1. Leading Excellence in Research Costing Practices
F&A Negotiations
Lupe Valencia, University of Washington
Shelly Benson, University of Illinois – Urbana-Champaign
Shannon Fisher, Kansas State University
Mira L. Levine, MAXIMUS
Adrienne Clifton, MAXIMUS
Leading Excellence in Research Costing Practices
General Conference: 11/2 – 11/4, 2016

2. Learning Objectives
CAS & ONR Contact Information
Understanding the Negotiation Process
Summary of University Experiences
Negotiation Experience & Issues
DS-2 Update
Things to review before the submission and before the negotiation

3. Cost Allocation Services (CAS)
Formerly known as the Division of Cost Allocation Services (DCA)
Four regional offices in New York, NY, Bethesda, MD, Dallas, TX, and San Francisco, CA
Negotiates the majority of Universities

4. Cost Allocation Services (CAS)
Electronic Submission of F&A & Fringe Proposals
25MB limit, may have to send Financial Statements and the F&A Proposal separately if you reach the limit.
Submit to:

5. Office of Naval Research (ONR)
Defense Contract Audit Agency (DCAA) conducts the audit of the F&A Cost Rate Proposal
ONR conducts the negotiation
Negotiates for 45 Universities
Electronic Submission is currently not available

6. The Negotiation Process
F&A Proposals are due 6 months after your fiscal year end
FYE June 30th, due December 31st
FYE August 31st, due February 28th
If you need an additional 90 days to complete your proposal, you can request an extension by ing the CAS Branch Chief:
Or by contacting Linda Shipp from ONR: or

7. The Negotiation Process
Once proposals are submitted, you should receive notice of receipt.
For CAS, proposal reviews are on a first in, first out basis.
Will receive 2-3 rounds of data request/questions
May or may not include a site visit to validate space and equipment
Phone negotiation (after site visit)
New rates established 12 months and beyond

8. The Negotiation Process
Once proposals are submitted, you should receive notice of receipt.
For ONR, they will send the proposal to DCAA so they can begin their audit.
DCAA will have numerous requests
DCAA will typically have multiple on-site visits (entrance conference, equipment validation, space validation, exit conference)
ONR will come on-site for the negotiation
New rates established 6 months to 12 months and beyond

9. W W FY13 Base Current Rates Proposed Rates OR - $352M OSA - $24M OR –
UNIVERSITY of WASHINGTON
FY13 Base
OR - $352M
OSA - $24M
Current Rates
OR –
FY %
FY 18 55%
FY %
OSA – 37%
Proposed Rates
OR – 55.87% includes 1.3% UCA
OSA – 38.48% W

10. W W Space inventory conducted prior to and during base year
UNIVERSITY of WASHINGTON
Space inventory conducted prior to and during base year
Space survey only conducted every base year
100 departments surveyed, additional reviews conducted based on varying MTDC thresholds and/or lab space ASF W

11. W Status of Submission Negotiation Process Negotiations Issues
UNIVERSITY of WASHINGTON
Submitted November 2014
Status of Submission
Completed May 2016
Negotiation Process
New buildings coming online
Specialty rate related
Negotiations Issues W

12. W Negotiation Questions: Standard CAS request Building component lives
UNIVERSITY of WASHINGTON
Negotiation Questions:
Standard CAS request
Building component lives
Department paid O&M
O&M expensed vs. capitalized W

13. W Utility Cost Adjustment (UCA)
UNIVERSITY of WASHINGTON
Utility Cost Adjustment (UCA)
Automatically granted 1.3% UCA for base year 2013 W

14. W Disclosure Statement (DS-2)
UNIVERSITY of WASHINGTON
Disclosure Statement (DS-2)
Updates Submitted: Mostly UG related. Pending final discussions. W

15. FY14 Base
OR - $247M
Inst – $433M
OSA - $64M
Current Rates
OR – 58.6%
Inst – 45.8%
OSA – 25.4%, 28.6%, 31.9%
Proposed Rates
OR – 63.4% (plus .37% for projection)
UCA – 1.3% (.54% actual calculation)
Inst – 45.4%
OSA – 31.4%

16. DRU MTDC Threshold: OR >= $2M and INST < $250K
MRU MTDC Threshold: OR >= $1M and INST > $250K
41 Departments Surveyed
Alternative Space Methodology Used

17. Negotiated Rates June 28, 2016 Submitted February 2015
Status of Submission
Submitted February 2015
Negotiation Process
Negotiated Rates June 28, 2016
Negotiations Issues
Electronic versus Paper
Buildings going Off-Line
College Administration

18. Audit/Negotiation Questions:
Many audit requests (DCAA)
Library, College Admin, Dept Admin, Space Surveys, Fringe Benefit Distributions, Buildings, Allocations, O&M, Service Rates, projections, effort cost share, depreciation, and more.
Sample sizes larger/short timelines
Internal controls
Three auditors/audits at same time

19. Utility Cost Adjustment (UCA)
Room Types Included:
Research Lab and Research Lab Service
Greenhouse Space
Automatically granted 1.3% UCA for 2014 base year only.

20. Disclosure Statement (DS-2)
Version 3 (effective 7/1/07) – not audited
Version 4 (effective 7/1/10) – not audited
Version 5: (effective 10/1/13) – Updated for change in Library organization structure, related cost pools and allocations
Version 6: (effective 7/1/16) – Updated for UG and move from 24% Admin Allowance to 26% Admin CAP

21. FY15 Base
OR - $43.1M
OSA - $29.2M
AG - $39.9M
Current Rates
OR – 50%
OSA – 35%
AG – 43%
Proposed Rates
OR – 56.8%
UCA – 1.16%
OSA – 35.21%
AG – 46.31%

22. Have used departmental S&W’s the last three cycles
No campus-wide space survey
Functional use of space based on S&W
Have used departmental S&W’s the last three cycles

23. Biosecurity Research Institute (BSL-3, BSL3Ag building)
Surveyed Research Labs and Support Rooms in
Biosecurity Research Institute (BSL-3, BSL3Ag building)
Space Ownership Verified by Departments
Acquired One New Research Building, Other Major Renovations Since 2010

24. Additional data requested in July Initial rate offer in October
Status of Submission
Submitted March 28, 2016
Negotiation Process
Additional data requested in July
Initial rate offer in October
Negotiations on-going

25. Utility Cost Adjustment (UCA)
Room Types Included:
Research Lab and Research Lab Service
Greenhouse Space
No follow up questions, so far.

26. Disclosure Statement (DS-2)
Updated and submitted April 2016: Updated for UG and F&A Proposal Changes

27. Things to Review Before the Submission
Financial Statement Comparison

28. Things to Review Before the Submission
Cost Group Comparison

29. Things to Review Before the Submission
Space ASF Comparison

30. Things to Review Before the Submission
Research Component Comparison

31. Things to Review Before the Submission
Effective Rate of Recovery

32. Things to Review Before the Submission
What a point is worth

33. Things to Consider Before the Negotiation
How many years should you negotiate for?
3-4 years is typical
Do you have any new research intensive buildings coming on-line?
Other factors: new financial system, staff retiring, etc…
Would you prefer a fixed or stepped rate adjustment?
Good
Negotiator

34. Leading Excellence in Research Costing Practices
Questions
Comments
Thank You!!
F&A Negotiations
Lupe Valencia, University of Washington
Shelly Benson, University of Illinois – Urbana-Champaign
Shannon Fisher, Kansas State University
Mira L. Levine, MAXIMUS
Adrienne Clifton, MAXIMUS
Leading Excellence in Research Costing Practices
General Conference: 11/2 – 11/4, 2016