M307 Facilities and Administrative Rate Proposal Process at Universities: Guidance for Central/Departmental Administrators

Transcription

1 M307 Facilities and Administrative Rate Proposal Process at Universities: Guidance for Central/Departmental Administrators Authors: Hank Kirschenmann - Attain Clay Hester University of Alabama at Birmingham

2 M307 Facilities and Administrative Rate Proposal Process at Universities: Guidance for Central/Departmental Administrators Authors: Hank Kirschenmann Attain Clay Hester University of Alabama at Birmingham Presented to: SRA International Annual Meeting Date: October 24, 2016

3 Authors This presentation was prepared by: Hank Kirschenmann, Senior Manager Attain, LLC 1600 Tysons Boulevard McLean, VA Cell: Clay Hester, Director, Cost and Space Analysis University of Alabama at Birmingham 921A Administration Building Birmingham, AL Office:

4 Agenda History of Federal Indirect Cost Reimbursement Present Environment Terminology Long Form Process Overview Facilities and Administrative Cost Rate Proposal Structure Negotiations 4

5 Why is this Important? Successful Indirect Cost Negotiations with the Federal Government Means Appropriate Reimbursement to the Institution Depending on the Volume of Full Recovery Awards, a 1% Change in Indirect Cost Rate can Equate to $100Ks in Annual Reimbursement 5

6 History of Federal Indirect Cost Reimbursement 6

7 History of Federal Indirect Cost Reimbursement 1940 s Universities first began to conduct Federally funded R&D during World War II R&D related to the war effort and post-war military initiatives (radar/sonar, electronics, computers) 1947: Navy Department issues Blue Book: Principles for Determination of Costs Under Government Research and Development Contracts with Educational Institutions - basic principles (13 pages) - little documentation requirements 7

8 History of Federal Indirect Cost Reimbursement 1950 s s Space engineering and medical science overtook military projects support GI Bill caused considerable financial strain on universities - level of federal funding and character of projects changed dramatically Medical research funding primarily in form of cost reimbursable grants with fixed rates for indirect costs (1955 8% TDC, % TDC, % MTDC) 1958: Bureau of the Budget issues Circular A-21 University business community sought higher level of reimbursement 1966: Federal agencies realized capped rates were artificially low: removed IDC cap 8

9 History of Federal Indirect Cost Reimbursement 1970 s s IDC rates escalated, higher proportion of grant awards for IDC Rates rose up to 80%, averaged approximately 50% PI s, Federal program officials, and Congress voiced concern Federal financial officials became more knowledgeable about university operations and accounting concerns about adequacy of university costing practices and Federal cost principles criticism about university record keeping and documentation Complete reworking of nearly all sections of A-21 Several Congressional Hearings (Dingell/Stanford) 9

10 History of Federal Indirect Cost Reimbursement Additional Revisions to A-21: 1982, 1986, 1991, 1993, 1996, 1998, 2000, 2004 OMB Uniform Guidance for Federal Awards (UG): - Issued December 2013; Effective December

11 Terminology 11

12 Terminology OMB - Office of Management and Budget issues principles for determining costs applicable to R&D, training, and other sponsored work performed under grants, contracts and other cost reimbursable agreements with the Federal government Cognizant Agencies responsible for negotiating indirect cost rates and auditing to ensure that institutions are applying cost principles on a consistent basis DHHS/CAS - Department of Health and Human Services, Cost Allocation Services (4 Regions) ONR - Office of Naval Research 12

13 Terminology OMB Circulars Cost Principles A-21 Cost Principles for Educational Institutions - guiding publication in determination of costs - applicable to grants, contracts and other agreements - applies to public and private institutions A-122 Cost Principles for Non-Profit Organizations A-87 Cost Principles for State, Local and Indian Tribal Governments 13

14 Terminology Other OMB Circulars A-110 Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations - Establishes uniform requirements among Federal agencies - Pre-Award, Post-Award, After-the-Award Requirements - References federal cost principles A-133 Audits of States, Local Governments, and Non-Profit Organizations - Schedule of Expenditure of Federal Awards: By Agency by Grant - Assessment of Internal Controls over Unallowable Costs, Financial Reporting, Cash Management, Effort Reporting, Equipment Inventory, Cost Transfers, Service Centers, Subrecipient Compliance - Transactional Testing 14

