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Processing A Proposed Contract In The Non-Federal Section Of CGA

Page synopsis: This page contains:

    I.    Definition of a contract.

    II.    Forwarding the contract to CGA, and your review of the contract as the PI.

    III.    Review and signature of a contract.

    IV & V.    Review of the terms and conditions and their negotiation.

    V & VI.    Accounts.

    VI & VII.    Account administration.

I. Regardless what the sponsor calls the document, e.g., agreement; memorandum of agreement; letter of agreement; grant agreement; grant, it will be a contract. The definitions of a contract are:

"An agreement between two or more parties, especially one that is written and enforceable by law; The writing or document containing such an agreement." (Excerpted from The American Heritage® Dictionary of the English Language, Third Edition © 1996)
"A promise, or set of promises, for breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty." (Excerpted from The Law Dictionary by Steven H. Gifis, Barron's Educational Series, © 1975)

In short, if MSU and the sponsor exchange a promise(s) then a contract will be formed.

II. If you receive the proposed contract from the prospective sponsor then please immediately forward it to the Office of Contract and Grant Administration (CGA). It is crucial that CGA receive it as soon as possible so that the contract can be entered into the system for review and, if necessary, negotiation. You should have the contract forwarded to the proper Contract and Grant Administrator. Please include the five-digit APP number. You will find the number in the upper right hand corner of the completed transmittal form. If you do not have a copy of the fully processed transmittal and thus do not know the APP number, you can obtain it from the link for "Reference / Proposal Information" on CGA's main Web page.

Some sponsors wish to also have the signature of the Principal Investigator(s) (PI) on the contract, signing as the PI, in addition to the signature by an authorized MSU official. If the contract requires your signature as the PI then prior to signing it you should review the following:

The attached project description or scope of work to ensure it only commits you to the obligations you are willing to assume.
The budget, to ensure it is the budget you require to conduct the project.
The contract terms and conditions to ensure none raise concerns or could be potentially problematic to you or other members of the project team.

Any concerns raised during your review should be discussed with the CGA administrator before you sign the contract as the PI.

Please also provide any information that will allow us to better prioritize, review, and finalize the proposed contract.

CGA will resist any attempt by the sponsor to include the PI as a party to the contract since it can result in creating personal liability for him/her.

III. Upon receiving the contract this section's CGA administrators will enter it into their contract log in order to maintain a record of the contract's receipt and review, and the status of the various actions and steps that may be necessary before the contract should be signed on behalf of the Board of Trustees of MSU. An official with the proper delegated authority received from MSU's president must sign the contract on behalf of MSU. The persons with the authority to sign research and creative endeavor project contracts, and related documents, are the CGA director and assistant director and the four Senior Contract and Grant Administrators.

IV. While there can be many concerns raised in a proposed contract, some of the most critical are noted in a suggested memo you can provide with your proposal to your prospective sponsor. Since this CGA section deals with a variety of sponsors (as its name suggests) this will result in receiving a variety of contracts with a variety of terms and conditions in a variety of formats, even from the same sponsor, e.g., the State of Michigan; an industrial firm with a decentralized contracting process. The resulting lack of a standardized contract may require full negotiations with different personnel of the same sponsor, thus complicating and potentially lengthening the time it takes to finalize a contract.

In addition, some terms and conditions may require us to obtain comments from the PI and various MSU offices, e.g., the Office of Risk Management and Insurance (indemnification clauses and insurance issues); the PI’s department and/or college (potential liability from penalty-default clauses or fixed price contracts), and possibly others, depending on the concerns and issues raised by a proposed contract.

V. During the review of the contract, terms and conditions in conflict with MSU policy, any which are disadvantageous to MSU, or any which will impose an unreasonable or unwarranted liability upon MSU, will be noted for possible negotiation. While some terms and conditions may be addressed internally, e.g., by the PI and the department/college accepting the potential liability or administrative burden, many other terms may need to be negotiated, particularly if those terms and conditions are in conflict with MSU policy or procedures or MSU’s status as a constitutionally created public university of the State of Michigan. CGA will contact the sponsor in order to negotiate acceptable terms and conditions if concerns and issues raised by those terms and conditions are not, or can not be, resolved internally. Depending upon the terms and conditions and whether the PI’s college participates, an advance account may be assigned. Otherwise, a hardship account may be an option for the PI.

VI. Once the contract is acceptable a signature by an authorized MSU official will be obtained. If the contract was signed on behalf of the sponsor prior to the contract arriving at MSU, thus now being fully executed, it can then be processed into an account. Depending on the restrictions governing the administration of the funding the PI may receive a restricted account ("61" series) or a "one project" unrestricted account ("71" series). In addition, if the contract is unrestricted and the PI has a general research account ("71" series) it may be processed into that account.

If the sponsor must still sign the contract then this office will forward all originals of the contract to the sponsor by regular U.S. mail. Once the fully executed contract is returned to this office by the sponsor an account will be established. This office will provide a PDF copy of the fully executed contract to the PI and her/his department with the e-mail message providing notification of the account number.

VII. The account will be administered subject only to the restrictions agreed to in the contract and the implementation of the rules contained in the MSU Manual for Business Procedures.

JFS 29 Nov. 2005