Are You Ready for the New NIH Payment Management System?

imagesNot the NIH, Not Again. (Sigh.)

You’ll have to forgive me, I know there is more to research administration than the NIH. (DOD, anyone? NSF?) It’s not that I choose to ignore the rest of the agencies out there funding the Federal share of academic research….really. It’s just that the NIH is in many ways, the canary in the coal mine for new policy at the Federal level. So I figure it’s going to be helpful to more than those of us working in the biomedical research area to talk about some of these issues.

The August Freak Out

In August and September 2013, NIH announced that their grants management systems would transition awardees to a new payment management process in order to allow the agency and their institutes and centers to better track award spending. They provided some preliminary details – enough to make every central office at every university with NIH funding to freak out – how is this going to work? Subsequent communications clarified the process, which have allowed schools to prepare and plan.

changeImplementation in Two Phases

The transition from PMS pooled (G) accounts to PMS (P) sub-accounts will occur over two fiscal years, and it started in October of 2013. There is an excellent FAQ on the transition, which will occur in two phases.

  • Phase 1 – Effective October 2013: Transition of Awards with New Document Number
  • Phase 2 – Effective October 2014: Transition of Continuing Domestic Awards

The notice of grant award will contain additional information to indicate the type of account (G to P) that is being used to award the funds in the transition year. The transition year will require a new award type (Type 4) and administratively shortened segments – for competitive awards in FY14 and FY 15.

Financial reporting requirements will be affected during these changes (there will be additional closing periods) and the reporting requirements for awards will be affected by whether or not the award was made under SNAP (now RPPR). During the transition, it looks like non-competing continuations under SNAP may need to submit two FFRs in FY14.

Importantly – carryover authority is not automatically available during this time frame. Grantees will report unobligated balances and receive approval for these funds to be re-obligated to the new sub-account. NIH states that even if the award was issued with “automatic carryover authority” the grantee has to receive approval through a new NOGA before funds are drawn down.

What You Need to Do Right Now

Review your award portfolio and take steps to ensure awards are appropriately charged for direct costs up front, reducing the need for cost transfers. This saves time, heightens compliance and allows your institution to meet the challenge of shortened reporting time frames.

  1. How many awards are under SNAP? How many are not under SNAP? (This will affect the calculation of your unliquidated obligations and unobligated balances – which, in this new world of payment management should be minimal.)
  2. What are their project dates, and how are they looking financially? (Are all expenses hitting the project in a timely manner?) If not, why not?
  3. What systems are in place to ensure direct charging of appropriate expenses (salary and non-salary) to awards, and reconciling expenses on a monthly basis? If these systems don’t yet exist, what needs to be done to set them up?
  4. Is there a process to regularly meet with investigators to review award activity and plan for changes in allocation of expenses proactively (to prevent cost transfers)?
  5. What reporting and queries can you utilize to easily manage your portfolio and provide updates to your investigators?
  6. Start to develop great relationships with your subcontract sites now – if you haven’t already. You’ll need to have them generate their final invoices faster than they have in the past.

What Your Investigators Need to Know

money-under-mattress-300x217We all know PI’s who think of Federal grants like funds stuffed between a mattress for a rainy day. Yet for every investigator who thinks like that, there are two that understand and have a very keen appreciation for managing awards. However, the new payment management system, combined with the shortened time frame for closing out awards is creating a new environment for managing sponsored funds.  We have to impress upon our most studious investigators that if they do not use their Federal funding, they will lose it.

This is the time when we can help our investigators by providing administrative leadership:

  • Clearly outlining what our investigators need to know about the policy and how we need to work with them to administer their projects.
  • Providing them with financial information regularly so they can make decisions about their research plan and strategy (and we can ensure administrative actions regarding purchasing, effort and salary administration and reimbursements are managed in a timely manner).
  • Updating our investigators regarding policy changes and trends in the availability of carry forward funds, additional reporting requirements, and other trends to assist them in managing their current awards and planning for new applications.

The Department of Defense already has a strong payment management system in place, but it stands to reason that the Department of Health and Human Services, and other federal agencies will look to adopt more stringent monitoring of federal grants. Have you seen the Do Not Pay website? The Obama administration, in creating a government that utilizes data and analytics to generate accountability, is creating a network of systems to ensure that funds are distributed, tracked and paid to the proper recipients.

