CONTRACT AND GRANT OFFICERS (CAMPUS AND LAB)*
CAMPUS BUSINESS CONTRACTS MANAGERS
Subject: California Energy Commission Terms in agreement with UC, & Schedule of Overhead Rates
I. UC RESEARCH AGREEMENT TERMS
RAO and CEC have been negotiating terms for over three years. The process
began with terms for the PIER Public Interest Energy Research program
which were issued in C&G Memo No. 98-08 dated September 25, 1998.
Since that time, terms continued to evolve as subsequent negotiations
occurred. A year ago, CEC decided to create a separate set of terms for
research projects with UC. The enclosed final UC Research Agreement 500-02-004
contains the result of a 3 year effort. The UC Research Agreement contains
terms which are appropriate for research projects, AND also includes administrative
terms which the CEC and UC desire to normalize in all awards (whether
for research or not) between CEC and UC.
C&G Memo No. 98-08 is cancelled and superceded by the terms provided
in this C&G Memo.
The UC Research Agreement (UCRA) has several unique features compared
to a normal contract for an individual project. The UCRA includes a Work
Authorization Procedure. This functions like a task order contract. The
UCRA terms do not have to be renegotiated for each award. The Work Authorization
is limited to the project variables i.e., scope of work, budget, staffing
for performance of the work, and reporting requirements. Work Authorizations
may be issued by the CEC program office after approval by the Department
of General Services. Work Authorizations will be developed by the CIEE
California Institute of Energy Efficiency, an OP Research Unit, in consultation
with campuses, and submitted to CEC. CEC will send the WA to RAO for signature.
CIEE will implement the fully executed WA by subagreement to a UC Campus,
or UC Managed DOE Laboratory or other entity to perform the work. The
UCRA also includes a special pre-agreed policy overhead rate of 20% MTDC
for all UC campuses. RAO will approve a class OH Waiver for this purpose.
The UCRA process was created to vastly simplify the effort required by
CEC and UC to make and perform awards.
The UCRA is classified as a contract by the CEC, not a grant, notwithstanding
the incorporation of OMB Circulars A-21 and A-110 and Exhibit C terms
for interagency agreements. A contract was chosen by the CEC because UC
(CIEE) will be providing services to the CEC to implement and monitor
WA(s). However, CIEE may make subawards which are grants or grant like
The CEC PIER program intends to award all of its research projects to
UC via the UCRA. The UCRA contemplates an estimated $20 million over the
next 4 years. Other programs at CEC will be encouraged to use the terms
in the UCRA. The CEC also has several interagency master agreements with
UCOP RAO for technical assistance services which may be updated to reflect
the new terms in the UCRA.
CEC and UC desire to normalize the contract terms between the parties.
Therefore, the terms in the UC Research Agreement shall be accepted by
all UC units including campus Sponsored Projects Offices, Campus Business
Contracts Offices, and Office of the President Research Administration
Office, without further negotiation, wherever the terms are to be included
in an award from CEC to UC. Terms specific to research may be deleted
if the award is not classified as research by a UC campus. However, terms
in the UC Research Agreement covering administrative and financial matters,
and intellectual property subjects shall be used where there is need for
provisions in non-research contracts. If a sponsored project award from
the CEC is classified as a Business Services Contract by a campus, and
the Business Contract Office is unable to accept the terms of the UCRA
and the OH rates provided in this Contract and Grant Memo, the award should
be transferred to the campus Sponsored Projects Office for handling. This
will assure consistency in UC contracting terms with the CEC.
There are many improvements in the UCRA terms, summarized below, over
the original PIER contract terms.
CEC STANDARD AGREEMENT 500-02-004 UC RESEARCH AGREEMENT
1. INVOICING PROCEDURES
B. CEC will accept computer generated invoices or equivalent without backup
documentation to verify the expenses.
Comment: This represents a major improvement over the previous requirement
to submit copies of all source documentation for each invoice. This eliminates
a major manual effort.
B. 1. Comment: The invoice categories correspond to UC standard invoice
categories compared to invoicing according to the larger number of elements
in the budget.
2. BUDGET CONTINGENCY CLAUSE
Comment: The clause initially offered gave the CEC the right to annul
the contract from the beginning, leaving UC with an unfunded liability
for incurred costs. This is contrary to Regents policy as well as patently
unfair. The revised clause gives CEC the right to terminate or otherwise
amend the contract to the funds available, including payment for costs
3. TRAVEL AND PER DIEM RATES
A. CEC has accepted UC travel and per diem rated for UC travel.
Comment: This is as compared to having to comply with State government
travel rates. This is a major improvement.
B. Travel not approved in the initial budget requires CEC approval, however,
approval may be made by fax or email.
Comment: This is in lieu of a written letter and the time it takes to
accomplish the approval by hardcopy.
C. CEC recognizes travel and per diem rates for DOE lab employee travel.
D. UC must have documentation in its files for travel, but is not required
to submit copies of all travel source documentation to be reimbursed for
travel expenses, as was required in the past.
Comment: This is a major improvement which avoids the costly manual effort
to make the copies and send them to CEC.