15 Terminology OMB Circular A-21 A-21 Cost Principles for Educational Institutions Major Sections: Definition of Terms Identification and Assignment of Costs Determination and Application of Cost Rates Simplified Method for Small Institutions Section J: General Provisions for Selected Items of Cost (Allowable vs. Unallowable) 15

16 Terminology OMB Uniform Guidance Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Educational Institutions: OMB 2 CFR Part 200) Replaces the following OMB Circulars: A-21 Cost Principles for Educational Institutions Circular A-122 Cost Principles for Non-Profit Organizations Circular A-87 Cost Principles for State, Local and Indian Tribal Govts Circular A-110 Uniform Administrative Requirements for Awards and Other Agreements with Institutions of Higher Education, Hospitals, and Other Non- Profit Organizations Circular A-102 Awards and Cooperative Agreements with State and Local Governments Circular A-133 Audits of States, Local Governments, and Non-Profit Organizations Circular A-89 Federal Domestic Assistance Program Information Circular A-50 Sections Related to Audits Performed Under the Single Audit Act 16

17 Terminology OMB Uniform Guidance Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Educational Institutions: OMB 2 CFR Part 200) The new rules apply to institutions of higher education, non-profit organizations, and State, local, and Indian tribal governments. The administrative and audit requirements also apply to hospitals, but not the cost principles. OMB will address the hospital cost principles in a separate process. In the meantime, the current hospital cost principles issued by HHS will remain in effect. Effective Date: Federal agencies must implement the policies applicable to Federal awards by issuing regulations to be effective by December 26, 2014 (one year after OMB s publication of the policies on December 26,

18 Terminology OMB Uniform Guidance Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Major Changes to Cost Principles for Universities: Cost Accounting Standards and Disclosure Statements (DS-2) - Federal award threshold for mandatory submission of DS-2: increase from $25M to $50M. Effort Reporting - Follows same concepts as current rules, but provides only general standards for acceptable systems rather than specific rules. Basic requirement: Charges to Federal awards for salaries and wages must be based on records that accurately reflect the work performed. 18

19 Terminology OMB Uniform Guidance Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Major Changes to Cost Principles for Universities: Direct Charges of Administrative and Clerical Salaries - Liberalizes current rules and permits them if they are integral to the project or activity and are explicitly included in the budget or have prior written approval from the Federal awarding agency. Direct Charges of Computers - Allows direct charging on non-capitalized computing devices that are essential and allocable, but not solely dedicated, to the performance of a Federal award. - Laptops and IPads appear included, IPhones are unclear. Direct Charging of Unused Termination Leave Costs - No longer permitted should be included in calculation of negotiated fringe benefit rates 19

20 Terminology OMB Uniform Guidance Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Major Changes to Cost Principles for Universities (F&A Rate Impacts): Extensions of F&A Rates; De Minimis Rates - Allows one-time extensions of Federally negotiated F&A rates up to four years, with cognizant agency approval. - Allows optional use of a de minimis F&A rate of 10% MTDC by organizations that have never negotiated F&A rates with the Government (primarily new grantees). Agency Limits on Negotiated F&A Rates - Federal agencies are required to accept negotiated F&A rates, unless a different rate is required by law or regulation or is approved by the agency head based on documented justification. Agencies must notify OMB of any exceptions approved by the agency head. 20

21 Terminology OMB Uniform Guidance Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Major Changes to Cost Principles for Universities (F&A Rate Impacts): Utility Costs - Current Utility Cost Index (UCA) allowance for certain institutions replaced by Relative Energy Utilization Index (REUI) available to all long-form universities. - The UCA can be used by all schools on the long form. UCA must be supported by calculations. The UCA is capped at 1.3 percentage points. - Schools that were on OMB A-21 Exhibit B must justify the UCA that has been allowed without justification since Institutions that were not on OMB A-21 Exhibit B stand to gain by the appropriate use of metered data and the application of REUI. 21

22 Terminology OMB Uniform Guidance Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards Major Changes to Cost Principles for Universities (F&A Rate Impacts): Utility Costs - REUI is used to weight Research Laboratory Space to calculate the UCA. - The REUI is currently stipulated to be 2.0. It may be adjusted by OMB no more frequently than annually nor less frequently than every five years. - Cost can be metered to space within buildings (site, floors or rooms) for the calculation of the UCA. - It is not clear whether the REUI = 2 will make it possible to justify the 1.3 UCA without additional metering at a sub building level or offsetting a possible UCA reduction by additional attention to the allocation of non utility related maintenance costs. 22

