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Threshold Change - Sponsored Projects

What is the phased approach for sponsored projects?

EXISTING AWARDS & PROPOSALS approved prior to May 1, 2016  

The $2,000 threshold will continue to apply to existing funding.  The $2,000 threshold will also continue to apply to non-competing renewals.  In addition, funding received in response to proposals with an EGC-1 approval date prior to May 1, 2016 will continue to have the $2,000 threshold apply, even if the award has a start date of 7/1/2016 or later, to accommodate the use of the lower threshold in budgeting.

PROPOSALS FOR NEW, COMPETING RENEWALS & SUPPLEMENTS approved on or after May 1, 2016  

Proposals for new, competing renewal, and supplemental funding with an EGC-1 approval date on or after May 1, 2016 will be subject to the new $5,000 threshold. Budgets submitted with these proposals must categorize items with an acquisition cost of $5,000 or more and a useful life exceeding one year as equipment. Indirect cost (F&A) must be calculated on all non-capital equipment/supplies with an acquisition cost under $5,000.

Why aren’t we implementing all aspects of this change at the same time (July 1, 2016)?

Implementing this change via a phased approach will allow Principal Investigators the opportunity to request funding that reflects the new capitalization threshold when submitting competitive proposals.  If all aspects of this change were implemented on July 1, 2016, sponsored projects would feel an immediate impact. 

Is this change retroactive?

No.  This is effective July 1, 2016.  If you have already submitted a proposal or received an award prior to this date, the threshold remains at $2,000 until a subsequent request for new funds is processed at which time the new threshold.

What is a grandfathered award?

“Grandfathered awards” are those that continue to use the $2000 equipment threshold beyond July 1st.  These come in three categories:

  • Existing funding already at the University
  • Funding received in response to a proposal submitted prior to May 1st (no matter the start date of that funding)
  • Noncompeting renewals (a form of the above)
What indication is there in UW systems that my award is grandfathered?

Starting July 1st, grandfathered award budgets will be identified by grant flag 14 in the FIN budget index.  The grandfathered award budget indicator (grant flag 14) can also be found in the budget profile in MyFD.  See the instructions below to locate the grant flag.

  1. Log into MyFD  http://ucs.admin.uw.edu/MyFD/Home.aspx
  2. Under the reports drop down arrow, select budget profile
  3. In the view budget # field, enter the budget number (no dash)
  4. Scroll down to the Grant section, look at GrantFlag14
  • Grandfathered award – Flag turned on
  • Non-grandfathered award – Flag turned off
The grant flag on a grandfathered award is missing. What should I do?

Contact Grant and Contract Accounting (GCA) through Grant Tracker or at gcahelp@uw.edu.

For more information: http://finance.uw.edu/gca/contacts

I’m working on a proposal and planning to submit it to OSP before May 1, 2016. Can I apply the new $5,000 threshold when preparing my budget?

The University prefers a “bright line” date to use in order to begin using the new threshold in proposal budgets.  Therefore, proposal budgets should continue using the $2000 threshold for submissions prior to May 1st.  If you believe you have a reason to use the new threshold sooner, then please contact OSP at osp@uw.edu with your eGC1 # and your reasoning. 

The University intends to “grandfather in” usage of the $2000 threshold for proposals submitted prior to May 1st, no matter the award start date, so there should not be a negative impact to the budget.

What if I prepared my proposal using the $2000 threshold, for submission before May 1st, but OSP submitted it on May 2nd?

Your award, when it arrives, will be “grandfathered in” using the $2000 threshold.

I am preparing a request for additional funding on my existing award. I am not competing for this funding. Do I use the new or old threshold in my request?

If the request will be submitted to the sponsor before May 1st, use the $2000 threshold.  If the request will be submitted on or after May 1st, use the new $5000 threshold.  When the funding arrives in response to this request, it will be “separated” from the existing award through use of a sub-budget.

When preparing my proposal budget how do I now calculate F&A on a microscope costing $4500?

If the budget is prepared and submitted to the sponsor on or after May 1, 2016, the cost of the microscope must be reflected in supplies (object code 05-40 or 05-41) and included as a direct cost to which F&A will be charged.  For more information on F&A base exclusions, please see GIM 13.

