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>> Brian O'Laughlin:Welcome, everyone. Depending on what time you're watching good morning, good afternoon or good evening. I hope everyone is staying safe and well during this COVID pandemic. I hope that you enjoy this virtual NIH virtual-style seminar and that whenever you're watching this video in the on-demand library that you are able to reference it often. George and I hope to see you in person in the future, but wanted to introduce ourselves. My name is Brian O'Laughlin. I'm the deputy director of the Office of Acquisition at the National Institute on Drug Abuse, and George is a contracting officer and branch chief at the National Institute on Allergy and Infectious Diseases, and George and I have been doing presentations for a while together. This presentation that I'll be doing is on contract administration and how to get paid for your work. He's got a partner presentation, "R&D Contracts: Finding Opportunities and Writing Proposals." So I certainly recommend that you watch these two presentations in tandem. A quick little plug here. George and I participated in a podcast for NIH, the same leadership that brought you this wonderful seminar, and it's found on their All About Grants podcast page, but we did a session on All About Contracts. So we hope you check that out, and the link is provided there for reference. So in this presentation, we're going to go over a lot of things. We're going to go over the various roles and responsibilities of the different parties of a contract, which include both people on government side as well as the contractor side. We'll talk about some the foundational and most important documents or portions of a contract, like the statement of work, and we'll talk about understanding that contract and contract type and what could happen during performance and contract changes, monitoring cost expenditures and how to handle requests to the government. Because ultimately on both sides, the government and contractor side, we want good, successful performance, and we eventually want to of course pay for that good, successful performance. So we'll talk about invoice submission as well. It's important to be aware and understand the different responsible parties on the government side. First off is the contracting officer. They are the only person that has the authority to direct or negotiate any changes to the contract. They're also the only one that can obligate funds. They're also responsible for making sure that you get paid for your performance. So they're critically important, and they are legally warranted to do that under the contract, but most frequently you'll probably interact with a contract specialist. They're typically the first point of contact for all contract matters. They will act as an advisor on the terms of your contract. They'll review all costs, and they'll monitor deliverables. They will work with the contracting officer on anything that needs to be resolved. But also on a day-to-day basis, you'll most likely frequently interact with the contracting officer's representative. They bring the technical expertise and will oversee and monitor the technical progress. These are typically the government scientists overseeing the research and development performed under the contracts. They'll have that specialized expertise that will mirror up and match whatever the science is going on under the contract. On the contractor side, there's various responsible parties. We often see different setups or arrangements depending on an organization's business decisions, but primarily we will see this type of structure where there's a principal authorized to bind the contractor, and authorized signatory of the contractor. There will also be a business representative that we typically interact with on a day-to-day basis related to monitoring and reporting costs. They typically will interact frequently with the contract specialist as the program runs, and then similarly they'll be the principal investigator who oversees technical performance. They will be named in the contract as key personnel, and they will interact frequently with the contracting officer representative -- the technical experts on each side overseeing the research under the contract. As these organizational structures typically mirror each other, here's a crosswalk to primarily think about it where our contracting officer on the government side matches up with the principal authorized to bind on the contractor side. Similarly the contract specialist and the business representative does the day-to-day running of the administrative components of a contract. And then on the technical side the contracting officer's representative and the PI are working together on the contract. So this presentation will be focusing on the contract award and administrative stages of the contract award process. I wanted to share the overall contract award process so you know where these stages nestle in, but for the purposes of this presentation, you can assume that your organization just won a competitive award and we're about to start and embark on performance of that contract. So once you've won a contract, all the contract obligations and limitations are found within that document. Everything that is required under the contract must be in there, and contractors shall not assume any obligations or take any action outside of that without authorization by the contracting officer. It's also important to understand the statement of work. The statement of work is the foundational document that a contract is built around. It's what you're going to perform. It's what you're going to do under the contract. It is the framework for everything that will happen. When you bill against a contract, everything will tie back to, how did it match up with the statement of work? So contractors should be intimately familiar with all the details of that, and any questions or concerns or