4.3 Proposal Development

Revised 3/14/00

The proposal is the document that you use to convince the sponsor that your project should be funded. Proposals (sometimes called applications) take many forms, from very detailed 300 page responses to Requests for Proposals to one-page descriptions of what you propose to do. Proposals to many of the agencies, such as NSF and NIH, require a very specific number of pages, margin width, type size and formats. Any deviation can cause the proposal to be returned without review. Other agencies, for example, Office of Naval Research (ONR), are less structured (at least for the present.

There is a body of information that a sponsor generally expects to receive through the proposal. They include:

• a description of the goals and objectives or deliverables of the project,
• who are the key players,
• what is the implementation plan and timetable or milestone chart,
• how will you evaluate what you are proposing or what quality control measures have you incorporated, and of course,
• what is it going to cost?

The sponsor will generally determine what information is required.

It is the responsibility of the investigator and the University to ensure that the proposal document is accurate, concise, well-prepared, responsive to the agency's instructions, and easily read and understood by the reviewer(s). Proposals submitted to federal agencies are subject to review under the False Statement and False Claims Act. Any false statement made in a proposal or report including a false claim on a budget or expenditure report is subject to federal regulations and can result in (and has on many recent occasions) a fine and/or a jail term.

4.3.1 Definitions

The following are definitions of terms often used when submitting a proposal or application to a government agency. These may also apply to some private sponsors. Some also contain some processing information. See specific agency guidelines for more information.

Program Announcement (PA): A formal statement about a new or ongoing extramural activity or mechanism. PA may serve as a reminder of continuing interest in a research area, describe modification in an activity or mechanism, and/or invite applications for grant support. Most applications in response to PAs may be submitted for any appropriate due date and are reviewed with all other applications received at that time.

Request for Applications and Requests for Proposals (RFA/RFP): A formal statement that invites grant or cooperative agreement applications in a well-defined scientific area to accomplish specific program objectives. The RFA/RFP indicates the estimated amount of funds set-aside for the competition, the estimated number of awards to be made, and the application receipt date(s). Applications submitted in response to an RFA/RFP usually are reviewed by a Scientific Review Group (SRG) convened by the awarding component that issued the RFA/RFP.

Note: Specific Program Announcements (PAs), Requests for Applications (RFAs) and Requests for Proposals (RFPs) are published in the Federal Register or can be found using other sources.

New Proposal/Application: An initial request for financial assistance for a project or activity that is not currently receiving support and must compete with other proposals for support. They are usually submitted on agency specified forms and in accordance with agency instructions.

Competing Continuation (Renewal) Proposal/Application: A request for funding to renew, by one or more additional budget periods, an existing funded project that would otherwise expire.

Competing Supplemental Proposal/Application: A request for an increase in support in a current budget period for expansion of the project's approved scope or research protocol. The request may specify budgetary changes required for the remainder of the project period as well as for the current budget period.

Revised (Amended) Proposal/Application: An unfunded application that the applicant has modified following initial review and resubmitted for consideration. For example, NIH allows a maximum of two revised applications in the 2-year period dating from submission of the original, unamended application.

Noncompeting Continuation Proposal/Application: A request for continuation of committed funding for the second or subsequent budget period within an approved project period. Also can be called a yearly Progress Report. Some agencies and some form of awards do not necessarily require the next year's budget amounts to be addressed. These are awards that are "under expanded authority."

4.3.2 Statement of Work/Project Deliverables

It is critical that the statement of work be an accurate reflection of what you intend to do in the project. In a grant proposal there will be some flexibility for a research project because it is research-you don't specifically know the outcome. If a particular research design proves to be inappropriate or an outcome not forthcoming, a researcher should be able to revise the work statement without jeopardizing the funding. However, unapproved changes in the design or expected deliverables for an industrial contract will more than likely preclude reimbursement for the work carried out. As a general rule, a grant will require a detailed statement of work while a contract will require a statement of specific deliverables i.e., what does the sponsor get for its money.

The statement of work/deliverables for a contract should be accurate, and not inflated. Propose what you can reasonably complete given the time and dollars allotted to the project. With the exception of ONR, most mission agencies (DOD, NASA, Energy, DARPA) use a contract as the funding mechanism. This is generally true for industry as well, although a purchase order is sometimes used.

4.3.3 Proposal Budgets

4.3.3.a Cost Accounting Standards and Cost Accounting Disclosure Statement

The University of Utah is required to comply with the Government Cost Accounting Standards (CAS).

In 1997, the University submitted a Cost Accounting Disclosure Statement informing the federal government of the processes that we use to comply with their standards on research cost accounting. It is anticipated that in the year 2000, the government will audit our statement to determine our level of compliance.

