Research Policies & Fees:
Fixed Price Agreements – Special Instructions for Budgeting

As part of the Contracting Demonstration Project to streamline the contracting of industry-sponsored clinical trials, the Medical School Office of Research has engaged ORSP (formerly DRDA) and Financial Operations in conversations about the inclusion of internal budgets as part of the official University file – specifically for sponsored fixed price or capitated agreements.

We have agreed it is the fiscal responsibility of the department to ensure that the use of capitated/fixed payments are accurately budgeted and expended to the benefit of the project.  In order to recognize where that responsibility lies and to reduce the administrative burden of responding to other campus units, ORSP, Fin Ops, and the Medical School Office of Research will not require review of an internal budget.

Effective immediately, these agreements will be reviewed based on the draft agreement and protocol attached to the Proposal Approval Form (PAF) in the eResearch Proposal Management (eRPM) system.  However, departments are strongly advised to create a culture where a protocol budget is formulated by the project team and then evaluated for feasibility at the chair level before authorizing the protocol and draft agreement to go forward in the eRPM system.

Further information provided through the departments and administrative structure advising how dollars should be described on the eRPM PAF, as well as best practices in reviewing the financial obligations, are included below.

 

Specific Instructions and Principles Regarding Fixed Price / Capitated Payments

Departments are advised to evaluate a full cost budget of the protocol prior to PAF approval.  Reviewing for:

  • Accuracy of costs based on the protocol requirements and institutional cost structure
  • Reasonableness of effort budgeted for the time period
  • Margin of needed finances for institutional costs v. the amount the sponsor is willing to pay under the contract


Complete the PAF using the following bullet points as a guide:

  • Attach to the PAF only the draft version of the contract and the protocol.  No internal expense budget should be attached.
  • The correct IDC rate should be listed on the PAF
  • Brief notes may be added to the PAF budget notes section (or an attachment may be uploaded under the internal documents section) that explains the estimated contract recovery – based on number of enrollees, clinical services provided, or start-up costs included.  This will be similar to what has been historically referred to as the “Revenue” representation on the internal budget.
  • The DC / IDC split of the revenue amount may be added to the PAF project dollars as well as Initial Budget period.  For help with the calculation, feel free to contact the Grants Office (msgrants@umich.edu).  These figures are captured for school data purposes. IF the unit chooses not to fill out for fixed price agreements, we will complete on the unit’s behalf at the Medical School.
  • If the department chooses, you may also capture effort related to the Key Personnel for data use on the PAF in the personnel section, but these numbers will not be validated by any unit in the review process past the Department level.


As we continue reviewing the clinical trials process and introducing measures to streamline the contracting process, further instructions on completion of the use of the system, PAF, and routing may be issued.

posted October 2011