23 F&A Terminology In order to perform F&A rate calculation, Federal regulations mandate the identification of costs as: Allowable - eligible for reimbursement from the Federal government - must be reasonable, allocable to sponsored agreements, treated consistently, conform to specified limitations Unallowable - not eligible for reimbursement from the Federal government Examples: Alcoholic Beverages Bad Debts Entertainment Fines and Penalties Lobbying Fund Raising 23

24 F&A Terminology In order to perform F&A rate calculation, Federal regulations mandate the identification of costs as: Direct Cost - can be identified specifically with a particular project, program, or activity of an institution Examples: Salaries, Wages and Benefits, Materials, Supplies and Services Modified Total Direct Cost - MTDC (Denominator) distribution base consisting of salaries, fringe benefits, materials, supplies, services, travel, subcontracts up to the first $25,000 of each 24

25 F&A Terminology In order to perform F&A rate calculation, Federal regulations mandate the identification of costs as: Facilities and Administrative (Indirect) Cost (Pools in Numerator) incurred for common or joint objectives; cannot be easily identified to a particular project, program, or activity of an institution Facilities Costs Operations & Maintenance of Plant Depreciation/Use Allowance on Buildings and Equipment Construction Interest Library Administrative Costs General & Administrative Departmental Administration Sponsored Projects Administration Student Services Administration 25 ``

26 F&A Terminology In order to perform F&A rate calculation, Federal regulations mandate the identification of costs as: Cost Sharing - activities benefiting a Federal program but funded by non-federal sources (including university funds) - mandatory/committed (must be tracked and included is sponsored bases) - new regulations discourage committed cost sharing in research programs 26

27 F&A Terminology Facilities & Administration Rate Formula (indirect cost rate): F&A Costs Allocated to Specific Function (Activity) / Function Distribution Base Major Functional Activities/Distribution Bases Instruction: teaching and non-research training activities including departmentally funded research Organized Research: research and development activities that are separately budgeted and accounted for including sponsored and university funded research, including research training Other Sponsored Activities: performance of sponsored work other than organized research and instruction Other Institutional Activities: residence halls, dining halls, athletics Distribution Base (Denominator) major functional activity Example: OR Portion of Each F&A Cost Pool (OM, DEP, INT, LIB, GA, DA, SA, SPA) Organized Research Base 27

28 F&A Terminology Types of Rates Predetermined: permanent rate, negotiated and agreed to for a specified, future period Provisional Rate: temporary rate based on estimate of future costs; used until an actual F&A rate can be determined and a final F&A rate established Final Rate: established after actual costs for a given period are known; replaces provisional rate for same period of time; overpayments returned to funding agency; underpayments normally not subject to additional funding Fixed with Carry Forward: characteristics of both provisional and predetermined rates rate computed and fixed for a future period based on estimate of level of operations for that period when actual costs are known, the difference between estimated costs and actual costs is carried forward as an adjustment to a subsequent period for which a rate is established institution s operations and level of federal funding must be reasonably stable 28

29 F&A Terminology Long Form Proposal - if total direct cost of work covered by Federal regulations exceeds $10 million in a fiscal year Short Form Proposal (Simplified Method) - using either a S&W or MTDC distribution base Cost Accounting Standards (CAS) Disclosure Statement: - if $25 million or more is received in sponsored agreements in a fiscal year (changed to $50M in new regulations) - comprehensive description of institution s cost accounting practices - consistency in estimating, accumulating, and reporting costs - consistency in allocating costs incurred for the same purpose DS-2 probably in need of complete review to coincide with changes associated with implementation of UG 29

30 F&A Cost Proposal Process and Structure (Long Form) 30

31 Long Form Process Overview 1) Institution Prepares and Submits to Cognizant Agency a Proposal for F&A Reimbursement Rate Based on Actual Costs 2) Cognizant Agency Reviews and Requests Additional Data and Information 3) Cognizant Agency Performs On-Site Review and Audit 4) Rate Negotiations 5) Cognizant Agency Issues a Rate Agreement for a Specified Number of Years 31

32 F&A Cost Proposal Process Classify Expenses: allowable, unallowable, exclusions (ie. expenses associated with University Hospital) Functionalize Accounts/Awards/Departments: organized research, instruction, other sponsored activity, other institutional activity, O&M, GA, etc. Reconciliation of total expenses to audited financial statements Perform Special Studies: space functional usage, building componentization, library Internal review process Document, Document, Document! Scrub, Scrub, Scrub! 32

