Someone once said, "If you hate difference, you will be bored to death." There is certainly no chance of boredom in the world of research administration because "difference" is a daily reality. Award mechanisms come in all shapes and sizes and most often with their own set of rules for management. Your last project might have been funded with a National Science Foundation grant (assistance/grant mechanism). The project before that one might have been funded with a federal contract (acquisition/procurement mechanism). Perhaps you have been hired to provide specific services that provide a deliverable that is based on a set fee or a published rate (fee-for-service mechanism). Each of these funding approaches has a personality of its own. Knowing the differences among them, and ultimately embracing these differences, is extremely important to the overall health and well-being of your project.
Michigan State's Manual of Business Procedures, Section 315 (revised March 2015) is an excellent resource for understanding the differences between the various award types. We encourage you to spend a few minutes reviewing the Manual to familiarize yourself with these different mechanisms. It is likely that, at some point in time, your research or the projects you are administrating will be funded multiple times by one or more funding mechanisms.
This topic is far too complex to discuss exhaustively in this newsletter, but we can begin with a few simple definitions:
- Grant – The transfer of a thing of value where substantial involvement by the granting agency is not expected; typically for the public good.
- Cooperative Agreement – The transfer of a thing of value where substantial involvement by the granting agency is expected (greater agency control).
- Contract – The acquisition by purchase, lease, or barter, property or services. A contract is a mutually binding legal relationship obligating the seller to furnish supplies or services and the buyer to pay for them.
- Gift – The transfer funds or property without any valuable consideration or compensation to the donor.
- Fee-for-Service – The request for a deliverable using known practical applications of standard procedures using special or unique MSU research capabilities and typically involves a set fee or a published rate that is routinely charged to all potential customers.
Each mechanism is unique to the mission and benefit of the funding agency and reflects differently on things such as cost, publication/data review, scope of work, and value exchange. For example, a gift probably would not require a review of publications or data, but a grant or a contract may place restrictions on how those items are handled before being made available to the public. A grant might allow the title of equipment to be vested with MSU, but a Federal contract, typically, would not. There may be no restrictive terms or conditions associated with a gift funding your project, but a Federal grant would be governed by 2 CFR 200 and agency specific terms and conditions, and a Federal contract would be subject to another set of rules entirely -- the famous Federal Acquisition Regulations (FAR).
Sometimes determining the nature of an activity, such as determining if a project nature and mechanism is actually a fee-for-service rather than a research/scholarship or sponsored project, can be an arduous process. Grants, cooperative agreements and contracts are fairly straight forward. But, in the case of fee-for-service it can be a bit more complicated. Section 315, Article 9 of the Manual of Business Procedures provides an excellent set of guidelines designed to help MSU investigators understand the differences between sponsored project activities and fee-for-service projects.
"Research and Scholarship Projects, Other Sponsored Project Activities" is work which the University conducts to uncover new and different trends or facts leading to a discovery. The pathway to discovery and the creativity of new ideas is in the hands of a principal investigator and other University employees and usually starts as a proposal which outlines a promising area of inquiry. Such work is an investigation aimed at the discovery and interpretation of facts, revision of accepted theories in light of new facts, development of new analytical and experimental protocols, or practical applications of such new theories, analysis, data gathering and experiments.
"Fee-for-Service Project" is work where the deliverable requested is generated using known practical applications of standard procedures and established theories, methods and standard experiments. Another form of fee-for-service is work for which the company provides a detailed protocol for the project, which must be performed as received by the university. The results of such work are of specific interest to the sponsor and may involve off-the-shelf tools and established protocols. Fee-for-service projects do not include novel analyses or interpretation of data sets, and the deliverables are limited to the results generated using the standard procedures, established theories, methods and experiments utilized in the performance of the work.
Based on these definitions, the following questions should be asked for clarification and the corresponding determination should be considered:
| Question | If "yes," this is probably |
| Is MSU executing a protocol (statement of work) that was created primarily by the company, and is MSU expected to follow that protocol without variation? |
Fee-for-Service, except Clinical Trials |
| Is the work restricted to the performance of previously published methods that are routinely executed by MSU and/or to methods prepared by the company and for which standardized pricing is typically appropriate? |
Fee-for-Service |
| Will the investigator develop any new methods to generate data for the project? |
Research, Scholarship/Sponsored Project |
| Is the work testing an hypothesis generated by an MSU investigator? |
Research, Scholarship/Sponsored Project |
| Will the investigator analyze the data generated and draw conclusions from those data that will not be used in research but will be used for outreach or extension projects or reports used for such purposes? |
Fee-for-Service |
| Will the investigator use the data generated to recommend additional studies or “next steps?” |
Research, Scholarship/Sponsored Project |
Just as Fee-for-Service agreements are distinguished from Research agreements, sponsored projects are set apart from gifts. MSU receives funding from a wide variety of sponsors, the vast majority of which would be considered sponsored projects. In some cases, funds may come from a non-governmental agency in which there are no technical reporting requirements and the nature of the award mechanism needs to be considered. In this case the following questions would help make a determination:
| Gifts | Sponsored Project |
| Is the work restricted to the performance of previously published methods that are routinely executed by MSU and/or to methods prepared by the company and for which standardized pricing is typically appropriate? |
Funding for a project provided by an external sponsor that typically has defined expectations for activities (whether research, scholarly activity, training, instruction and instructional design, etc.) |
| Funding does not originate from a government agency. |
Funding may originate from government agencies, as well as from corporations, associations, and foundations. |
| Funding for a general or specific purpose, within a general area of work. |
Funding based on a specific statement of work as stipulated in the agreement conveying the award. The sponsor may also predetermine it. |
| Deliverables typically limited to (at most) reports as noted below, plus use of funds as generally requested and awarded. |
Deliverables defined by agreement, e.g., reports, results, IP rights, services, training, equipment prototypes, specific start and end dates, etc. |
| Pre-approval of expenditures not required unless a change in circumstances requires the University to revisit the purpose of the gift with the donor. |
Certain expenditures may require prior approval by the sponsor. |
| No requirement for return of unexpended funds. |
Funder may (or may not) require that unexpended funds be returned if funds are not approved to be carried forward to extend the project. |
| No technical reports required. Non-technical reports are recommended as a courtesy. |
May require technical, quarterly or annual progress reports, and detailed financial reports. May also include right of sponsor to audit project. |
| No restriction on publication rights. Acknowledgement of donor support in publication is recommended as a courtesy. |
Sponsor requires or restricts acknowledgement of support in publications. May request/require minor publication delays. |
This snapshot of the variety of award mechanisms illustrates that just as the nature of each project varies, so do the rules and mechanisms that fund them. The fact that you have a grant, a contract, a gift, or a fee-for-service agreement really does matter. This is why the Office of Sponsored Programs (OSP) and Contract and Grant Administration (CGA) play such an important role on campus. “Different” is a daily reality for us and we are here to help with understanding those differences. We look forward to partnering with you administratively to ensure that your award is understood and managed efficiently and accurately.
Note: Section 315 of the Manual of Business Procedures includes the most up-to-date and accurate information related to Sponsored Projects, Fee-for-Service, and Gifts.
Questions?
Contact ContractTeam1@osp.msu.edu OR ContractTeam2@osp.msu.edu