anything at all, or if the work is changing, it must be approved by the contracting officer. So communication with the contracting officer is critical. In these presentations, George and I stress that communication is absolutely one of the most foundational things that need to happen under a contract. The successful performance happens when all the parties are talking together as the work evolves. During contract performance, many things happen, and sometimes administrative issues or concerns arise or things to work through pop up. So it's always important to understand contract type, and it's also important to understand that contract modifications happen, and they're frequent, and they can happen for a variety of reasons. The work changes or needs to change. The science changes. You discover something along the way that isn't quite working, and we want to pivot in a direction. There's oftentimes there's things that you would want to do under a contract, but your contract prohibits it, and so you need to go to the contracting officer for authorization. And then then critically important of course is payment and making sure that proper payment happens. It's important to always understand the contract type of your contract. Now, this will be specified in the competition stage of the procurement back when you're competing for it, but it will also be specified in your eventual award. And so there's different implications on how it ties to payment. So a fixed-price contract, the government can define a specific outcome or deliverable, and so we pay a set, locked-in price for that. There's also cost reimbursement contracts, which are typically done for research and development because those outcomes are hard to define. Can't necessarily guarantee the curing of a disease or something along those lines, so we reimburse anything allowable, allocable and reasonable in the direct performance of that contract. Additionally, and these have become popular over the last years, are indefinite delivery, indefinite quantity contracts where the government specifies an overall need but not necessarily the details of that until they are ready to award a singular task order or multiple task orders against that. So I always like to think of it as a restaurant menu. So the parent indefinite delivery, indefinite quantity is the overarching menu, and then when it's time to order that entree, that meal or that specific thing, that's the task order. In addition, it's important to have awareness of the availability of funds under your contract because you'll be billing against that, so you don't want to have an invoice and those funds have lapsed. The NIH primarily uses annual appropriations, and in compliance with appropriation it could either be severable or non-severable, and we'll get into that in a few slides, but it impacts the period of availability of funds. That's the key. And again, if you have any questions, communication is extremely important, so please just talk to your contracting officer. So R&D and science is typically done under cost reimbursement contracts, and it's important to note that all costs that you will eventually bill against these contracts are subject to review by the government to determine allowability, allocability and reasonableness. These three things are what every contract specialist is required to view as they look at invoices, so they're important to note. Allowability is things that are established by regulation, policy and contract terms. It's often easier to think of them as what is unallowable, and we'll list a bunch of this in every contract, things that are unallowable. Allocability is that they need to be directly tied to the performance of that contract and not other contracts. And so this is where indirect costs will fit in because we'll portion that proper portion to the contract. And then reasonableness, which is just a cost in that amount that is consistent with what a reasonable person would incur in the conduct of the same business. This is a subjective analysis, so again, it's important to know how your contract specialist and contracting officer are looking at things, what documentation they require to determine reasonableness. Service contracts where the government receives benefit at any time the work is performed is considered a severable contract. Severable service contracts have a funny limitation of 1 year or less. So the maximum period of availability for a severable contract is 12 months. And that's important when it relates to billing because you can't extend that beyond 12 months. So no cost extensions if work needs to continue can't happen past 12 months. Additionally, these are often term contracts where we would procure a level of effort, which would be specified in the contracts, so hours --performance of hours working on something -- and often options are added into these contract terms where you can add option years for extra hours or option quantities for extra hours. The other type of contract is a non-severable service contract. These are contracts for supplies or services that require the completion or end point of a delivery or product or report. Non-severable, you're buying the entire undertaking and value is at the end, so extensions are potentially possible depending on what caused them. These have a really clear end point, so I always think it's clinical trials where you need the entire trial to culminate into a final report or study report. Time extensions, as noted, could be possible. During the performance of a contract, sometimes the work changes or there needs to be a revision, and so any terms or conditions of the contract, including things that happens in the statement of work, need to be done by written modification by the contracting officer. And that is to protect both parties for clarity around what is going on under the contract and for billing and performance. When a contract needs to be changed, it can only be done through a