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Evaluating Risks at the Proposal Stage

Most proposal application guidelines do not include the sponsor’s award terms and conditions. When award terms and conditions are mentioned in the directions for preparing a proposal, the sponsor is typically putting the University on notice that such terms are likely to appear in a resulting award notice. In some cases, the University is required to accept the terms upon proposal submission.

The following problematic award requirements may appear in the proposal preparation guidelines. Although SPO may be able to convince a sponsor not to include such terms/conditions in the actual award, principal investigators (PIs) should be familiar with the risks associated with each before deciding to develop and submit an application. NOTE: This is not an exhaustive list. SPO plans to provide information on additional proposal risks in the future.

Citizenship Restrictions: The University does not discriminate on the basis of citizenship. Therefore, Berkeley does not accept awards that impose citizenship restrictions except under certain conditions. The most common exception is when the purpose of the award is the development of a U.S. workforce (e.g. fellowship and training support for graduate and undergraduate students and early career researchers).  In reviewing the proposal guidelines, PIs should be sure that the primary purpose of the project includes workforce development if a citizenship restriction is likely to be imposed.

Payment/Reimbursement in a Non-U.S. Currency: Awards that are likely to be paid in another nation’s currency pose a risk because the exchange rate between the U.S. and the other country can change from the time the award was negotiated to the time that the invoice is paid. The result could be that the sponsor’s funds, once converted to U.S. dollars, may be more or less than expected. If the application guidelines indicate payment will be made in a non-U.S. currency, the PI should be willing and able to monitor currency fluctuations to avoid overspending the fund. Note:  If the sponsor also requests invoices to be submitted in a non-U.S. currency, the PI/department/CSS must be willing to create invoices in currency other than US dollars, as the Contract and Grant Accounting (CGA) system cannot generate such invoices.

Confidentiality/Proprietary Data:  There is risk involved in receiving confidential information/proprietary data “from” a sponsor because failure to keep such information confidential can result in a “breach” of the agreement, i.e., failing to perform, which can lead to a number of negative outcomes including the termination of the agreement for cause and/or a law suit for damages.

The responsibility (and administrative burden) of complying with the requirements associated with the receipt and protection of confidential information from a sponsor—including any costs associated with protection of that information—will necessarily fall on the Berkeley PI. PI should consider how long the information needs to be kept confidential, what is required to keep the information confidential (e.g. security measures), and who can and cannot access this information. Note: No export-controlled proprietary can be accepted by the University because of the substantial numbers of foreign students and visitors on our campus.

Fixed Price Agreements: The risk of accepting a fixed price or fixed amount award or subaward to the University is that once the amount of funding to support the project is agreed to and fixed in the agreement, the sponsor or pass through entity (the organization issuing the subaward to the University) is only required to pay this amount to the University no matter how much it actually costs to do the work. In developing a proposal that will be issued as a fixed price/amount award PIs should make sure that the milestones can be met by the timelines provided and/or the outcomes to be achieved are clearly defined and doable.

Information Security: In recent years some funding agencies, both federal and non-federal, have begun to notify applicants that any future award will contain information security requirements above and beyond the norm. The PI and his/her department/unit should be willing to implement additional security procedures and bear any potential costs associated with controlling and protecting information subject to security requirements.

Note: This page will be updated with additional guidance as new proposal issues emerge.