Policy RA04 MAKING REVISIONS TO BUDGETS AND PROGRAM PLANS ON FEDERALLY SPONSORED PROJECTS

Contents:

  • Purpose
  • Definition - The Budget Plan
  • Agency Prior Approval Requirements
  • Expanded Authorities
  • Federal Demonstration Partnership
  • Additional Restrictions or Limitations
  • Construction Awards
  • Combined Construction and Nonconstruction Projects
  • Notification of Potential Cost Overruns
  • Format of Budget Revisions
  • Agency Reaction to Request
  • Cross References

  • PURPOSE:

    To detail the actions needed to make revisions to the budgets and program plans of Federally sponsored grant projects. These guidelines are governed by OMB Circular A-110. University personnel are instructed to consult the version of A-110 applicable to their award before making final decisions.

    DEFINITION - THE BUDGET PLAN:

    The budget plan is the financial expression of the project or program as approved during the award process. It may include either the Federal and non Federal share, or only the Federal share, depending upon Federal awarding agency requirements. It shall be related to performance for program evaluation purposes whenever appropriate.

    AGENCY PRIOR APPROVAL REQUIREMENTS:

    The Principal Investigator or Project Director (PI/PD) of a federally sponsored project is required to report deviations from budget and program plans, and request prior approvals for budget and program plan revisions, in accordance with these guidelines. All such reports or requests must be processed through the Office of Sponsored Programs and countersigned by an authorized official of the University.

    For nonconstruction awards, PI/PD's shall request prior approvals from Federal awarding agencies for one or more of the following program or budget related reasons:

    1. Change in the scope or objectives of the project or program (even if there is no associated budget revision requiring prior written approval).
    2. Change in a key person specified in the application or award document.
    3. The absence for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator.
    4. The need for additional Federal funding.
    5. The transfer of amounts budgeted for facilities and administrative (F & A) costs (formerly referred to as "indirect costs") to absorb increases in direct costs, or vice versa, if approval is required by the Federal awarding agency.
    6. The inclusion, unless waived by the Federal awarding agency, of costs that require prior approval in accordance with OMB Circular A-21, "Cost Principles for Institutions of Higher Education."
    7. The transfer of funds allotted for training allowances (direct payment to trainees) to other categories of expense.
    8. Unless described in the application and funded in the approved awards, the subaward, transfer or subcontracting out of any work under an award. (This provision does not apply to the purchase of supplies, material, equipment or general support services.)

    NOTE: No other prior approval requirements for specific items are to be imposed by Federal agencies upon universities unless a deviation has been approved by OMB. However, PI/PD's are advised to review carefully the terms of the specific grant award and the agency's guidelines prior to making any changes to the budget or program plans.

    EXPANDED AUTHORITIES:

    Except for requirements listed in paragraphs 1 through 4 above, Federal awarding agencies are authorized, at their option, to waive cost related and administrative prior written approvals required by OMB Circular A-110 and OMB Circular A-21. Thus, many agencies, through the implementation of OMB Circular A-110 in their sections of the Code of Federal Regulations (CFR) or in their agency guidelines, have granted universities expanded authorities to approve budget and program revisions.

    For awards that support research the expanded authorities described below (items 1 through 3, below) are automatically granted to universities (i.e., unless the Federal awarding agency specifically retracts the authorities in the award or in their guidelines, or unless one of the conditions included in item (2) below applies, the "default condition" is that universities have the authority to approve the changes internally).

    Such expanded authority may include authorizing universities to do any one or more of the following:

    1. Incur pre award costs 90 calendar days prior to award or more than 90 calendar days with the prior approval of the Federal awarding agency. All pre award costs are incurred at the University's risk (i.e., the Federal awarding agency is under no obligation to reimburse such costs if for any reason the University does not receive an award or if the award is less than anticipated and inadequate to cover such costs).

    2. Initiate a one time extension of the expiration date of the award of up to 12 months unless one or more of the following conditions apply.

    a. The terms and conditions of award prohibit the extension.

    b. The extension requires additional Federal funds.

    c. The extension involves any change in the approved objectives or scope of the project.

    For one time extensions, the University must notify the Federal awarding agency in writing with the supporting reasons and revised expiration date at least 10 days before the expiration date specified in the award. This one time extension may not be exercised merely for the purpose of using unobligated balances.

