University of California
Office of the President
Senior Vice President—
Business and Finance
|Research Administration Office||No.01- 06
August 2, 2001
CONTRACT AND GRANT OFFICERS (CAMPUS AND LAB)*
Subject: California State Department of Transportation – University of California Memorandum of Agreement Regarding Overhead Rates and Interagency Transportation Research Master Agreement No. 65A018
This Operating Guidance Memo transmits the following two agreements between the California State Department of Transportation (Caltrans) and The Regents of the University of California:
2. Interagency Transportation Research Master Agreement No. 65A0108 which supercedes Caltrans Interagency Master Agreement No. 65Y350.
II. CALTRANS – UC Memorandum of Agreement on Overhead Rates (MOA):
This MOA applies to all extramural awards between all Divisions of Caltrans and UC. It specifically applies to all contracts and interagency agreements, whether they provide for an individual project, for multiple projects via a Master Agreement with individual Research Technical Agreements (RTAs), or grants. The MOA also applies to subawards to UC campuses and subcontracts to non-UC entities. If there is a type of agreement not specifically listed herein which is within the meaning of extramural award as defined in the Contract and Grant Manual and the C&G Memo defining data elements for the corporate Contract and Grant Information System (CGX), this MOA applies.
Overhead (OH) rates have been an issue between Caltrans and UC, and an issue among UC campuses with Caltrans for many years. All Caltrans and UC components shall use the rates in accordance with the terms of the MOA, effective July 1, 2001. See Enclosure 1.
The MOA classifies UC campuses as either an "ITS Campus" or an "non-ITS campus." An ITS campus has an established Institute of Transportation Studies (ITS) primarily funded by Caltrans. There are three ITS campuses, Berkeley, Davis, and Irvine. The seven other UC campuses, without an ITS, are non-ITS campuses. Caltrans prime awards to ITS campuses and subawards among ITS campuses will use an OH rate of 10% of total direct costs, as defined in the MOA. Subawards under these prime awards to non-ITS campuses will be at a 15% OH rate of total direct costs.
Caltrans prime awards to the seven non-ITS campuses, including awards pursuant to Enclosure 2., the Research Master Agreement No. 65A0108, and all subawards under these prime awards to ALL 10 UC campuses, including ITS campuses, will be awarded at a 15% OH rate of total direct costs. Caltrans awards to the DOE Laboratories, whether directly from Caltrans or indirectly via a subaward from any UC campus, will be at OH rates applied to the OH rate base as prescribed by the DOE. All subcontracts to all non-UC entities will be at that entity’s federally approved OH rate and federally approved base.
All Caltrans awards to UC will be budgeted on a base of total direct costs (TDC) as defined in the MOA. However, this base has some of the base exceptions similar to a modified total direct cost (MTDC) base, but with significant differences. The MOA includes a specific section defining what is included and excluded from the TDC base.
RAO has issued a formal class indirect cost rate exception, No. 02R-018, consistent with the terms of the MOA.
BUDGETING FOR SUBAWARDS AND SUBCONTRACTS:
The OH rates in the MOA apply to budgets for subawards and subcontracts. For example, if a budget from a non-ITS campus is submitted to the Berkeley campus which is an ITS campus, the budget for the work at the non-ITS campus should use the 15% OH rate. If a budget is from a non–UC entity, e.g. another university, that institution’s federally approved OH rate and federally approved OH base should be used. You will note that while the MOA specifies that a TDC base should be used by non-UC entities, the guidance in this Memo clarifies that the modified base approved by the non-UC entity’s federal cognizant agency is what should apply.
IMPLEMENTATION OF THE MOA:
The MOA is effective July 1, 2001. The implementation of the MOA will operate differently than the usual model you are accustomed to with federal awards where the change would apply to the next renewal or continuation within an existing award period of performance.
The Caltrans’ concept is to "freeze" the OH rates in all existing agreements, for the life of the existing agreement as defined by the period of performance stated in that agreement. If an agreement was awarded before July 1, 2001 and the OH rate was the full federally approved rate, i.e. higher than the rates in the MOA, that rate will apply for the life of the agreement. For example, if the agreement is for 4 years, three of which are after June 30, 2001, the full OH rate would apply for the full 4 years. Caltrans does not want to amend any agreement awarded before July 1, 2001 to change the OH rate either up or down to conform to the MOA. This same principle applies to subawards or to subcontracts under existing prime awards.
The Caltrans concept is to apply the OH rates in the MOA to "new awards." This definition includes both awards with new award numbers as well as additions of more time and new dollars to an existing award which extends it beyond the term of the original award.
