Award Negotiations + Pre-Award Accounts

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Why Negotiate?

Sponsored Programs and Regulatory Compliance Services (SPARCS) focuses much of its attention on negotiating the terms and conditions of agreements. Why? Because the university’s purposes and principles related to why we conduct research are sometimes compromised by the initial terms of sponsored agreements. If we sign off on an agreement that restricts our ability to publish the results of our research, for example, then we compromise our research mission.

How Does it Work?

SPARCS staff handle all negotiations with research sponsors. After negotiating an acceptable agreement, SPARCS awards the agreement and the research project can begin in earnest. When necessary, SPARCS also negotiates agreement modifications to accommodate unexpected project changes.

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Fast Facts

Here are some interesting facts:

  • Negotiation Free Zone: Federal government grants rarely need negotiations because they already include language that complies with our standards related to research conduct and results.
  • Negotiation Magnets: Approximately 40% of our negotiation hours revolve around 8% of our awards — those sponsored by private industry.
  • Contracts vs. Grants: Contract terms vary greatly and often require intense negotiations.
  • Fast or Slow Lane: Generally, award negotiations handled by SPARCS staff take between 2 and 11 days (with some lengthier time spans due to the complexity of issues, number of problems, and slow sponsor response times.)
  • How Much Longer: To check the status and progress of negotiations by SPARCS staff, pull up the RADAR record to access progress journal notes made by the negotiators.

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Contracts vs. Grants?

As noted in the Fast Facts listed above, contracts often require intense negotiations, so explore the following references for an overview and contact the SPARCS Office if you have any questions.

Click the page below to access a PDF version of this thorough explanation from another university on how contracts differ from grants.

Grants vs. Contacts PDF

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You may also want to access the following PDF version of a similar chart handout from one of our 2012 Q&A sessions:

NCSU Contracts vs Grants Chart link

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What Should We Watch Out For?

red flagBy understanding some of the issues that require negotiation, you can keep an eye out for red flags in proposals — these issues that warrant contacting SPARCS for advice and help. Review the following information to learn more about the general negotiation process and issues.

Lengthier negotiations often revolve around retaining the right to publish our results, intellectual property rights, payment provisions, and indemnification responsibilities.

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Key Terms

Some of the main negotiation points involve the following terms. (Click the “Key Terms in Research Agreements” box below for more detailed explanations of terms.)Key Terms Link

  • Intellectual Property Matters (patents, copyrights, licenses)
  • Legal issues such as indemnification and insurance
  • Payment and financial reporting provisions
  • Technical reporting and breach of contract terms
  • Governing law (should be limited to NC law) and venue (where any court action takes place)
  • Export controls (For more information, visit this Export Controls link on the SPARCS site and see more information in Section 10 of this guide on Regulatory Compliance.)

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Red Flags

Here is a short list of red flags you may find in proposals. If you notice any of these potential issues in proposals, contact the SPARCS office immediately to discuss:

red flag Publication Restrictions

red flag Indemnification

red flag Arbitration

red flag Intellectual Property Rights

red flag Governing Law and Venue

red flag Export Controls

red flag Labor Categories and Rates

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Taking a Chance on Pre-Award Accounts

Pre-Award accounts can sometimes be established before the fully executed award arrives.

Here are some important facts to keep in mind:

  • Pre-award spending under these accounts can be risky.
  • If the pre-award account is established but the award is not granted, any pre-award expenditures become the responsibility of the PI’s department or college.
  • For this reason, researchers should generally ask for only minimal start-up costs under the pre-award account.

Review the following sections thoroughly for information on making good decisions and minimizing the potential risks.

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A Pre-Award Account Might be Appropriate When…

Most standard federal awards contain a clause allowing 90-day pre-award costs, but other awards not containing this assurance should be “handled with care.”

If the award meets the following criteria, the risk is minimized:

  • The award is imminent.
  • The PI or College Research Office has something in writing from the sponsor that the award is forthcoming.
  • The pre-award spending is necessary for the effective and economical conduct of the project for reasons such as:
    • Payroll deadline is approaching
    • Need to order specialized equipment and supplies
    • Pricing quote for required equipment is expiring
    • The nature of the research is time sensitive – e.g., plant growing season

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 Is a Pre-Award Account Worth Taking the Risk?

Think about the following risk factors before requesting a pre-award account:

Caution Sign on Pile of Money

  • NO AWARD!
    If negotiations fail or unforeseen circumstances occur, the expected award may not be granted. Even with federal agencies, they must sometimes divert funds earmarked for grants to national emergencies such as hurricane relief. If so, all expenditures incurred become the responsibility of the PI’s department or college.
  • THE OFFICIAL AWARD DATE IS LATER THAN EXPECTED!
    The pre-award account is effective June 1st, for example, but the final start date is actually July 1st. In this situation, the June expenditures may not be allowed.
  • PRE-AWARD ACCOUNTS FOR PRIVATE COMPANY AWARDS ARE RISKY… PERIOD!
    Make sure that a SPARCS negotiator gets involved if things change after the initial review to avoid potential risks such as company mergers that de-rail or adversely affect the grant award.

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Go for It! Requesting a Pre-Award Account

Check the SPARCS Pre-Award page for more detailed information on the following steps:

Money with Okay Sign

  1. PI forwards all pertinent documentation of eminent award, spending cap, and acknowledgement of final responsibility of funds to the College Research Officer.
  2. College Research or Business Officer completes the “Request a Pre-Award Account” process in RADAR, uploads all correspondence, and supplies e-mail addresses for notification.
  3. SPARCS staff forward the information to a SPARCS negotiator who reviews and approves (or contacts the college to discuss potential risks), adds the pre-award date and amount to the RADAR record, and uploads the information into RADAR.
  4. SPARCS staff prepares the proposal package for the Office of Contracts and Grants (C&G).
  5. C&G staff handles the account set-up.

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Using RADAR to Request a Pre-Award Account

The following screen shots illustrate the steps that the College Research Officer or Business Officer uses in RADAR to request a Pre-Award Account.

Step 1

RADAR Step 1

Step 2

RADAR Step 2

Step 3

RADAR Step 3

Step 4

RADAR Step 4

Step 5

RADAR Step 5

Step 6

RADAR Step 6

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Getting Negotiation and Pre-Award Account Help

Call the main number or use the general SPARCS e-mail link illustrated below to contact a negotiator. Click the SPARCS site image below to go to the contact page if you’d like to bookmark it for future reference.

SPARCS Contacts Page

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spa-related-contacts-header

  • Send an e-mail to a University expert if your College Business Office cannot help on related questions.
  • Send an e-mail to the webmaster for this site if you discover broken links or want to make suggestions for improvement of this guide.

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Last Update: August 23, 2013