Fixed Price Contract

Sponsored Program Procedure for Balances on Fixed Price Contracts.

Administrative Procedure A10.3

Effective: February 26, 1988

Responsible Administrative Office: Sponsored Programs Accounting & Compliance

Purpose

The purpose of this statement is to set forth policy and procedures to ensure timely closure of completed, fixed price contracts and the proper disposition of any unexpended balances.

Policy

• "Fixed price contracts" referred to here are characterized by payments of predetermined amounts by a sponsor to support a project. The payments are either lump-sum or periodic and may or may not require a payment request from UMCP. The payments are not on an expense reimbursement basis but on a predetermined lump-sum project cost, without further accounting.
• Therefore, if the project costs are actually less than the award, the excess revenue is retained by UMCP. Cost overruns exceeding $50 will be assumed by the department, college, or central campus funds (if the sponsor does not provide the needed additional funding).
• Following positive indications of contract completion, unspent on Fixed Price Contracts will revert to the department of the principal investigator if (1) there was no voluntary waiver of indirect costs, and (2) the unexpended balance is greater than $50. If there was indirect cost waivers, funds will first be used to reimburse the campus for unrecovered indirect costs.

Procedure

• Unspent funds from completed fixed price contracts will be transferred to the appropriate departmental revolving account following these procedures:
  • If the term of the project has passed, all end products including reports have been delivered, and the sponsor has indicated successful completion, then the project is in the closeout period. During this period of not less than 90 days, no unexpended funds may be transferred out.
  • If indirect costs have been voluntarily waived by the campus, unexpended funds will be used first to reimburse central campus accounts for such costs with the remainder reverting to the department.
  • Only expended balances greater than $50 will be transferred to unrestricted department accounts; balances of $50 or less will revert to central campus accounts.
  • All transfers of unexpended balances will be prepared by the Sponsored Programs Accounting & Compliance.
• No special revolving accounts will be established; each department will elect an existing revolving account for this purpose.