Fixed Price versus Cost Reimbursable Agreements
Fixed price performance based agreements are those in which a value (a fixed price) is determined for work to be accomplished. In general, payment for a fixed price contract is usually tied to performance or deliverables. If the performance is not met, the sponsor is not obligated to pay. If the performance is met, the sponsor is contractually obligated to pay. Unspent funds remaining after all deliverables have been met will be retained by the university rather than returned to the sponsor.
UNI's funding requests must be within a reasonable range of actual anticipated expenditures. UNI should not accept fixed-price contract funding from sponsors simply based on market value (e.g., what might have been paid to other contractors) without regard to estimated costs even if the sponsor is willing to pay it.
Normally, if a contract proposal is appropriately budgeted and all reasonable and allocable expenditures are posted to the contract account, the unexpended balance should be no more than 10% of the awarded amount unless there is justification.
An audit sensitive issue arises when final actual expenditures are substantially less than the amount of the contract award. As a non-profit organization, UNI must not intentionally generate "profit" from externally funded activities. A substantial positive balance can imply to state auditors and external sponsors that UNI inappropriately inflated our cost proposals thereby deliberately generating non-project related future operating funds for the university.
Cost reimbursable agreements are based on actual expenditures. The sponsor reimburses UNI for actual allowable and allocable costs spent on a project. These costs are not to exceed the budgeted amount and closely follow the budget submitted with the proposal and included in the award document. For government contracts the contractor is not expected to perform once the funds have been exhausted.
For both fixed price and cost reimbursable projects, the Office of Research and Sponsored Programs must have a detailed budget prior to the proposal being submitted to the sponsor. Once funded, the payment terms are outlined in the award document, but often require UNI to send monthly or quarterly invoices.
All award payments are to be sent to:
University of Northern Iowa,
ATTN: Cashier, Office of Business Operations
Cedar Falls, Iowa 50613-0008