CENTRALIZED CONTROL OVER RATES AND THEIR APPLICATION:
The MOA represents a centralized institution to institution agreement. There are to be no variations from the terms of the MOA, unless mutually approved by the parties to the MOA. If there is a Caltrans unit which varies from the terms of the MOA, please contact my office and we will communicate the nonconformance to the designated party at Caltrans for resolution. One of the purposes of the MOA is to relieve campuses from struggling over OH rate issues with Caltrans. If there are variations from the terms of the MOA by UC, the OH waiver request procedure shall be used.
III. INTERAGENCY AGREEMENT – Transportation Master Research Agreement No. 65A0108
This Interagency Agreement supercedes and continues any Research Technical Agreements (RTAs) initiated under Caltrans Interagency Agreement No. 65Y350 which expired June 30, 2001.
ARTICLE V – RATES:
Note all new RTAs pursuant to 65A0108 to all ten UC campuses and all subawards to all ten UC campuses will be at 15% TDC.
ARTICLE VI - TERMINATION
ALERT: A prenegotiated draft of this provision read as follows: "Caltrans shall reimburse UC for non-cancelable obligations and costs incurred for purposes indicated in the proposal, up to thirty (30) days from the date of the official termination notice." Caltrans agreed to delete the bold type in the final draft. It is impossible to incur all settlement costs within 30 days as there may be cases where leases of space or equipment rentals cannot be terminated in 30 days. This may create an inappropriate unfunded liability for The Regents. I have seen this same limiting statement in other State agreements and alert you to look for this language in State agreements and negotiate it out. The UC negotiation objective is to assure allowability of settlement costs and uncancellable obligations as is provided in A-21, Section 49, in all extramural awards.
ARTICLE XV – RIGHTS TO DATA:
This provision was modified to add "for State government purposes", limiting the authority "to authorize others to do so for State government purposes", not commercial purposes. The clause also clarifies that Caltrans may request copies of originals rather than the original fixations of data. The Regents own the original fixations of data. Please note this change for any future contracts your campus may receive directly from Caltrans.
ARTICLE XIX – PATENT RIGHTS AND PROVISIONS
ALERT: The prenegotiated draft agreement included the following from Caltrans: "…if patentable discoveries or inventions should result from work described herein, all rights accruing from such discoveries or inventions shall be the joint property of UC and Caltrans. … Caltrans shall share equally in any license fees or royalties collected by UC, which are derived from any Caltrans funded RTA." (Bold added for emphasis.) Caltrans agreed to delete the foregoing language. This language was discussed with Provost King and was viewed as a deal breaker by UC. Article XIX in the final version should be used as a model for patent clauses in any contracts your campus may receive directly from Caltrans.
I am highlighting this experience as an indication of what some State agencies are doing in response to the Bureau of Audits report on the State management of intellectual property. The Bureau of Audits view is if the State pays for the work, it should own title to copyrights and to patents. The Bureau of Audits does not recognize UC as a State entity. So please be alert to State agency efforts to take title to copyrights and inventions, and assert royalty sharing in their contract terms. These incursions must be held at bay.
IV. OTHER CALTRANS AGREEMENTS
Caltrans also makes awards directly to UC campuses. For example, Berkeley has interagency master agreements which provide for RTAs under them. We are not aware of all of the terms in all of these Caltrans agreements. We ask you to be alert to terms which vary significantly from the terms in Enclosure 2. We are especially concerned that Caltrans not include the above IP provisions about joint ownership, royalty sharing, or licensing or authorizing other states or entities to use intellectual property, not limited to State of California governmental purposes in any agreements with UC. If you receive such language in Caltrans agreements directly to your campus and are not able to negotiate the appropriate changes, please contact my office.
V. ADMINISTRATIVE EFFICIENCIES
The topic of streamlining Caltrans administrative requirements as part of agreeing to reduced OH rates was raised. The response was a review of Caltrans experience with UC which included: late progress reports, late final reports, late invoices, and inattention to close out as much as 3-4 years after the award has expired. It is difficult to negotiate improvements by the other party when we need to make improvements ourselves.
VI. CHOICE OF TERMS
The term "overhead" is used in this Memo because this is the term used by Caltrans and other State agencies. RAO is aware that, in the context of federal costing policy, the equivalent term is "F&A or Facilities and Administrative Costs."
VII. OTHER AGREEMENTS WITH CALTRANS
Campuses are requested to use the terms in Enclosure 2 as a guide in negotiating terms of other Interagency agreements and contracts with Caltrans, in particular, intellectual property terms.
David F. Mears
Research Administration Office
Refer: Samuela Evans
Subect:: 02, 22
Organization Index: S-010
Cancel: C&G Memo No. 96-14
Enclosure 1. Memorandum of Agreement on OH Rates
Enclosure 2. Interagency Agreement No. 65A0108 - Transportation Master Research Agreement
Cc: Senior Vice President King
Senior Vice President Mullinix (Enc. 1)
Vice President Hershman (Enc. 1)
Interim Vice Provost Coleman
Vice Chancellors for Research