There are four primary areas of concern CAS 501, 502, 505, 506. These standards require that the University maintain consistency in budgeting and expending, consistency in allocating costs to activities, accounting for unallowable costs and costing periods, whether or not federal funding is involved. These standards, along with OMB Circular A-21, State guidelines and University policy, dictate how the University budgets and expends externally supported projects, including both government and private sponsors.

In unusual circumstances where costs occur that do not conform to the process described in the University's Disclosure Statement, University officials will determine the materiality in each case and make every effort to assure that an inequity does not occur to its federally and privately sponsored agreements.

Criteria for determining when costs incurred for the same purpose, in like circumstances, are treated either as direct cost only or as indirect costs only with respect to final cost objectives is found in the University's Cost Accounting Disclosure Statement dated 12-31-97.

4.3.3.b Allowable Costs

Allowable costs are those categories of costs that can be charged to a grant or contract (i.e. salaries, equipment, travel, supplies, etc.). Certain types of costs, (i.e. cost of alcoholic beverages, etc.) are not allowable and may not be charged to a contract or grant. The tests of allowability of costs are: (1) they must be reasonable; (2) they must be allocable to the sponsored agreement under the principles established; (3) they must be given consistent treatment throughout application of those generally accepted accounting principles appropriate to the circumstances; and (4) they must conform to any limitations or exclusions set forth in established principles or in the sponsored agreement as to types or amounts of cost items.

Reasonable costs. A cost may be considered reasonable if the nature of the goods or services acquired or applied, and the amount involved therefor, reflect the action that a prudent person would have taken under the circumstances prevailing at the time of decision to incur the cost was made. Major considerations involved in the determination of the reasonableness of a cost are: (1) whether or not the cost is of a type generally recognized as necessary for the operation of the institution or the performance of the sponsored agreement; (2) the restraints or requirements imposed by such factors as arm's length bargaining, Federal and State laws and regulations, and sponsored agreement terms and conditions; (3) whether or not the individuals concerned acted with due prudence in circumstances, considering their responsibilities to the institution, its employees, its students, the Federal Government, and the public at large; and (4) the extent to which actions taken with respect to the incurrence of the cost are consistent with established institutional policies and practices applicable to the work of the institution generally, including sponsored agreements.

4.3.3.c Allocable Costs

Allocable costs are those allowable costs that actually benefit the grant or contract to which they are being charged. A cost is allocable to a sponsored agreement if (1) it is incurred solely to advance the work under the sponsored agreement; (2) it benefits both the sponsored agreement and other work of the institution, in proportions that can be approximated through use of reasonable methods, and/or (3) it is necessary to the overall operation of the institution and, is deemed to be assignable in part to sponsored projects. Where the purchase of equipment or other capital items are authorized under a grant or contract, the amounts authorized for such purchases are assignable to the sponsored agreement regardless of the use that may subsequently be made of the equipment or other capital items involved.

4.3.3.d Unallowable Costs

Unallowable expenses are not allocated to sponsored projects as either a direct cost or as facilities and administrative indirect costs. The costs of unallowable activities are usually treated either as part of the Other Institutional Activities (OIA) base for determining facilities and administrative indirect cost rates, or are included in an administrative cost pool, neither of which is allocated to sponsored agreements. Generally, unallowable costs include: administrative and clerical salaries, local telephone charges and installation, office supplies, memberships, and postage. If a charge is unallowable as a direct cost, it is also unallowable as a match or cost sharing.

4.3.3.e Direct Costs

Direct costs are those identified specifically with a particular sponsored project, an instructional activity, or any other institutional activity; or that can be directly assigned to such activities relatively easily with a high degree of accuracy. Costs incurred for the same purpose in like circumstances must be treated consistently as either direct or indirect costs. Where an institution treats a particular type of cost as a direct cost of sponsored agreements, all costs incurred for the same purpose in like circumstances shall be treated as direct costs of all activities of the institution.

General categories of direct costs include, but are not limited to, salaries and wages, fringe benefits, supplies, contractual services, travel and communication, equipment and computer use.

Personnel Costs. These costs are for University of Utah Personnel only. Non-University of Utah personnel costs should be identified as consultants and/or independent contractors. For more discussion on salary and personnel including percent of effort, effort reporting, reassigned time, increases, and additional compensation, see Section 5.4.2 Salary and Personnel Issues.

Salaries and Wages. Payments made to employees of the University for work performed.

Administrative Salaries.* Salaries for University employees for administrative or clerical functions. Administrative Salaries may not be charged to sponsored activities (grants or contracts) unless specifically identified and justified in the proposal. This payment requires Sponsor approval in the award in all cases.

