Follow that URL – Grant (SBIR and STTR) Recipients Need to Read

With the increasing use of e-mail and other electronic means of delivering grant documents, more and more the terms and conditions associated with a grant award come in the form of URL links embedded in the electronic documents that are sent.  These links are critical to documenting and understanding ALL the requirements you as a grant recipient must meet.

One of the first things a grant awardee needs to do when the notice of award is received is to generate a complete record of the proposed agreement (keep in mind until you either sign the agreement, draw down the first dollar, or otherwise indicate acceptance of he terms and conditions, the agreement is a proposal – you can negotiate (or try to) modifications of the agreement.  A complete record of the agreement should include a download or print out of all the items referenced by URL (website addresses).  The documentation of the agreement as of the time period of award is key, because documents get changed, moved, etc.

Another reason to follow the URLs is that you really do need to read the agreements.  What was in a previous agreement may be different from how the agency is now doing business, you may be dealing with a different agency, or any number of other factors may come into play.  Making assumptions about what you “know” about your grant terms and conditions can result in some significant compliance and business issues.

It is important to remember that responsibility for compliance rests not only with the “company” but also with the principal investigator and owners, officers, and anyone else in the organization who could be viewed as a responsible party for compliance and business operations.  The accountability and responsibility cannot be shifted to your accountant, lawyer, or any other person in an advisory capacity.  You may have recourse against someone for advice given, but the government is going to hold the recipient company accountable first and foremost.

As a grant recipient, your organization needs to understand that the administrative and financial terms and conditions are of equal importance to the success of the grant as the project scope and the programmatic requirements,  In reading the award notice and proposed agreement, you need to read for the meaning of individual clauses AND how they interconnect and relate.

Often an award document says you don’t have to do “X” IF you meet the certain conditions.  Fail to meet one of those stated conditions and now you have to do “X”.

Frequently there are reporting requirements and other administrative processes the award requires embedded in the original program legislation and the grant announcements.  By submitting the application for the grant and then accepting the funds, you have agreed to those terms and conditions.  Those program requirements usually rise to the level of statutory requirements – they are laws, not merely guidelines or interpretations AND some of them have intellectual property impact.

Other frequently misunderstood areas which subsequently create issues are things such as “allowable” costs.  The cost principles and other guidance that apply to a particular award include lists of the standard “unallowables” and conditionally “allowable” items.  Understanding that list and the items under those categories is an excellent starting point for every recipient, but it isn’t enough.  Gaining an understanding of the “allowability” rules for making determinations is where the organization needs to be.

Allowability is a critical concept.  Simply checking the list of unallowable costs incorporated in your terms and conditions won’t guarantee the costs you are charging to a particular grant are or stay allowable.  Organizations can quickly find that costs which are technically allowable are disallowed by not following the proper procedures for recordkeeping, procurement, and timekeeping.

Every aspect of the grant program – from announcement to the award notice and agreement – determines what performance is required and expected of your organization.  The entirety of the agreement and the conditions are arguably more important as the individual clauses about specific activity.  Why?  Because a breach of terms and conditions in one area of the agreement can (and often does) move your organization into an entirely different category of performance requirements – a higher risk category.

So whenever you make the decision and commit the effort to pursuing a grant, be sure you understand ALL the requirements your organization will need to meet.  This includes whether your organization is truly eligible to pursue the grant to the intellectual property and business systems impacts.

Read every grant in its entirety, every time.  Follow the URLs that are in the grant documents.  Make a hardcopy and/or an electronic copy for your files.  In the event of an audit, you will want the documents that were relevant to your grant, not the ones which may be on-line at the time of the audit.

As the government moves to more streamlined, consolidated, and electronic practices, it becomes increasingly important that you document your understanding of the agreement.  If you need to ask for clarification or guidance on a particular point, do so, AND GET IT IN WRITING from an authorized contract official.  Only things which are in writing by someone with the proper authority count.

Grants are fabulous opportunities to cover costs of proof of concept and development for projects you would normally undertake.  Grants are not meant to be the sole source of funding for a business or a project.  If your business is starting out 100% or nearly 100% grant funded, then it is even more critical to understand the requirements and exclusions created by acceptance of federal (and/or state) funds.

While you may view all the activity in your business as grant related because you are “only” working on grant projects, the government will be unlikely to take the same perspective.  By their nature and existence, commercial entities will always have business expenses which are either unallowable or only proportionately allocable to a grant.  Understanding that distinction from the beginning will go a long way toward staying compliant with your grant agreements.

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