generally tied to performance or deliverables. The Sponsor is not obligated to pay if performance measures are not met. This type of agreement poses risk to FAU not only due to the potential for failed performance, but additionally, if the cost to complete the project exceeds the dollar amount awarded, FAU is still obligated to complete the work. If the work is completed under budget, FAU retains the funds, however, a substantial remainder may pose an audit risk for FAU.

A Cost-Reimbursement agreement is used when there is less certainty in the outcome and cost to a research project during the specified period of performance. Under a Cost-Reimbursement agreement, a detailed proposal budget is submitted, but payment is made by reimbursement for actual expenditures, typically on a monthly or quarterly basis. If the full awarded budget is not met at the end of the period of performance, the remainder is forfeited. Conversely, if the work is not completed but the full awarded budget is met, accommodations may be made at the Sponsor’s discretion, for additional funding to complete the work. There is less risk to FAU with a Cost-Reimbursement agreement.

FAU, rather than the Principal Investigator (PI), is considered the contracting party in research agreements. Only the Vice President for Research (VPR) or the VPR designees are authorized to approve and execute research agreements, established in FAU Policy 11.1 Signature Authority. The Office of Sponsored Programs is represented by authorized officials who accept and sign these documents. PIs are not authorized to sign and bind FAU under a contract. In certain circumstances, the PI may be asked to sign the agreement to acknowledge that the he/she will adhere to the terms of the agreement.

Each research agreement received by the OSP Contract Services for review must have a corresponding proposal routed and approved in FAU’s research management system - Novelution. When an agreement requires Contract Services review, the Proposal and Contract Administrator (PCA) verifies the proposal in Novelution and submits a contract initiation form to Contract Services, along with the respective post-award information, a copy of the contract, final statement of work, final budget (for funded agreements), and any relevant background correspondences. Once received by Contract Services, the agreement will go through the following workflow:

CONTRACT SERVICES WORKFLOW

STAGE 1:	Log and conduct preliminary review within 48 hours of receipt of award agreement
STAGE 2A:	Conduct a full review and redline mark-up of award agreement within 5-10 business days
STAGE 2B:	Send award agreement to applicable offices for review/approval (General Counsel, Export Control, Office of Tech Development, etc.)
STAGE 3A:	Any edits or requested revisions are sent to the Sponsor for their review
STAGE 3B:	Sponsor revisions and comments are reviewed and award agreement may return to Stage 2B, if applicable
STAGE 4A:	Once the terms and conditions are finalized, the PI may be contacted to provide assurances and approvals as applicable
STAGE 4B:	Award agreement is routed to both parties’ authorized officials for signature
STAGE 5:	Award agreement is fully executed and sent for post-award

For a more detailed look into this process, please see the detailed Workflow Chart.

There are several factors that can cause delays, the most common are: A delay in the review and negotiation of research agreements occurs when a corresponding proposal has not been routed and approved in FAU’s research management system – Novelution. An approved proposal in Novelution ensures that the respective FAU college, department, or pillar has reviewed and authorized the research project and budget.

Research agreements often include numerous pages of terms and conditions and flow-down requirements from Sponsors. It is necessary that Contract Services perform a thorough line by line review to ensure that FAU is in compliance with all requirements. As a state-controlled public institution of higher education (i.e. a government agency), FAU may be in conflict with terms and conditions provided by the Sponsor and can only agree to contract terms that are consistent with Florida law. Throughout negotiations, Contract Services works closely with the Office of the General Counsel.

To view the entire workflow process of a research agreement review, please view the Contract Services workflow chart (ATTACH LINK HERE) that provides timelines, potential delays, and the details of each stage of review.

A standard review process without extensive negotiations and/or delays may be completed within two to four weeks of receipt of the agreement. Depending on the receptiveness of both parties to requested changes to the terms and conditions and the response time for all necessary reviewers of each party, an agreement may take several months to execute. In rare circumstances, an award may be forfeited if the parties are unable to agree upon critical terms.

To inquire on the status of an agreement in review, please contact ospcontracts@fau.edu.