33 F&A Cost Proposal Structure Organized Research F&A Rate Formula Total of OR Portion of F&A Cost Pools OR Base Organized Research Base Modified Total Direct Costs (MTDC) of those awards / activities which meet Federal definition of organized research Includes: Salaries & Wages including Fringe Benefits Materials, Supplies and Services Subcontract Costs up to first $25K per Award Cost Sharing (Mandatory and Committed) Tuition Remission Scholarships Patient Care 33

34 F&A Cost Proposal Structure Facilities Cost Pools Depreciation/Use Allowance on Buildings Depreciation/Use Allowance on Equipment Operations and Maintenance of Plant Interest on Construction Library Administrative Cost Pools General & Administrative Departmental Administration Sponsored Projects Administration Student Services Administration **Total of Administrative Cost Pools is Limited to 26%** 34

35 F&A Cost Proposal Structure F & A Costs Overhead costs incurred to support Research activities: Depreciation of Research Buildings & Equipment Operation & Maintenance of Research Areas Construction Interest of Research Areas Cost of Libraries Used for Research Administrative Services Direct Costs Costs incurred in performing Research activities/protocols: Salaries and Fringe Benefits of Lab Personnel Research Supplies and Materials Research Consultants Travel $55,000 F & A Costs Direct Costs $100,000 F & A Cost Rate = 55% 35

36 F&A Cost Proposal Structure Q: How are the costs in a particular F&A cost pool allocated to Organized Research and other functional activities? A: Depends on the cost pool. 36

37 F&A Cost Proposal Structure Pool Building Depreciation Equipment Depreciation Allocation Method Space Study - functionalized SF Space Study - functionalized SF Construction Interest Specific Identification / Space Study - functionalized SF O&M Space Study - functionalized SF, plus up to 1.3% utility cost adjustment (per REUI calculation in new UG) Library Users FTE s (students, classes of employees) / S&W of employees General & Administrative MTDC of Functions Receiving G&A Services Departmental Administration Complex: Pool for each department / Faculty salaries of 3.6% of MTDC / DCE s Sponsored Projects Administration MTDC of Functions Receiving SPA Services Student Services 100% to Instruction function 37

38 F&A Cost Proposal Structure Space Functional Usage Study Performed In-house or with Consultant For F&A proposal s Base year (need to perform a dry-run prior to base year?) Room-by-Room Survey of Research Intensive Buildings Web based tools (Attain AttainSpace, UAB INSITE) Training/Meetings with Departmental Administrators Room survey sheets/screens record room type, occupants, grants performed, estimated functional usage percentages based on Federal definitions Decisions on acceptable methodologies in DCA Best Practices Guide - MTDC thresholds, joint use methodology for certain room types Keys to Credible Space Study: Departmental Administrators must confirm room numbers and room types; document occupants and grants; and understand functional usage definitions Functional Usage percentages are supported by actual funding (S&W of occupants) 38

39 F&A Cost Proposal Structure Space Study Example for Building A Functional Usage Statistics Based on Survey Room OR INST OSA DA OM Room Type SF % SF % SF % SF % SF % SF 101 Office % 50 50% Classroom % Jan. Closet % Lab % % 30 15% Cold Room % 75 10% 10 15% 15 _ Total SF 1, % Total 30% 54% 6% 5% 5%` 39

40 F&A Cost Proposal Structure Building Depreciation Pool Allocation Example Space Statistics Allocation Building Annual Dep.* OR INST OSA DA OM to OR Building A $250,000 30% 54% 6% 5% 5% $75,000 Building B 80, % 0 Building C 200,000 35% 25% 15% 5% 20% 70,000 Building D 50,000 10% 80% 10% 5,000 All Other 3,250,000 20% 65% 5% 5% 5% 650,000 Depreciation Applicable to OR $800,000 *Per A-21, Excludes Proportion for Federal Funds 40

41 F&A Cost Proposal Structure Equipment Depreciation Pool Allocation Example Space Statistics Allocation Building Annual Dep.* OR INST OSA DA OM to OR Building A $100,000 30% 54% 6% 5% 5% $30,000 Building B 50, % 0 Building C 80,000 35% 25% 15% 5% 20% 28,000 Building D 50,000 10% 80% 10% 5,000 All Other 1,685,000 20% 65% 5% 5% 5% 337,000 Depreciation Applicable to OR $400,000 *Per A-21, Excludes Externally Funded Equipment (Federal and Non-Federal) (Note: May also be allocated based on a department or room square footage basis) 41

