Research and Sponsored Projects Manual (RSP)

Effective: 7/1/1987

Revised: 3/1/2005

RSP 509–03: Financially Closing Out Fixed Price Agreements

Purpose

To describe the disposition of residual balances on fixed price agreements

Source

Office of the Vice President for Research and Economic Affairs

Background

Fixed price agreements are generally discouraged because of risk involved. A fixed price contract requires that ASU perform the work to the sponsor’s specifications regardless of the actual cost of doing the work. Therefore the university must budget carefully to ensure that actual cost and the price paid by the sponsor will match.

All costs for a fixed price project must be expensed directly to the project agency/org.

Thus with accurate budgeting and charging of costs, there should be neither a deficit nor a substantial surplus of funds at project completion.

Policy

Upon project completion, both deficit and surplus balances on a fixed price agreement must be transferred to a nonsponsored account.

Procedures

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If Costs Exceed the Sponsor’s Funding at Project Completion

If costs exceed the sponsor’s funding at project completion, Grant and Contract Accounting (GCA) will take one or more of the following steps until all project costs are covered:

1. write a memo to the principal investigator requesting an alternative unrestricted fund source to absorb the overrun
2. move the excess costs to the principal investigator’s Investigator Incentive Award (IIA) account if funds are available
3. contact the department chair, dean, or other contact person at the college level for an unrestricted account to absorb the cost overruns

   and/or

4. cover the cost overruns with facilities & administrative cost recovery funds from the dean’s Research Incentive Account.

Note:

This procedure applies to cost overruns on cost reimbursement awards as well.

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If the Sponsor’s Funding Exceeds Costs at Project Completion

If the sponsor’s funding exceeds project costs, GCA will:

1. book facilities & administrative costs (based on project budget) that had been waived up to the federally negotiated rate, if applicable

   and/or

2. send a memo to the department chair or counterpart requesting an unrestricted agency/org into which any remaining surplus funds can be transferred, net of any cost overruns on agency/orgs for the same principal investigator.

If no response is received, GCA will transfer the surplus funds to the dean’s Research Incentive Account.

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