No retention will be withheld.
Comment: This has been a point of contention for years. Under existing
contracts, there is a 10% withholding on each invoice, which is held to
the very end of the contract period. This forces a working capital expense
onto UC. This is inappropriate for one State Agency to impose this kind
of cost on another State entity. This is a major improvement.
5. PAYMENT TERMS AND CONDITIONS
B. Indirect Cost Rate.
Comment: The indirect cost rate is fixed at 20% for all Work Authorizations
performed by UC Campuses and Office of the President (including CIEE California
Institute for Energy Efficiency.) The OH rate will apply to MTDC according
to OMB Circular No. A-21. The fixed rate of 20% is a policy rate agreed
to by UCOP RAO with the CEC applicable to Work Authorizations using UC
Research Agreement No. 500-02-004. All other awards from CEC directly
to UC campuses shall bear a 25% rate. This agreement on OH freed up over
$25 million in awards from CEC to UC.
E. Disputed Invoices.
Comment: On disputed invoices, CEC will withhold payment only on the disputed
portion of the invoice. Typically, a State agency will withhold payment
of an entire
Invoice if there is any dispute notwithstanding the amount. This forces
a financial expense to UC. Withholding only the disputed amount, and payment
of the undisputed amount, is an improvement.
H. Advance Payments.
Advance payments are authorized.
Comment: Advance payments are required when work is performed by DOE laboratories.
This provision makes it possible for this requirement to be met.
7. ALLOWABLE COSTS
Allowable costs under this Agreement shall be in accordance with A-21.
Comment: This is a new position for the CEC to accept A-21 as the basis
for cost allowability. This improvement resolves issues of reimbursement
for termination costs, and maintenance costs for equipment.
BUDGET EXHIBITS B-1 AND B-2 (FORMATS)
RAO made it clear that UC does not use hourly rates for faculty, or use
burdened rates as the Exhibit calls for. CEC responded that this is a
standard form, and campuses have been able to respond to it.
Comment: For now, try to provide the information requested in proposal
budgets, even if it is calculated by formula (because the budget is an
estimate). After the award is made, use the standard invoicing procedures.
If there are serious issues, inform RAO.
EXHIBIT C Interagency Provisions
Comment: This is standard boilerplate prescribed by State Department of
General Services. Although the UC Research Agreement is a “contract” since
UC is providing services to CEC, the terms as modified for UC are more
akin to an Interagency agreement in recognition that UC is a State entity.
EXHIBIT D Special Terms and Conditions
B. A new sentence was added at the end: “If the parties do not mutually
agree to arbitration, the parties agree that the forum to resolve a dispute
is State court or Federal court, with the exception of Federal bankruptcy
Comment: This is an improvement because it gives UC access to the court
system if it is not satisfied with the outcome of the CEC internal disputes
The CEC standard termination clause allows termination costs incurred
up to the effective date of termination. It is silent about the allowability
of uncancellable obligations which result in costs incurred after the
effective date of termination. When this question was raised with the
CEC, CEC was VERY clear that such costs incurred after the effective date
of termination were not allowable.
Comment: This view created a potential unfunded liability for UC. Further,
the view was inconsistent with termination costs as allowed by OMB Circular
No. A-21. After much discussion, CEC agreed to accept A-21 as the standard
for determining the allowability of termination costs.
Comment: This provision refers to legal notices, e.g termination, formal
contract changes. It does not include CEC approvals of travel which can
be done by Fax or email.
EXHIBIT E Additional Provisions
D. Budgets may be cost reimbursable or deliverables-based (fixed price.)
Comment: Please note that BOTH cost reimbursement and fixed price budgets
are permitted. There are times when cost reimbursement is appropriate,
and fixed price may be appropriate. The intention here is to make both
E. Budget reallocation.
Comment: The budget reallocation is 15% OF THE TOTAL AMOUNT OF THE WORK
AUTHORIZATION or $5,000 which ever is greater. This is a good standard
because it refers to the total amount of the WA, as compared to individual
budget elements. The $5,000 is intended to eliminate de minimus changes
from the advance notice requirement.
B. Comment: UC may use UC purchasing policies in the award of subcontracts,
or subawards. The exemption provided in subparagraph B excludes the requirement
for UC to go to CEC for approval of sole source awards which involve complex
State approval processes. The policy in State Contracting Manual 3.06
permits State agencies to make awards to UC without competitive bidding,
and for UC to make subawards to public entities (not for profit entities)
without competitive bidding. When awards are made to for profit entities,
competition should be sought, or a written justification should be included
in the file if there was no competition.
C. Subawards to UC Managed DOE Labs.
CEC negotiated terms directly with DOE for use when CEC desired to contract
with a DOE Laboratory. In previous contracts, CEC required UC to use these
terms. UC is bound by the terms of the prime contracts it had signed with
DOE for management of LBNL, LLNL, and LANL. DOE has approved a Memorandum
Agreement for UC campuses and RAO to use to transfer funds to a UC Managed
DOE laboratory. RAO is in no position to substitute the CEC negotiated
terms for the terms DOE approved for use by UC.