One Part Challenge, Two Parts Opportunity

To be sure, the next 18 months aren’t going to be easy – but working together we’ll transition to the new payment management system. More importantly – it’s an opportunity to introduce new ways of managing sponsored projects that can remain in place to meet the challenges of tighter Federal funding in the future.

Subcontractors, Consultants and Vendors: So Many Choices, Still So Confusing.

hire.outsource image

There are more proposals to submit to agencies than ever before – and the criteria for competitiveness includes an institution’s ability to collaborate – not only within its walls but with investigators working on related research at other institutions.

The selection of the proper agreement type for a collaborator during the proposal phase should happen as early as possible, with the investigator working with the research administrator and the collaborator to evaluate the proposal mechanism and the statement of work. A set of questions help evaluate the best agreement for the collaboration.

What criteria determine the type of agreement for a sponsored project?

1. What is the service, function or activity they will perform (with some specificity).

A subcontractor or consultant will typically have a more detailed scope of work than a vendor, which has a very specific task to perform. A subcontractor and consultant perform work which relates to the aims of the award, which have milestones and reports attached, and often require analysis. However, the outcomes of the work are not predetermined. A vendor’s work is determined by its regular course of business as it is contracted to perform a service on behalf of the award, and it either performs the service, or it does not.

2. Under what time frame will they perform it?

Accordingly, the time frames for the agreements will match the types of work performed. A vendor is usually engaged until it finishes the work performed.

3. Will they be using the facilities of an institution, or their own facilities?

Subcontractors and vendors use the facilities of their institutions; consultants use their own facilities, and not the facilities of their institutions (unless they are a small business).

4. Who will the check be made out to (who will receive the 1099)?

A subcontractor and vendor will have payments made to an institution. A consultant is almost always an individual, but can be a business. In the event that a consultant is a business, this arrangement should be reviewed periodically to ensure that the agreement should not be revised to become a subcontract in subsequent years. (Yearly consulting agreements should be considered.)

5. Does the contractor expect to have publication rights?

Only if the contractor is a subcontractor. A consultant does not typically receive publication rights.

6. Will the work of the contractor affect the direction of the science in some way?

Only if the contractor is a subcontractor. A consultant does not typically have the ability to influence the direction of the science, as the role of a consultant is to produce a work product under the direction of the PI but does not have a named scientific role. If the individual is to direct the science, they should work under the auspices of their academic institution and contribute based on their institutional based salary/effort.

7. Is the contractor working in a capacity with a level of independence?

A subcontractor or consultant, based on their named role on the project has the ability to function independently with oversight by the PI. A vendor cannot function independently. They have a scope of work that they need to complete under the direction of the PI by a specified time frame, and there is no room for deviation or independence.

8. Do the terms of the award flow down to the contractor?

The terms of the award flow down to the subcontractor and the consultant, but not the vendor. This may be a vital distinction when selecting a correct agreement type for a collaborator.

AFTER THE FACT AGREEMENTS – NOT A GOOD IDEA

I’m very appreciative, but often surprised when an investigator suggests setting up a subcontract after the fact to “save work” and time, because it seems too cumbersome to set it up during the proposal phase. In fact, setting up the subcontract, consultant or vendor agreement during the proposal phase is crucial – because at that time, F&A is being established based on the proposal budget. When the proposal is awarded, and F&A is set – any after the fact subcontracts or other agreements have to include F&A out of direct costs. This is a VERY painful budgetary impact that could have otherwise been avoided.

PREPARING THE REQUEST FOR THE COLLABORATOR

When the collaborator is a subcontractor, we have a standard package of materials that we send from our institution that we hope will make life easier for the research administrator we are working with, who will almost always be receiving the request (we ALL know this) later than we would like.

  • Northwestern’s subcontractor form (Financial Conflict of Interest Statement with standard SF424 info)
  • Draft Budget and Budget Justification
  • Draft Statement of Work

For a consultant, we provide a draft consultant letter, which states the hourly rate of pay, travel per diem, length of time work will be performed, nature of the work to be performed and support for the project. We also provide detailed instructions for completing our FCOI process for the proposal.

Common Question: Can a consultant on a proposal be an investigator at my institution?

If the work on a sponsored project is not related to an investigator’s regular work, and is not an ongoing assignment, it may be possible to justify a consulting agreement at your institution for an investigator who is also employed by your institution. However these agreements require prior institutional approval before they are proposed and should be done with proper planning. A PI cannot propose an investigator in the same department as a consultant.