42 F&A Cost Proposal Structure Construction Interest Pool Allocation Example Space Statistics Allocation Building Annual Interest* OR INST OSA DA OM to OR Building A $100,000 30% 54% 6% 5% 5% $30,000 Building B 40, % 0 Building C 40,000 35% 25% 15% 5% 20% 14,000 Building D 10,000 10% 80% 10% 1,000 All Other 775,000 20% 65% 5% 5% 5% 155,000 Interest Applicable to OR $200,000 *See definition in Section J.26 of A-21 42

43 F&A Cost Proposal Structure Operations & Maintenance Pool Example: Breakdown by Building Building Specific: Bldg A Bldg B Bldg C Bldg D Others Utilities* 145,000 80, ,000 60,000 3,055,000 Heat & Fuel 100,000 50,000 80,000 41,000 2,729,000 Custodial 35,000 15,000 25,000 10, ,000 Campus-wide: Total Costs Grounds & Landscaping 675,000 25,000 15,000 20,000 10, ,000 Facility Operations 900,000 35,000 15,000 25,000 10, ,000 Safety 1,350,000 50,000 20,000 33,000 15,000 1,232,000 Other: Environmental Health 300,000 6,000 4,000 5,000 3, ,000 Hazardous Waste 275,000 4,000 1,000 2,000 1, ,000 Totals $10,850, , , , ,000 9,800,000 * May be allocated to buildings based on metering 43

44 F&A Cost Proposal Structure Operations & Maintenance Pool Allocation Example Space Statistics Allocation Building Annual O&M OR INST OSA DA OM to OR Building A $400,000 30% 54% 6% 5% 5% $120,000 Building B 200, % 0 Building C 300,000 35% 25% 15% 5% 20% 105,000 Building D 150,000 10% 80% 10% 15,000 All Other 9,800,000 20% 65% 5% 5% 5% 1,960,000 Operations & Maintenance Applicable to OR $2,200,000 44

45 F&A Cost Proposal Structure General & Administrative Pool Allocation Example Total GA to be Allocated: $6,000,000* G&A Applicable Annual MTDC % Total to Function OR 15,000,000 15% x $6,000,000 = $ 900,000 INST 36,000,000 36% x 6,000,000 = 2,160,000 OSA 8,000,000 8% x 6,000,000 = 480,000 OIA 15,000,000 15% x 6,000,000 = 900,000 LIB 5,000,000 5% x 6,000,000 = 300,000 DA 15,000,000 15% x 6,000,000 = 900,000 SPA 2,000,000 2% x 6,000,000 = 120,000 SSA 4,000,000 4% x 6,000,000 = 240,000 $100,000,000 * Includes cross allocations from Bldg. Dep., Equip. Dep., Interest, and O&M pools 45

46 F&A Cost Proposal Structure Departmental Administration Pool Allocation Separate Pool must be developed for each academic department and include the following: 1) Faculty Administration - calculated as 3.6% of total MTDC of all departmental functions 2) Administrators, secretarial, clerical, and other staff that are joint benefiting calculated Direct Charge Equivalent (DCE) formula - use total salaries and wages to assign administrative cost to instruction and sponsored programs 3) Non-salary expenses - calculated using formula - percentage of administrative salaries in a department account to total salaries in that account is applied to total non-salary expenses to arrive at non-salary administrative expenses 4) Dean s Administrative Office - pro-rated to academic departments based on total MTDC of all departments Once pool is formulated for each department, expenses are allocated to the direct functions of the department based on the ratio of MTDC 46

47 F&A Cost Proposal Structure Sponsored Projects Admin. Pool Allocation Example Total SPA to be Allocated: $770,000* Annual Sponsored SPA Applicable MTDC % Total to Function OR $15,000,000 65% x 770,000 = $500,000 OSA 8,000,000 35% x 770,000 = 270,000 $23,000,000 *Includes cross allocations from Building Depreciation, Equipment Depreciation, Interest, O&M, and GA pools 47