modification, and these policies are specified in the Final Acquisition Regulations. There's two types of modifications: bilateral modifications, which require signature and agreement between both the contractor and the government, and then there's those things that can be done unilaterally by the government, which requires only the government CO to sign off on. Examples of bilateral modifications are negotiating equitable adjustments. An equitable adjustment could arise from cost overruns or change orders where unexpected costs occur in completing the statement of work or change to a contract needs to happen. The statement of work is revised or a delivery schedule is adjusted, and these result in an equitable adjustment, and this will result in a back and forth over cost or price and will eventually end up in a contract modification. And so it needs to be bilateral for these types of actions because both parties need to agree. Unilateral modifications on the other hand are those modifications that the government can change on its own. So these relate to administrative modifications, such as the changing of the contracting office or representative, or some of our internal accounting information if we make adjustments. There are some limitations with the changes that we can do unilaterally, and that's typically done because it needs to happen immediately. The government can unilaterally order a change, but eventually it will require a second modification for that equitable adjustment on cost or price that will need to be bilaterally done. One of the most common examples of a unilateral modification is an option, and options are unilateral because they're prenegotiated and set up front in the contract as part of that initial competition. And so that way when it becomes time for the option to be exercised, it's all pre-priced out. The terms and conditions are all set, so when it's unilaterally exercised, the contractor is obligated to perform that work. Options can be for the additional items or time. Often they're option years or option quantities. One of the most important clauses in any cost reimbursement contract is the Limitation of Cost clause. This clause will protect both the contractor and the government as costs are being incurred under the contract as it relates to overruns and projecting out costs. And so this clause is important because the contractor is required to alert the government whenever it's expected to incur 75 percent of what is funded or at any time when the contractor projects that it's going to overrun the contract. And once that happens, it requires the government to them provide clarity back to the contractor. Because if the government takes no action to that alert, the government is not obligated to reimburse the contractor for any costs beyond what has been funded. And so as a contractor you'll want to be careful to stop expending costs beyond what is funded because you won't get paid for it. That clause, though, with the 75 percent alert thing, the government may choose to do one of those contract modifications that we talked about, so that it can adjust to what is happening with the performance of the contract. And again, the key is only the contracting officer can do this. So if your core or program person is saying, "Oh, this will work out," or "We'll get the funding," that may be the plan, but you're going to want to make sure that the CO gives you that in writing. In addition to monitoring the overall costs under an estimated cost contract, we're going to move into discussing specific elements that you'll want to pay attention to. And it's important to note the reasonableness and realistic tests that any contracting officer will take with reviewing cost incurred under a contract. We'll be looking for the cost to be reasonable, which is just what a prudent person would pay for something, but also cost realism or that the cost is realistic, that it matches up to the work performed. And to me, how I differentiate between the two is for reasonable, it focuses on what you're buying backed up by quotes or comparisons to historical information or even government estimates. But realistic focus is on not only what we're buying, but also the how and how that matches up to the technical approach of your organization. So as you incur costs, there may be several ways to do something, but for whatever you decided that those costs are reasonable for that approach. So when we as contracting officers set up contracts, again, we'll reimburse contractors for anything that's allowable, allocable or reasonable, and there are some things that up front we just can't pre-approve, and these are 10 examples of costs that require our approval. So they may or may not be allowable, so we can't blanketly do them. One common example of something that requires pre-approval is travel, because travel costs can only be allowable when it is in direct performance of the contract. And the US code there, it's pretty clear that unless a contract requires that travel in order to accomplish the contract, we can't pay for it. And so some examples of allowable travel include site visits, or when there's contract review meetings that need to happen, or travel for very specific training, oversight or technical assistance of other contractors or possible grantees. So for example, clinical trial monitoring and the travel associated with that. And then in addition, it's also to point out that although travel may be allowable, it must be reasonable in accordance with HHS policy. So the Department of Health and Human Services, which NIH is part of, has efficient spending policies. So again, communication with your contracting officer is important before you book travel, before you commit to travel, before you invoice for travel after it's happened, in case it's not reimbursable. So you'll just want to make sure and check. So if your travel is approved and you've gotten contracting officer approval, again those