Financial Affairs Policies

UMB Policy on SPAC Contract and Grant Billing

VIII-8.00(A)  |  Financial Affairs  |  Approved September 7, 2023

Responsible VP/AVP: Dawn M. Rhodes, DBA, MBA

Revision History

January 1, 2009

Purpose

To set forth the standards for University of Maryland, Baltimore (UMB) to bill Sponsors in order to meet the terms and conditions of Sponsored Awards.

Policy Statement

UMB bills Sponsors in a timely and accurate fashion pursuant to State requirements and the terms and conditions contained in Sponsored Awards. The method UMB utilizes for generating, processing, approving, tracking, and storing invoices is based on the type of Sponsored Award. The various types of Sponsored Awards covered under this policy are:

• • Letter of Credit (LOC) Grant
  • Cost Grant or Contract
  • Volume or Milestone Grant or Contract
  • Schedule Grant or Contract
  • Schedule/Cost Grant or Contract

1. UMB schools and departments receive awards from various Sponsors, including the federal government, state and local governments, and private entities.
2. Sponsors may require UMB to issue invoices before the Sponsor will make payment to UMB.
3. SPAC uses a centralized invoicing system to generate, process, approve, track and store billing transactions between UMB and Sponsors.
4. Sponsored Projects Accounting and Compliance (SPAC) is the UMB department responsible for issuing invoices to Sponsors (except when the award type is a Volume or Milestone award, as described below).
5. Instructions and guidelines for issuing invoices are set forth in SPAC Procedure for Sponsored Contract and Grant”.
6. SPAC issues invoices for expenses that have posted in UMB’s financial system.
7. SPAC conducts periodic reviews to ensure that expenses billed to a Sponsor are reasonable and allocable under the terms and conditions of the Sponsored Award and that the billing is in accordance with UMB’s policies.
8. UMB employees who fraudulently create or submit an invoice to a Sponsor may be subject to disciplinary and/or criminal action.

Definitions

Letter of Credit (LOC) Grant: A method of combining billing of multiple awards from the same Federal agency, using an agency portal. Cash draws can be performed at a frequency determined by the award recipient entity, typically multiple times a month when the Sponsor is a larger federal agency and at least monthly when the Sponsor is a smaller federal agency. Amounts requested are based on the expenses incurred in UMB’s financial system at the time of the draw.

Cost Grant or Contract: Amounts requested are based on the expenses incurred in UMB’s financial system for the period of the bill.  Indicators for a Cost Grant or Contract include:

• Cost-reimbursement type Sponsored Award.
• Billing is based on actual expenses incurred performing the work during the period billed.
• Financial expenditure report may be required.
• Expenses “shall not exceed” a stated contractual amount.
• UMB is required to return any funds received in excess of actual expenses.

Volume or Milestone Grant or Contract: Payments are based on an agreed, set amount (price or fee) for the specified work to be performed rather than actual costs incurred in doing the work. UMB is required to provide the work for that amount, whether the actual costs incurred are greater than or less than the agreed amount. The difference between a Volume award and a Milestone award is that a Milestone award has a contractual limit, while a Volume award has a “cost per” budget that is variable depending on the amount of deliverable achieved. Indicators for a Volume or Milestone Grant or Contract include:

• Recipient is not required to return funds to Sponsor that were paid but not expended for project costs.
• Fixed price/fixed fee type award.
• Payment is based on providing a “deliverable” to the Sponsor, such as:

o Amount per hours of service

o Amount per patients enrolled, per procedure, per sample

o Amount per case report form (data) submitted

o Amount per technical report submitted

o Amount per milestone achieved

• Invoicing may or may not be required; any invoicing requirement should be clearly stated in the Sponsored Award.
• Sponsor is not required to pay an additional amount when actual costs of providing the deliverables exceed the agreed price/fee.
• Recipient is required to return “unearned” funds to Sponsor when advance payments are made based on an estimated number of deliverables being provided but the estimated number is not achieved.

Schedule Grant or Contract: Payments are based on an agreed upon payment schedule with set amounts.  Payments are made on a schedule rather than based on actual costs incurred in doing the work. UMB is required to provide the work for that amount, whether the actual costs incurred are greater than or less than the agreed amount. Indicators for a Schedule Grant or Contract include:

• Payments will be made on a specific date without the requirement of a bill.
• Fixed price/fixed fee type award.
• Invoicing may or may not be required, and any invoicing requirement should be clearly stated in the Sponsored Award.
• Sponsor is not required to pay an additional amount when actual costs of providing the deliverables exceeds the agreed price/fee.
• UMB is required to return “unearned” funds to Sponsor when advance payments are made based on an estimated number of deliverables being provided but the estimated number is not achieved.
• UMB is not required to return any funds to Sponsor that UMB received in excess of actual expenses if the deliverable is achieved.

Schedule/Cost Grant or Contract: Payments are made on a schedule rather than based on actual costs incurred in doing the work. However, a final accounting of the actual costs will be required at the end of the award. Any unused funds must be returned to the Sponsor. Indicators for a Schedule/Cost Grant or Contract include:

• Payments will be made on a specific date without the requirement of a bill.
• Cost-reimbursement type award.
• Invoicing may or may not be required and any invoicing requirement should be clearly stated in the Sponsored Award.
• Sponsor is not required to pay an additional amount when actual costs of providing the deliverables exceeds the agreed price/fee.
• Final financial expenditure report will be required, and excess funds must be returned to the Sponsor.
• Expenses “shall not exceed” contractual amount.

Sponsor – An individual, organization, or governmental agency that agrees to fund, either in whole or in part, a UMB project or activity.

Sponsored Award– An externally funded activity that is separately budgeted and accounted for according to the terms and conditions of the award. Sponsored Awards include grants, contracts, and cooperative agreements for research, training, and other public service activities.

Sponsored Project – An externally funded activity that is separately budgeted and accounted for according to the terms and conditions of the award. Sponsored Projects include grants, contracts, and cooperative agreements for research, training, and other public service activities.

Scope and Exceptions

This policy applies to Sponsored Awards received from Sponsors where payments are due to UMB based on Letter of Credit (LOC), Cost, Volume, Milestone, Schedule, or Schedule/Cost billing as determined by the Sponsored Award.

Exceptions to this policy must be approved in writing by the Chief Business and Finance Officer (CBFO). Exception requests should be submitted to the CBFO in the form of a memo that has been signed by the relevant Dean or Dean’s designee (e.g., Associate Dean).

Roles and Responsibilities

Schools/Department Administrators - responsible for working with SPAC Team to initiate Milestone and Volume Billing and to review other billing to ensure that it is reasonable.

SPAC Team - responsible for coordinating the billing for all sponsored awards to ensure the accuracy of the sponsored accounts receivable balance.