48 F&A Cost Proposal Structure Total LIB to be Allocated: $10,000,000* Library Pool Allocation Example Statistics for Allocation: FTE % Total Allocation Student FTE** 12,000 75% x $10,000,000 = $7,500,000 Faculty/Staff FTE 4,000 25% x 10,000,000 = 2,500,000 Total 16,000 LIB Applicable Faculty/Staff S&W by Function: to Function Organized Research 24% x $2,500,000 = $600,000 Instruction 48% x 2,500,000 = 1,200,000 Other Sponsored Activity 7% x 2,500,000 = 175,000 Other Institutional Activity 21% x 2,500,000 = 525,000 * Includes cross allocations from Bldg. Dep., Equip. Dep., Interest, O&M, and GA pools ** Should be based on number of weeks that classes are in session 48

49 F&A Cost Proposal Structure Stepdown Allocation Costs to Function Alloc. Bldg. Equip. Interest O&M GA DA SPA Lib Bldg. Dep. 3,830 (3,830) Equip. Dep. 1,965 (1,965) Interest 900 (900) O&M 10, (10,850) GA 6,000 (6,000) DA 10, (11,648) SPA (770) Lib 9, (10,000) SSA 240 Inst 2,417 1, ,566 2,160 6,000 8,700 OR , , OSA , OIA 900 1, Totals

50 F&A Cost Proposal Structure Summary of Organized Research F&A Rates Cost Pool F&A Costs Applicable to OR OR Base On-Site Rate Off-Site Rate Bldg. Dep. $800,000 $15,000, % Equip. Dep. 400,000 15,000, % Interest 200,000 15,000, % O&M 2,200,000 15,000, % Library 600,000 15,000, % Facilities Pools 29.00% Gen. Admin. 900,000 15,000, % 6.00% SPA 500,000 15,000, % 3.33% Dept. Admin 2,700,000 15,000, % 18.00% Administrative Pools 27.33% 27.33% Total F&A Rate 56.33% 27.33% Less Excess Above Admin. Pools Cap of % -1.33% Proposed F&A Rates 55.00%* 26.00% ** Potential increase of rate by up to 1.3% (per REUI calculation in new UG) 50

51 Negotiation Process 51

52 Negotiation Process DHHS/CAS Desk Review* DHHS/CAS On-Site Review Rate Negotiations Formal Rate Agreement * If cognizant agency is ONR, the review/audit will be performed by DCAA with rate negotiations performed by ONR. 52

53 Negotiation Process DHHS/CAS Desk Review Requests for Clarification and Additional Data - team of negotiators may perform review - requests may be numerous and sporadic Very Detailed Space Study, Research Base, and Pool-by-Pool Review May Need to Contact Negotiators to Clarify Questions and Responses 53

54 Negotiation Process DHHS/CAS Desk Review Typical Areas of Review: Reconciliation of Expenses to Audited Financial Statements - Detailed explanations of adjustments/re-classes Organized Research Base - Explanations for awards not classified as OR - Mandatory/committed/salary cap cost sharing Building Depreciation - Breakdown of construction costs by original construction and renovations 54

55 Negotiation Process DHHS/CAS Desk Review Equipment Depreciation - list of assets by year of purchase / review of useful lives - proof that federally funded assets were excluded - breakdown by asset class Operations & Maintenance - reconciliation by building to GL - breakdown of costs by type of utility - listing of employees with job titles in O&M-coded funds SPA, GA, DA - list of position titles - focus on allowability of miscellaneaous costs 55

56 Negotiation Process DHHS/CAS Desk Review Library - detail on FTE calculations (do they match statistics on University s web-site) - determination of other users (walk-ins, internet users) Space Study - OR space vs. OR base comparison - research density calculation at academic department level - room-by-room listing for selected academic departments - listing of employees in academic dept. funded by internal sources - does funding justify functional usage classification? i.e. Lab with 3 occupants is functionalized as 90% OR, but occupants are funded by non-sponsored funds - unpaid students or visiting scientists in labs 56

57 Negotiation Process DHHS/CAS Desk Review Space Study (continued) - 100% OR rooms - common/joint use areas - vacant rooms - service centers / specialized service facilities / animal research facilities 57

58 Negotiation Process DHHS/CAS On-Site Review Primary Focus on Space Study Equipment Inventory Sample DHHS/CAS Interview of Departmental Administrator / Chair / PI s in 3 10 Academic Departments over 1-4 Days (high OR $, high OR SF) Attendees: - Team of DHHS/CAS negotiators - Departmental Administrator, Department Chair, PI s - Representative(s) from the University Responsible for F&A proposal - Representative(s) from Attain 58