Comment: The Agreement permits UC to use the terms DOE approved for use
with UC Managed DOE labs in the Memorandum Agreement, in lieu of the CEC
negotiated terms. The CEC negotiated terms with DOE will apply to all
non-UC managed DOE labs. This is a major improvement and resolution of
this longstanding issue.
PURCHASE OF EQUIPMENT
Standard CEC policy is for CEC to take title to equipment purchased with
CEC funds. Likewise, standard CEC policy is to hold contractor liable
for any and all risk of loss or damage to CEC owned equipment regardless
of the cause of loss or damage. Standard CEC policy was to disallow the
cost of maintenance and repair to the CEC owned equipment, notwithstanding
the need to maintain or repair to perform CEC work.
Comment: RAO viewed the cost of maintenance and repair as an allowable
cost. Further, it is not appropriate for UC to be liable for any and all
causes of loss or damage, when such causes included acts of God, i.e.
earthquakes over which UC has no control.
These issues were resolved by CEC agreeing to have title to equipment
purchased with CEC funds vest in UC, and incorporating A-21 into the Research
Agreement which expressly allows maintenance and repair costs.
Comment: please note that the Exhibits differentiate between UC managed
DOE Labs, and non-UC managed DOE labs.
II. TERMS IN CEC DIRECT AWARDS TO UC CAMPUSES
By mutual agreement with the Manager, CEC Contracts Office, terms in research
awards made directly to UC campuses will follow the terms negotiated by
RAO in the UC Master Agreement. If campuses are offered terms by CEC other
than the terms in the UC Research Agreement, the matter should be referred
to the Manager, CEC Contracts Office for resolution. If UC campuses believe
terms other than those in the UC Research Agreement are needed for topics
covered in the UC Research Agreement, the matter should be referred to
the Director, UCOP Research Administration Office.
III. TERMS IN CEC COMPETITIVE RFPs, & TERMS OFFERED UC UNDER CEC
CONTRACTS TO NON-UC ENTITIES
By mutual agreement with the Manager, CEC Contracts Office, terms offered
to UC when UC is a subcontractor under a CEC prime contract to a non-UC
entity, should be those terms CEC has negotiated with UC in the Research
Agreement. CEC has agreed to include a provision in such prime contracts
authorizing the prime contractor to use the UC terms, in lieu of the terms
of the prime which are intended to apply to the prime contractor not UC.
Hopefully, this will resolve the agony experienced when CEC primes flow
down their terms which UC cannot accept. If CEC issues an RFP, campuses
should be alert to CEC including reference to UC terms. If proposals are
submitted to CEC under an RFP, campuses should reference UC terms to remind
the CEC contracts staff to include the UC terms either in a prime direct
award to a UC campus, or in a prime contract to a non-UC entity where
a subcontract is planned to a UC campus. The 25% overhead rate would apply
to these subcontracts to UC per item IV.2 below.
IV. OVERHEAD AGREEMENT BETWEEN UC AND CEC
The following OH rate schedule is applicable to all CEC agreements with
UC, notwithstanding whether UC classifies them as extramural awards, business
contracts, or any other type of transaction where UC is required to perform
a project. This schedule has been agreed to by CEC Contracts Manager.
1. Work Authorizations issued pursuant to UC Research Agreement 500-02-004.
- 20% of MTDC as defined in A-21 for all UC Campuses
- DOE mandated OH rates for DOE labs
- Non-UC entities full federally approved OH rate, if available; if federally
approved rate is not available, customary OH rate used with all other
2. CEC new awards made directly to UC campuses outside of UC Research
# 500-02-004, or Subcontracts to UC received from non-UC CEC prime contractors.
Applies to new awards under all CEC programs, not just PIER.
- 25% applied to MTDC
Note 1: If a proposal is submitted assuming the UC Research Agreement
will not be used, but at award time ends up coming under the UC Research
Agreement, the budget may be adjusted to reflect the 20% rate.
Note 2: The 25% rate specifically assumes CEC, or prime non-UC CEC contractors
issuing subawards to UC, will use general terms virtually identical to
those in the UC Research Agreement. If terms vary from this standard,
contact RAO. Historically when the contract terms were much more difficult
and not uniform, the full OH rate applied.
3. ALL existing CEC awards to UC (including the grant to UCB).
- Full federally approved OH rates incorporated into the award.
- Existing rates will be applicable until the award expires.
4. Rates in subawards made by CIEE, or by campuses under a direct award.
- Subawards under the UC Research Agreement will follow rates per 1. above.
- Subawards under direct prime awards from CEC to UC campus will follow
rates per 2., above.
5. OH rates applicable to MTDC incurred by CIEE, as approved by UCOP.
- 21.7% applies to existing CEC WAs in CIEE's current portfolio.
- 20% applies to new WAs under the UC Research Agreement # 500-02-004.
- 25% applies to awards not made under the UC Research Agreement.
Note: Overhead rates applicable to CIEE MTDC are distinct from and in
addition to CIEE Core Costs, or the management fee applied to current