Fringe Benefits. Employee benefits paid by the institution. (i.e. FICA, Worker's Compensation, Withholding Tax, Insurance, etc.) The University of Utah has established institutional averages to be proposed on grants and contracts for sponsored agreements, they are: 36% for full time employees, 22% for postdoctoral fellows, and 10% for part time employees and predoctoral fellows (undergraduate). The appropriate fringe benefit should be added to the salary(ies) requested for all personnel when calculating a budget. See Memorandum - University of Utah Treatment of Fringe Benefits Applicable to Grants and Contracts in the Appendix for more information.

Stipends. Stipends are payments to students and include scholarships, fellowships, financial assistance grants, training grants, or other contributions supporting educational or training expenses. A stipend does not require the performance of services, and by definition, an employment relationship does not exist. Stipends generally are not allowed except for training grants or if specifically approved in the award document.

Travel

Travel costs include expenses for transportation, lodging, subsistence, and related items incurred by employees who are in travel status on official business related to a sponsored project. Such costs may be charged on an actual basis, or on a per diem or mileage basis in lieu of actual costs incurred subject to the maximum amounts specified in the current Schedule of Allowable Travel Rates set by the University and within the University's Travel Policy and practices consistently applied to all institutional travel activities. Reimbursement of travel costs associated with sponsored research projects must comply with all provisions stipulated by the sponsoring agency, or with all provisions of the University's travel policy if more restrictive. Funds can be requested for travel to scientific meetings, to conduct fieldwork, to collaborating laboratories and for consultation with the funding agency or with colleagues concerning project research.

Travel costs are divided into two categories:

Domestic travel: includes travel within and between any of the states, territories, and possessions of the United States of America, and Canada.

Foreign travel: includes travel outside the United States, its territories and possessions, and Canada or as specifically defined by contracting or granting agencies. On government sponsored projects, U.S. carriers must be used to the maximum extent possible when commercial air transportation is the means of travel between the United States and a foreign country or between foreign countries (FAR 47.402). Convenience or expense is not considered an appropriate reason for not using U.S. carriers. Foreign travel paid from federal contracts and grants requires advance approval by the Research Accounting Department and often the sponsoring agency.

For a proposal budget, estimated cost should normally include air fare or other mode of transportation, the number of days of per diem, and ground transportation in accordance with University policy. Most sponsors require a statement about the purpose of the proposed travel and its relevance to the sponsored program, especially in connection with foreign travel. For more information contact the University of Utah Travel Department.

Equipment (also see Section 5.4.8 Property)

Capital Equipment. An item having an acquisition or donated value of $5,000 or more and a useful life in excess of one year. These items are not subject to Facility and Administrative (F&A) costs when the negotiated F&A rate schedule is used or when F&A is not an allowable cost by the awarding agency.

Insurable Equipment - An item having an acquisition or donated value of between $1,000 and $4,999 and a useful life in excess of one year. These items should be budgeted under the category "supplies" and are subject to F&A costs. This account category exists solely for the purpose of accounting for items which if missing or destroyed are possibly subject to a University insurance claim.

Fabricated Equipment - Equipment that is constructed by combining or assembling modular components and/or materials into one identifiable unit is referred to as fabricated equipment. When completed, each component loses its individual identity and the end product becomes an identifiable single unit. Typically such equipment is made or designed in-house for a specific purpose. In order to be capitalized, the finished product must have a unit cost of $5,000 or more and a life expectancy of more than one year (fabricated equipment can also be recorded as insurable equipment if the cost is between $1,000.00 and $4,999.99). Also see the "Notice of Intent to Fabricate" form in Section 9.

Items to take into consideration with fabricated equipment:

• University labor costs related to equipment fabrication by an approved recharge center qualify for inclusion in the capitalized cost. All other University labor costs are not allowed to be capitalized as part of the fabricated project.
• The purchase price on individual components does not have to exceed $5,000, as long as the total combined price of the end product is equal to or greater than $5,000. If a fabricated project is approved, then the individual items must be purchased using a fabricated equipment account in the range of 61100 - 61108.
• Repair of existing equipment, regardless of the cost, is not fabricated and is subject to F&A costs.
• If there is an upgrade of existing equipment, which results in the existing equipment implementing new technologies (not just an upgrade or repair of existing technology) and the total of the components of the upgrade are greater than $5,000, then the purchase of the components are not subject to F&A costs.

Consultants/Professional Services

A consultant is an individual hired to give professional advice or services for a fee but not as an employee of the hiring party. A consultant can be an individual or organization under agreement to provide primarily professional services (including actuarial, scientific, engineering, or technical advice) to the University in an independent contractor relationship. Consultant costs can include the consultant's travel and incidental expenses. Consultant costs can also include payments for conference or workshop speakers. Consultant and Professional Services agreements are further defined and explained in the University Policies and Procedures Manual, Section 4-14.