Is there a new object code for equipment purchases ($2,000 - $4,999) for grandfathered awards?

Beginning 7/1/2016, two new object codes will be available for equipment purchases of $2,000 - $4,999 for grandfathered award budgets.  These new object codes will replace the existing “06” object codes for specific equipment purchases with a cost of $2,000 - $4,999. (See the grandfathered award object code chart below)

  • 05-47 non-capitalized equipment ($2,000 - $4,999) – grandfathered awards
  • 05-48 non-capitalized equipment M&E tax exempt ($2,000 - $4,999) – grandfathered awards

I’m using the budget module in Sage for a grandfathered award and the system is charging Facilities & Administrative (F&A) costs to the new “05” object codes. What should I do?

Please check the applied Base Type selected for the budget in question.  The base type determines whether the new “05” codes are excluded from the base and therefore not charged F&A or whether the “05” object code is included in the base and therefore charged F&A.  Possible Base Types include:

  •          Salary and Wages (S&W) – the new “05” object codes are excluded from being charged F&A
  •          Total Direct Cost (TDC) – the new “05” object codes, along with all other direct costs, are charged F&A
  •          Modified Total Direct Cost (MTDC) – the new “05” object codes are excluded from being charged F&A  
  •          Total Direct Cost less Equipment & Tuition (TDC less E&T) – the new “05” object codes are excluded from being charged F&A

You can review the applied Base Type by clicking on the F&A tab of your budget.  The “Change the F&A Rate or Base Type” link below the base type allows you to change the base type if needed. You must provide a justification when you select a custom base type and identify the object codes to which the custom F&A rate should be applied. The F&A rate will be applied to these budget categories only.

How will this change be reflected in the financial system?

The financial system is set up with indirect cost base codes to inform the correct application of F&A.  When F&A is calculated, it is applied to those direct cost object codes that are subject to the F&A base.  The base code for Modified Total Direct Costs (MTDC) will be changed to reflect that equipment costs under $5,000 for grandfathered budgets are not charged F&A.  Only tangible items of personal property (greater or equal to $5,000) that meet the UW definition of equipment should be classified with an object code within the “06” range.  

My lab is heavily involved in fabricating equipment. Will I continue to exclude equipment fabrication costs from the F&A base when the total of those fabrication costs is $5000 or more?

Yes, when equipment fabrication costs total $5000 or more, those costs are excluded from F&A.  Please see the Equipment Inventory Office instructions on equipment fabrication for more details.

This policy will increase the total amount I need to request in my budget. The sponsor’s funding opportunity has a total cost dollar cap and so I now need to reduce other line items. Can I seek an F&A waiver so I can meet the total cost cap?

No, an F&A waiver is not the appropriate method to meet the total cost dollar cap amount.  If your sponsor imposes a total cost dollar cap, you must budget within that cap consistent with University policy.  You may want to consider seeking additional funding to meet your budget needs or reduce the scope of work.

My sponsor is industry and does not indicate which direct costs are to be excluded from the base. Do I still exclude equipment costing $5000 or more?

No.  Unless an industry sponsor specifically publishes which direct costs must be excluded from F&A, you should use Total Direct Costs (TDC) as the base.  For more information, please see GIM 13.

https://www.washington.edu/research/osp/gim/gim13.html

How and when will facilities and administrative (F&A, indirect cost) rate agreements be revised to reflect the equipment threshold change?

The UW’s cognizant federal agency (DHHS) is currently reviewing our disclosure statement and will be providing guidance with the upcoming rate agreement.  We have requested that the new equipment threshold and effective date be added to the equipment section of our F&A rate agreement.

Don’t federal regulations and University policy require that all items on the inventory be physically verified periodically?

The University must exercise proper control over its assets.  Items on the equipment inventory must be physically verified at least once every two years, according to University policy.  Federal regulations require that items that are federally titled must be physically verified at least once a year.

Effective 7/1/2016 the UW will no longer be required to inventory items with a previously acquired value under $5,000 that are still depreciating.