59 Negotiation Process DHHS/CAS On-Site Review Types of Questions Asked - What are the department s sources of funds? - What are the department s number of faculty, post docs, graduate students, undergraduate students, lab technicians, visiting professors? Required teaching load for faculty? - Standard start-up fund packages? Bridge funding? - How was survey conducted? - How were functional usages determined for each room? - How were joint use areas functionalized? - Any major changes in space or external funding since base year? DHHS/CAS Negotiators Perform Walk-thru of Selected Areas 59

60 Negotiation Process DHHS/CAS On-Site Review Pre-Meeting with DA s/chair/pi s - Week or so prior to DHHS/CAS visit - Inform who is coming and what to expect - Review/refresh their memory on how space survey was conducted - Review/refresh their memory on functional usage definitions - Review list of rooms submitted to DHHS/CAS - Potential questions from DHHS/CAS - Inform them not to be intimidated and answer only what is asked - Request that they notify all department personnel that negotiators may be performing a walk-thru - Listing of equipment (if provided to DHHS/CAS) 60

61 Negotiation Process Negotiations Could Begin Face-to-Face at On-Site Review Exit Meeting Could Begin Shortly Following On-Site Review with DHHS/CAS Issuance of List of Issues / Adjustments / Positions - Preparation of University responses Finalization - Face-to-Face at DHHS/CAS Office or University (large schools) - Via conference/phone calls - DHHS/CAS Representatives: Branch Manager, Lead Negotiator, Review Team - University Representatives: Vice President for Finance/Treasurer/Controller, Cost Accounting Director, Attain team Real negotiations begin: numerous caucuses, counter offers 61

62 Negotiation Process Negotiations Rate Agreement - Each Component is given a Rate - Base is Defined (MTDC vs. S&W) - Final Rates for Provisional Years - Number of Years Going Forward (3 4 years are most common) - Separate On-Campus and Off-Campus Rates for OR, INST, OSA - Separate rate for DoD contracts (no 26% administrative cap) - Specialized Rates - Medical Center vs. Rest of University - Intergovernmental Personnel Act Agreements (IPA s) - Incorporation of New Fringe Benefit Rates - Signed by DHHS/CAS and University representative 62

63 Negotiation Process Length of Entire Process UAB s FY 2014 F&A Proposal (FYE 9/30/14) Space Study Training September/October 2014 Space Study Quality Assurance December 2014 thru February 2015 Proposal Submitted to DHHS - June 2015 Initial Requests for Additional Data September 2015 On-Site Space Review Waived by DHHS/CAS Negotiations Completed September

64 Negotiation Process Length of Entire Process UAB s FY 2010 F&A Proposal (FYE 9/30/10) Space Study Training September/October 2010 Space Study Quality Assurance December 2011 thru January 2012 Proposal Submitted to DHHS - August 2011 Initial Requests for Additional Data March 2012 On-Site Space Review June 2012 Negotiations Completed - June 2012 * Also performed dry-run space study based on FY 2009 activities. Used results to determine department MTDC threshold and rooms types for joint use methodology. 64

65 Negotiation Process Keys to Successful Negotiations Quality of Proposal Submitted for Negotiation Negotiation Skills of University Representatives Ultimate Decision Maker is Member of University Team Good Rapport with Federal Representatives: show respect, emphasize importance to University, leave room for levity 65

66 Negotiation Process Keys to Successful Negotiations Realize that Conflict can be Part of the Process Leave your Ego Outside the Negotiating Room Put Yourself in their Place: Agendas, Expectations, Pressures Negotiate from a Position of Strength: Know the strengths and weaknesses of the proposal 66

67 Why Do F&A Rates Vary Among Universities? Common Reasons Identification of O&M Costs to Research Buildings: Utility Metering, Utility- Related Costs, Maintenance & Repair Identification/Documentation of Organized Research Space: Maximizing via Space Study Methodology; Quality Assurance to Minimize DHHS/CAS Adjustments University s Physical Location/National Region Impacting Facilities Costs (Construction and Operational): Northeast, South, Mid-West, West Amount of Federal Funding on Construction of Research Buildings and Research Equipment University s Business Decisions on Funding of Research Facilities: Debt Financing 67

68 Additional Thoughts from UAB s Perspective 68

69 San Antonio, here we come!!!! 69 ` 2016 Attain, LLC

70 To Continue the Discussion Want to learn more about how Attain is different? Please contact us. We re eager to work with you. Hank Kirschenmann Phone:

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