The Principal Investigator (PI) should identify and include appropriate consultant costs as part of their proposal budget. Some sponsoring agencies limit the amount that can be paid to consultants for their time. Both NSF and the Department of Defense have limits on consultant pay. You should determine if there are limits on consultants before you submit a proposal to a sponsoring agency. Consultant costs are not excluded from the F&A calculation.

Forms: Contracting for consulting and/or professional services on a sponsored research project with the University of Utah requires the completion of two forms: 1) the "Professional Services/Consulting Agreement" and 2) the "Employee vs. Independent Contractor Checklist". The forms and instructions can be found in Section 4 of the Policies and Procedures Manual and on the OSP Website.

Note: If a consultant agreement is being used to pay additional compensation to a university employee, please see Section 5.4.2.e Additional Compensation in this handbook. Also use as a reference the Memorandum - Consultant or Employee: How to Tell the Difference found in the Appendix.

Supplies

Lab and Technical Supplies. Items such as laboratory supplies and materials, lab notebooks, transparencies, report binders, and so forth that are used only for project purposes are justified as lab and technical supplies. Include items with a useful life less than one year or less than $5,000 per item. Individual items over $1000 and less than $5,000 are categorized as "Insurable Equipment" but identified on a budget in "Technical Supplies". Animals and animal costs should be identified in the "Other Costs" category.

Office Supplies.* Supplies necessary for the administrative or clerical functions of an office. Office supplies may not be directly charged to sponsored activities (grants or contracts) unless specifically identified and justified in the proposal. The purchase of office supplies requires specific Sponsor approval in all cases.

Other Expenses

Animal Services. All expenses related to animal care such as purchasing, renting, leasing, caring for and disposing of animals.

Books/Subscriptions. If directly related to project and specific approval is given by sponsor.

Computer Services. Charges to be paid to the Computing Center, Administrative Computing Services and others providing computer and data processing services.

Repairs and Maintenance. The cost of non-capitalized repairs and maintenance, including maintenance contracts.

Membership Dues*. May not be directly charged to grants and contracts unless specifically identified an justified in the proposal. Specific sponsor approval is required in all cases.

Participant Support. This category is to be used when specifically identified, defined and allowed by the sponsor. It is to reimburse costs such as subsistence allowances, mileage allowances, registrations fees to be paid to or on behalf of participants or trainees.

Patient Care. The cost of routine and ancillary medical services (e.g. hospital or pharmacy charges) on either an inpatient or outpatient basis. The University of Utah has implemented the NIH definition of "Patient Care".

Postage*. The cost of mailing (i.e. stamps, etc). Postage may not be directly charged to grants and contracts unless specifically identified and justified in the proposal. Sponsor approval is required in all cases.

Printing and Photocopying. The costs of printing, photocopying, photographing, etc. incurred in producing documents or other printed material.

Professional Development. Costs for training and instruction of employees to enhance their abilities to perform work related responsibilities.

Publishing Page Charges. Costs incurred for publishing articles or papers in magazines, journals, etc.

Purchase Services (or Other Services). Procurements of recognized, defined or previously accepted services which are necessary for the conduct of the research but do not significantly add to the body of knowledge anticipated at the conclusion of the research.

Shipping/Freight. Costs incurred for shipping and freight that are billed independently of the goods being shipped.

Sub-awards.** For the purposes of this manual, a sub-award is a discrete portion of the intellectual activity of a program or project defined in the statement of work performed outside of the University of Utah and using facilities, resources and support services of the contracted activity. The Office of Sponsored Projects is responsible for preparing and negotiating the sub-award document after collaborating with the Principal Investigator (PI) with respect to the statement of work and the budget. The PI will review the final negotiated agreement and is responsible for assuring adequate and timely progress of the work. For more information on policy and procedure for sub-awards see Section 15 Appendix: Policy Statement - Subcontracts/Sub-grants.

Telephone Equipment.* These costs (usage and purchase of telephone equipment) may not be directly charged to grants and contracts unless specifically identified and justified in the proposal. Sponsor approval is required in all cases.

Telephone-Long Distance/WATS. These are allowable if some mechanism is in place to ensure that such calls are charged to the projects to which they are directly related.

University Services. Costs of services provided by University departments.

*OMB A-21 stipulates that normally these costs are treated as indirect costs (F&A). In order to be treated as direct costs, these restricted costs must be listed in the proposal with an explanation stating the REASON why they are direct costs and how they can be SPECIFICALLY IDENTIFIED with this proposal and/or award and must have specific agency approval. Under the new modular grant process with NIH, all OMB A-21 items are not allowable.

**The first $25,000 of each sub-award is subject to F&A costs if the University negotiated agreement is used in the budgeting process.