    3. Carry forward unobligated balances to subsequent funding periods. The University implements its expanded authorities through the project modification procedure.

    FEDERAL DEMONSTRATION PARTNERSHIP:

    Penn State is a member of the Federal Demonstration Partnership (FDP), which has developed Research Terms and Conditions that tend to be more favorable to universities than most terms and conditions issued by non-FDP agencies.  The following agencies are members of FDP:

  • National Science Foundation (NSF),
  • National Institutes of Health (NIH),
  • Office of Naval Research (ONR),
  • Department of Agriculture (USDA),
  • Air Force Office of Scientific Research (AFOSR),
  • Army Research Office (ARO),
  • Army Medical Research & Material Command (AMRMC),
  • National Aeronautics & Space Administration (NASA),
  • Environmental Protection Agency (EPA), and
  • Department of Homeland Security.
  • The award document from the appropriate federal agency must specify that FDP Research Terms and Conditions apply in order to utilize them. In addition, these members have agency- specific terms and conditions that apply to their grants. Current FDP terms and conditions and agency-specific terms and conditions may be found at: http://www.nsf.gov/awards/managing/rtc.jsp.

    ADDITIONAL RESTRICTIONS OR LIMITATIONS:

    The Federal awarding agency may, at its option, restrict the transfer of funds among direct cost categories or programs, functions and activities for awards in which the Federal share of the project exceeds $100,000 and the cumulative amount of such transfers exceeds or is expected to exceed 10 percent of the total budget as last approved by the Federal awarding agency.

    No Federal awarding agency shall permit a transfer that would cause any Federal appropriation or part thereof to be used for purposes other than those consistent with the original intent of the appropriation.

    All other changes to nonconstruction budgets, except for the changes described in "Combined Construction and Nonconstruction Projects" section below , do not require prior approval.

    PI/PD's are instructed to consult the terms of their award and the agency's guidelines in order to ascertain their agency's policy regarding these additional restrictions or limitations.

    CONSTRUCTION AWARDS:

    For construction awards, the University shall request prior written approval promptly from Federal awarding agencies for budget revisions whenever one of the following apply:

    1. The revision results from changes in the scope or the objective of the project or program.
    2. The need arises for additional Federal funds to complete the project.
    3. A revision is desired which involves specific costs for which prior written approval requirements may be imposed consistent with the cost principles established in OMB Circular A-21.

    NOTE: No other prior approval requirements for specific items are to be imposed by Federal agencies upon universities unless a deviation has been approved by OMB. However, PI/PD's are advised to review carefully the terms of the specific grant award and the agency's guidelines prior to making any changes to the budget or program plans.

    COMBINED CONSTRUCTION AND NONCONSTRUCTION PROJECTS:

    When a Federal awarding agency makes an award that provides support for both construction and nonconstruction work, the Federal awarding agency may require the University to request prior approval from the Federal awarding agency before making any fund or budget transfers between the two types of work supported.

    NOTIFICATION OF POTENTIAL COST OVERRUNS:

    For both construction and nonconstruction awards, PI/PD's are required to notify the Federal awarding agency in writing promptly whenever the amount of Federal authorized funds is expected to exceed the needs of the University for the project period by more than $5,000 or five percent of the Federal award, whichever is greater. This notification shall not be required if an application for additional funding is submitted for a continuation award.

    FORMAT OF BUDGET REVISIONS:

    When requesting approval for budget revisions, the University shall use the budget forms that were used in the application unless the Federal awarding agency indicates a letter of request suffices.

    AGENCY REACTION TO REQUEST:

    Within 30 calendar days from the date of receipt of the request for budget revisions, Federal awarding agencies shall review the request and notify the University whether the budget revisions have been approved. If the revision is still under consideration at the end of 30 calendar days, the Federal awarding agency shall inform the University in writing of the date when the University may expect the decision. PI/PD's should monitor agency responsiveness.

    CROSS REFERENCES:

    Other Policies in this Manual may apply, especially:

    RA03 - Preparing Budgets (Cost Estimates) for Sponsored Projects.


    Effective Date: February 20, 1998
    Date Approved: February 10, 1997
    Date Published: March 02, 1998 (Editorial changes February 24, 2010)

    Most recent changes:

    Revision History (and effective dates):

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