No. Work should not be started on a project until the agreement has been reviewed, negotiated (if necessary), signed by both parties, and set-up in Workday. Before an agreement has been fully executed, the terms and conditions are not finalized and are subject to change. If work is performed before the terms and conditions are finalized, there is potential for both liability and financial risk. For example, some Sponsors will not allow a period of performance to be “back-dated” and the start date of the agreement will be the date of award execution once all parties have signed. Any costs incurred prior to the start date may not be approved for payment, even if the proposal had an established period of performance.

Additionally, there are other terms that may present compliance issues if work is started before the agreement has been fully executed. For example, although not included in the request for proposal (RFP), some agreements include foreign national restrictions, but without a full contract review, a Principal Investigator may not know this. If a foreign national performs work on a project that prohibits foreign nationals, FAU would be in noncompliance. I It is critical to not start work on a project until the agreement has been fully executed.

When FAU receives a subaward from another university or other institution, that entity is the pass-through entity (PTE) and FAU is the subrecipient. The PTE receives funding from a Prime Sponsor through an award agreement or contract which likely includes terms and conditions. When the PTE issues an award to FAU (in the form of a subaward), they are required to include the prime award agreement in its entirety and/or specific clauses from that prime award, the “flow-down” terms. Flow-down terms and conditions must be reviewed by Contract Services along with the subaward terms and conditions. In some cases, the two sets of terms and conditions may conflict with each other, and Contract Services will work with the PTE to determine which terms take precedence.

Since the PI is ultimately responsible for carrying out the project in compliance with the terms and conditions of FAU and the award agreement, the PI should read the agreement in its entirety. Although Contract Services will review and obtain any PI confirmations on any unusual or problematic terms, it is still necessary for the PI to read the entire agreement and ask any questions if clarification is needed.

The Florida Atlantic University Research Corporation (FAURC) is a not-for-profit 501(c)(3) organization which is separate from Florida Atlantic University (FAU) and was established to assist faculty, staff and students at FAU with research support, particularly in connection with patentable inventions. Unlike FAU, FAURC is not a state entity and has greater flexibility in accepting terms and conditions from certain Sponsors, such as industry and foreign entities, that FAU cannot accept. At the time of proposal submission, PCAs may advise that FAURC should be marked as the applicant entity, but in most cases, the decision to route an award through FAURC is made after the award is received.

The Federal Acquisition Regulations (FAR) consist of uniform policies and procedures that govern the procurement process of Federal agencies. The FAR is codified in Title 48 of the Code of Federal Regulations (CFR). The FAR has the full force and effect of law and some agencies have issued supplements to the FAR, which contain agency-specific regulations governing the implementation of the FAR for purposes of that agency's agreements. For example, the Department of Defense Federal Agency Regulation Supplement (DFARS), National Aeronautics and Space Administration (NASA) Supplement (NFS), and the Department of Energy Acquisition Guide (DEAR).

Within the FAR, there are specific clauses that describe the rules for contracting with government. Certain FAR clauses are prescribed for cost-reimbursement contracts, others with fixed-fee agreements. Some FAR clauses are specific to fundamental research, others to controlled information, and so forth. Contract Services must carefully review all FAR and FAR supplement clauses to ensure they are applicable to FAU and to the specific project, and that FAU is in compliance or working toward compliance. FAR clauses can be incorporated by full text or by reference and often comprise multiple pages of an agreement and take considerable time to review. Additionally, FAR and FAR supplement clauses must frequently be negotiated to eliminate those that are not applicable and to substitute alternate clauses as needed.

For more information on the FAR, please visit: https://www.acquisition.gov/content/part-2-definitions-words-and-terms

There is a misconception that a Sponsor can expedite the award process by issuing a purchase order (PO) in lieu of a formal research agreement. Contrarily, the opposite is often true. When a PO is issued by a Sponsor, it may be “bilateral” where both parties must sign, or “unilateral” where only the Sponsor signs. In either case, the PO itself is a contract because it obligates both parties to fulfill the outlined responsibilities (i.e. sponsor payment/FAU performance). POs often have hidden terms and conditions that are referenced on the PO through a URL, and those terms and conditions must be reviewed and negotiated by Contract Services. If the PO does not include all of the necessary project information or key terms, or if terms are negotiated or added, then Contract Services will prepare an addendum which both parties will be required to sign.