1. F&A Negotiations Leading Excellence in Research Costing Practices Conference October 13 - 15, 2015 Mariana Traetta, University of Kansas Brian Bertlshofer, UNC Chapel Hill Shelly Benson, University of Illinois – Urbana-Champaign Adrienne Clifton, MAXIMUS

2. 2 Learning Objectives  CAS & ONR Contact Information  Understanding the Negotiation Process  Summary of University Experiences  Negotiation Experience & Issues  DS-2 Update

3. 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. 4 Cost Allocation Services (CAS)  Electronic Submission of F&A & Fringe Proposals  25MB email limit, may have to send Financial Statements and the F&A Proposal separately if you reach the limit.  Submit to:  CAS-SF@psc.hhs.gov CAS-SF@psc.hhs.gov  CAS-Dallas@psc.hhs.gov CAS-Dallas@psc.hhs.gov  CAS-Bethesda@psc.hhs.gov CAS-Bethesda@psc.hhs.gov  CAS-NY@psc.hhs.gov CAS-NY@psc.hhs.gov

5. 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. 6 The Negotiation Process  F&A Proposals are due 6 months after your fiscal year end  FYE June 30 th, due December 31 st  FYE August 31 st, due February 28 th  If you need an additional 90 days to complete your proposal, you can request an extension by emailing the CAS Branch Chief:  Patrick.Smith@psc.hhs.gov Patrick.Smith@psc.hhs.gov  Matthew.Dito@psc.hhs.gov Matthew.Dito@psc.hhs.gov  Steven.Zuraf@psc.hhs.gov Steven.Zuraf@psc.hhs.gov  Louis.Martillotti@psc.hhs.gov Louis.Martillotti@psc.hhs.gov  Or by contacting Linda Shipp from ONR:  Linda.shipp@navy.mil or 703-696-8559 Linda.shipp@navy.mil

7. 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 6 months to 12 months and beyond

8. 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. 9 Things to Consider Before the Negotiation  What is your actual rate of recovery for Organized Research?  What is one OR point worth?  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

10. 10 FY14 Base OR - $66M OSA - $25M Current Rates OR – 50.0% OSA – 33.0% Proposed Rates OR - 55.3% (plus 2.2%- 2.9% projection) UCA –.67% OSA – 34.3%

11. 11 Space Inventory & Space Survey conducted annuallyMTDC Threshold: $500K40 Departments SurveyedAlternative Space Methodology Used

12. 12 Submitted March 2015 Status of Submission In Process Negotiation Process Electronic versus Paper Negotiations Issues

13. 13 Negotiation Questions: Standard CAS Request Vacant Space Recon 1 Research Buildings Equity Ratio

14. 14 Utility Cost Adjustment (UCA) Room Types Included: Research Lab and Research Lab Service Animal Quarters No follow up questions, so far.

15. 15 Disclosure Statement (DS-2) Update In-Process: To be submitted. Updates mostly UG related.

16. 16 FY14 Base OR - $356M OSA - $75M Current Rates OR – 52.0% OSA – 36.0% Proposed Rates OR – 61.0% UCA – 1.0% OSA – 36.5%

17. 17 S&W Threshold: OR S&W of $500K179 Departments Surveyed60 Reviewed plus Lab Animal Space (DLAM)

18. 18 Alternative Space Methodology: Surveyed Research Labs and Support RoomsSpace Ownership Verified by DepartmentsThree New Research Buildings Since 2010

19. 19 Submitted July 2015 Status of Submission Awaiting Data Request Preparing for Expected Data Request Items: Service Centers Subcontracts >$25K Reconciliations Negotiation Process

20. 20 Utility Cost Adjustment (UCA) Room Types Included: Research Lab and Research Lab Service Greenhouse Space No follow up questions, so far.

21. 21 Disclosure Statement (DS-2) Update In-Process: Updates for UG and F&A Proposal Changes plus recent Financial System Change

22. 22 FY14 Base OR - $246M OSA - $64M Current Rates OR – 58.6% OSA – 25.4% Proposed Rates OR – 63.4% (plus.37% for projection) UCA – 1.3% (.54% actual calculation) OSA – 31.4%

23. 23 DRU MTDC Threshold: OR >= $2M and INST < $250K MRU MTDC Threshold: OR >= $1M and INST > $250K41 Departments SurveyedAlternative Space Methodology Used

24. 24 Submitted February 2015 Status of Submission Audit in Process Negotiation Process Electronic versus Paper Buildings going Off-Line Negotiations Issues

25. 25 Audit/Negotiation Questions: Many audit requests (DCAA) Library, College Admin, DCE/DA, Space Surveys, Fringe Benefit Distributions, Buildings, Allocations, and more. Sample sizes larger/short timelines Internal controls Three auditors/audits at same time

26. 26 Utility Cost Adjustment (UCA) Room Types Included: Research Lab and Research Lab Service Greenhouse Space No follow up questions, so far.

27. 27 Disclosure Statement (DS-2) Version 3 (effective 7/1/07) – not audited Version 4 (effective 7/1/10) – not audited Version 5: Updated for UG and F&A Proposal Changes (previously had 24% administrative allowance) Few cleanup items left, ONR not ready for it to be submitted, waiting on new form to submit

28. F&A Negotiations Leading Excellence in Research Costing Practices Conference October 13 - 15, 2015 Mariana Traetta, University of Kansas Brian Bertlshofer, UNC Chapel Hill Shelly Benson, University of Illinois – Urbana-Champaign Adrienne Clifton, MAXIMUS Questions Comments Thank You!!