Regulations & Policies

Academic Affairs - Research and Sponsored Programs

I. OBJECTIVE & PURPOSE

The purpose of this policy is to establish a process and assign responsibility for covering expenditures in circumstances where costs on a sponsored project are unrecoverable. The policy applies when expenditures exceed the real or anticipated total funding from the sponsor for the award or when expenditures are deemed unallowable and thus not reimbursable by the sponsor.

II. STATEMENT OF POLICY

Costs charged to sponsored projects that are not able to be collected from the sponsor for reasons of unallowability, unallocability, unmet deliverables, dispute with or bankruptcy by the sponsor, or other reasons, must be paid for with University funds. Because there is no available source of funds set aside specifically to cover such costs, these unrecovered costs on a sponsored project are considered uncollectible debt and must be covered by other fund sources. The following sections define common reasons for uncollectible debt and the institutional unit responsibilities for the resulting deficits.

ORSP is authorized to stop and initiate transactions to resolve deficit balances if the responsible parties as defined below do not take appropriate action. For situations leading to uncollectible costs that are otherwise not described below, responsibility for the costs will be decided by the Provost in consultation with the Associate Vice President for Research and other interested parties.

1. Budget Overruns and Unallowable Costs

    

   The Principal Investigator (PI) is responsible for ensuring that expenditures on contracts and grants are allowable and allocable in accordance with the budget established with the sponsor, University policies and procedures, and federal and state regulations. In situations in which expenditures are disallowable or unallocable, improperly precede the contract period without authority, and/or exceed the contract budget, the PI is responsible for addressing any uncollectible costs. This includes for audit finding corrective actions on disallowed expenditures for which the PI was responsible.

    

   The Office of Research & Sponsored Programs (ORSP) will notify the PI immediately upon identification of budget overruns or unallowable charges on a sponsored project. Within thirty (30) days after identifying these uncollectible costs, the PI must process a cost transfer request to remove the unallowable charges from the sponsored account and charge them to a different account. If the unallowable charges to the sponsored account have not been removed after 30 days, ORSP will transfer the uncollectible costs from the sponsored account to the PI's Individual Professional Development (IPD) account. In the case of multiple investigators on an award, the uncollectible amount will be prorated to the percent of credit associated with each investigator and transferred to the IPDs accordingly. In the event that the PI's IPD has an insufficient balance to cover the uncollectible costs, the department and then the college will be responsible for covering the costs; PIs will never have future salaries or wages garnished for uncollectible costs on contracts and grants.

    

2. Non-Performance and Unmet Deliverables

    

   The Principal Investigator (PI) is responsible for completing the research, service, and/or reporting activities in accordance with the terms of the contract with the sponsor. This includes promptly notifying both ORSP and his/her chair or unit supervisor as soon as the PI anticipates problems with completing the contracted activities to the specifications defined in the contract. Timely notification allows the University to negotiate with the sponsor and/or adjust the PI's workload to ensure that the University does not violate the terms of the contract.

    

   If the PI's inaction, underperformance, and/or lack of adherence to the contract schedule leads to the sponsor's refusal to pay unreimbursed costs due to non-performance or unmet deliverables, ORSP will notify the PI immediately of his/her responsibility to cover the uncollectible costs. ORSP will also review the case with the Office of the General Counsel to determine if the University has any legal recourse for collecting the unreimbursed costs.

    

   Within thirty (30) days after confirming that the University can not recover the uncollectible costs from the sponsor due to breach of contract that was the responsibility of the PI, the PI must process a cost transfer request to remove the uncollectible costs from the sponsored account and charge them to a different account. If the uncollectible costs on the sponsored account have not been removed after 30 days, ORSP will transfer these expenditures from the sponsored account to the PI's IPD account. In the case of multiple investigators on an award, the uncollectible costs will be prorated to the percent of credit associated with each investigator and transferred to the IPDs accordingly. In the event that the PI's IPD has an insufficient balance to cover the uncollectible costs, the department and then the college will be responsible for covering these costs; PIs will never have future salaries or wages garnished for uncollectible costs on contracts and grants.

    

3. Sponsor Non-Payment and Bad Debt

    

   A sponsor may refuse to or not be able to pay properly invoiced expenses that are otherwise allowable and compliant with the terms of the contract. This may occur because the sponsor went out of business or refuses to honor the contract, among other possibilities. When this occurs, all University effort on the project must immediately cease, and ORSP will work with the Office of the General Counsel and/or collection agencies to recover unreimbursed costs. If the University determines that the sponsor is unlikely to pay, or if the amount recovered is less than the unrecovered debt on the sponsored project, the net uncollectible costs will be paid equally between the department/college, ORSP, and Academic Affairs in order to close out the project fund.

    

4. Billing and Other ORSP Errors

    

   ORSP is responsible for accurate and timely accounting and invoicing on sponsored projects, and for following the terms of the contract with the sponsor, including adhering to the project dates detailed in the contract. If errors or other administrative issues on the part of ORSP result in uncollectible costs, ORSP will remove the uncollectible charges from the sponsored account and charge them to an ORSP account. If, however, these errors are the result of PI non-performance, such as late invoicing due to insufficient deliverables or late reporting by the PI, then the policy for Non-Performance and Unmet Deliverables as per Section B above shall apply. If another administrative unit/division is responsible for accounting and/or invoicing problems leading to uncollectible debt, ORSP will consult with Academic Affairs and Administration & Finance to determine an appropriate solution.

    

5. Internal Payment Disputes

    

   Disagreements over unit responsibility for uncollectible costs may be contested in writing. Any such contested action must be provided to the Associate Vice President for Research in writing and include reasons and support documents for why a particular academic unit should not be charged as otherwise defined in this policy. The Associate Vice President for Research will take action to resolve any such dispute. Any disagreement with the action of the Associate Vice President for Research may be appealed to the Provost in writing. The Provost shall make the final determination should the dispute remain unresolved.

    

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