specific costs, the flight, the locational stuff must be allocable, allowable and reasonable, but then once you go to bill for it, you'll want to make it clear on the invoice, the traveler's name, the date of travel, so it can smoothly go through any payment process. Another area to seek approval relates to subcontracts. Now the government can't mandate who a contractor works with, but it does have what's called consent rights with subcontract agreements. And what those consent rights are laid out in the Federal Acquisition Regulations Part 44, but it's basically to make sure that whatever arrangement that's put together is appropriate under a federal contract so that we look at the potential subcontract type. We look at what they're doing because ultimately the prime contractor is responsible for the performance of that contract. So even if you use a lot of subcontractors, the prime contractor is still held responsible. We point these examples out because ultimately we don't want you as contractors to commit resources or time or expense to these things and then ultimately they're found to not be allowable under a contract. Another good example of this is government property. So there's an assumption that when we compete a contract that contractors should possess all the facilities and resources to perform the work. They've just proposed on it, they say they can do everything. We make the assumption that they have everything, but under certain circumstances, there is the potential that government property will get involved, and it's either government is providing it to whoever wins the contract and the transfer of that or when the procurement of property is needed under a contract and you want to bill back that against the contract. So you'll want to work with your contracting officers on that specific situation, because typically when equipment or property is bought, the title of that property vests with the government. Okay, so you've been in constant communication with your contracting officer and contract specialist, and you've gotten any pre-approvals that you've needed and you're ready to document them. So it's time to bill and put together your invoice, and how do you do that? So the good news is the instructions will be right in the contract, and the process is electronic. The payment process is electronic. The submission process, actually, used to be a paper process where it would get scanned in. But one of the silver linings of the pandemic is NIH has shifted to an electronic invoicing process, which we expect will continue beyond, but talk to your COs about that. So on the invoice itself, you'll itemize the different cost categories, the first being the direct labor, which you'll list out individuals by name, the title position, their rates, the amount of effort claimed. You'll also add to that any fringe benefits and overhead and F&A and amounts. You'll itemize and break out the materials and supplies and break them out. A thousand dollars there, as noted in the slides, is a good indication of an amount that we may look for additional information. Again, talk to your COs about that because that's a reasonableness test. The travel, as indicated before, once it's pre-approved you'll want to list it out and document the contracting officer's authorization associated with that. Similar to consultants and subcontracts, again, just continually provide the break-out. And then also make sure, this gets back to the severability and non-severability, that when you bill it's tied back to a contract period or a contract line. And again, these will be listed in the contract for reference. But you'll want to make sure that your cost incurred because that's what dictates what payment period it's from, the incurred date, matches up to an active contract [Indistinct]. So unfortunately sometimes either the documentation is not sufficient or there's a question of cost, and it results in an invoice suspension. And a suspension is a failure to provide the required information that leaves the contracting officer unable to approve your invoice. Now, suspensions don't mean that they're permanently disallowed. It may mean we just need more information and we need to revisit it. Everyone should be aware the government has an obligation to pay within 30 days of invoice receipt due to the Prompt Payment Act, and so sometimes if there's going back and forth over a specific invoice cost, that may just take additional time or clarity. So a suspension will occur. So when a suspension occurs it may happen for a variety of reasons, and again, it may be a partial or full suspension, depending on how substantive the issue is. But here are some examples of reasons that the government suspends. They're costs are not itemized properly. They're not pre-approved. Indirect cost rates may not be approved. There could be just information that doesn't help us identify which period it's tied to. And so once it's suspended, and hopefully everything is resolved, again, work with your contracting officers. But then there is potential to re-bill for the suspended costs, provide the proper supporting documentation and eventually get paid for those initially reported costs. So in closing, we hope that you found this useful in terms of learning a little bit more about contract administration, what types of things require documentation, how to put together an invoice, who to talk to. And hopefully you'll have some valuable lessons to take back. In addition to the materials in the slide, I always want to share the Federal Acquisition Regulation that these requirements are all tied to. They're listed here for you as well as linked on this slide. And everyone should hopefully be aware that as part of the Department of Health and Human Services, we have our own regulations as well, and in addition, NIH issues policy guidance as well, and we provided you all the references here. So thank you so much for your time, and I wish you all the best.