NIH POLICY MANUAL

1. Explanation of Material Transmitted: This chapter is being updated to clarify IC Budget Officer responsibilities in Section F2.

2. Filing Instructions:

   Remove: NIH Manual Chapter 1165, Agency Agreements, dated 3/19/00.

   Insert: NIH Manual Chapter 1165, Agency Agreements, dated 4/3/01.

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A. Purpose:

B. References:

1. Section 601 of the Economy Act of 1932, as amended (31 U.S.C. §1535).

2. DHHS General Administration Manual, Chapter 8-77

3. Section 301 of the Public Health Service Act, as amended (42 U.S.C. § 241)

4. NIH Manual 1130, Delegation of Authority, Finance No. 4

5. Memorandum to the PHS Agency Heads from the Deputy Assistant Secretary for Health (Management and Budget), dated November 17, 1994, entitled: Delegation of Authority to Approve and Sign Agency Agreements

6. Division of Extramural Information Systems, Office of Policy for Extramural Research Administration, Office of Extramural Research (OER), NIH pamphlet entitled "Activity Codes, Organization Codes, and Definitions used in Extramural Programs"

7. NIH Manual Chapter 1743, Keeping and Destroying Records.

C. Definitions:

1. Interagency Agreement is a written arrangement between one or more NIH components and one or more government entities outside of the NIH, all of which must have the statutory authority to engage in the arrangement. Such agreements may include, but are not limited to, arrangements to receive and/or provide services, supplies, advice and counsel, involving the exchange of funds.

2. Intra-agency Agreement is a written arrangement between/among NIH components, all of which must have the statutory authority to engage in the arrangement.

3. Obligating Document is a legal document stipulating NIH will provide funds for goods and/or services ordered.

4. Reimbursable Document is a legal document stipulating an NIH component will collect funds for goods and/or services provided to another NIH component or government account.

5. ICs - includes Institutes and Centers, and Offices within the Office of the Director, NIH.

D. Direct Citation of CANs

• Where ICs’ intramural scientists are collaborating and there is no ultimate award as described above within which to cite specific ICs’ common accounting numbers (CAN).

• When NIH service centers are billing for personal services of Federal government employees, since the DHHS Payroll System does not allow use of more than one CAN for payroll purposes.

• Where the awarding component cannot cite and use the CAN of the funding IC because of limitations of systems such as the Administrative Database or Information for Management, Planning, Analysis and Coordination (IMPAC) II.

The ICs must document the responsibilities of each party, including the dollars and CAN involved using whatever documentation the parties agree upon. This documentation will serve as the support for the dollar amount and the charge to the IC’s common accounting number. See Appendix 1 for a suggested format for documentation of direct citation agreements. When co-funding an assistance award, ICs should use the "E-Mail Co-Fund Worksheet" http://odoerdb2.od.nih.gov/gmac/sources/pol_cofund_doc.html, in lieu of the format contained in Appendix 1 to document the direct CAN citation on a Form PHS 5152-5 Notice of Grant Award.

E. Background:

1. Development of an Agreement

A comprehensive summary description of the project objective and the general scope of what is being agreed upon such as personnel, equipment, facilities, etc., should be defined and stated clearly in all agreements. Financial data must be listed accurately and for appropriate purposes. The requirements set forth in DHHS GAM Chapter 8-77 apply to both interagency and intra-agency agreements. Before entering into an agreement, ICs may obtain legal advice, if desired, from the Office of General Counsel, NIH Bldg. 31, Room 2B50. IC Budget Officers must report to the appropriate finance office, prior to the end of the fiscal year, those agreements where the NIH funds obligated will not be fully obligated by the servicing agency by the end of the fiscal year. Excess funds will be deobligated for use elsewhere.

The approval of the Secretary is required for any agency agreement which involves at least one of the following: (See Appendix 2 for format of letter to the Secretary)

a) Agreement that has an impact on Secretarial or OPDIV policy initiatives or contains significant policy change.

b) Agreement that may have a significant impact on relations between/among the Department, State and Local governments, other HHS grantees, or the public.

c) Agreement that is beyond the scope of authorities delegated by the Secretary.

d) Agreement that is determined by the NIH Director or the Deputy Director for Management to require Secretarial approval.

2. Interagency Agreements

The NIH Form 1742, Agency Agreement and Clearance, and signed interagency agreement will serve as the obligating/reimbursable documents for all interagency agreements provided they are complete and signed by all applicable parties. The documents must be submitted to OFM, OER (for extramural agreements) and the other parties, in accordance with NIH policy.

3. Intra-agency Agreements

The NIH Form 1742 may serve as the obligating/reimbursable document for all parties to the intra-agency agreement provided it is completed fully and signed by all the participating NIH components. For intra-agency agreements, only the NIH Form 1742 is required by OFM and OER (extramural agreements only - 842 CANs).

4. Variations of Agreements

a. New Reimbursable Agreements

A document covering a new work requirement which defines the specifications and conditions agreed upon between NIH and internal components, or between NIH and other governmental entities is considered a new agreement.

b. Renewal Agreements

A renewal agreement is a continuation in the next fiscal year of an existing inter-agency/intra-agency agreement which provides for the performance of new or additional work similar or identical in nature to that previously required, obligates additional funds, and/or extends the performance period by more than six months.

c. Modification Agreements

A modification (other than renewal) of an agreement alters or amends one or more provisions of a current fiscal year inter-agency/intra-agency agreement.

d. Multi-Year Agreements

Where the services are continuing and recurring in nature, and the agreement is severable, the services must be charged to the fiscal years(s) in which they are rendered. Services are generally viewed as chargeable to the current time the services are rendered. However, a need may arise in one fiscal year for services which, by their nature, cannot be separated for performance into separate fiscal years. If this agreement is based upon some statute other than the Economy Act, the provision in 31 U.S.C. §1535 that requires deobligation to the extent obligations are not incurred before the end of the period of availability of appropriations does not apply. In this situation, the obligation will remain payable in full from the appropriation initially charged, regardless of when performance occurs, in the same manner as contractual obligations, subject to any other legislative restrictions.

5. Signature Authority

Since agency agreements are essentially contractual in nature, there must be a proposal by one component and an acceptance by another. Once the proposal has been agreed upon, approval must be conveyed by all parties signing the agreement. Only then can funds be obligated. The delegation of authority from the Director, NIH, to authorize agreements within NIH and between the NIH and other entities (both interagency and intra-agency) is set forth in NIH Manual 1130, Delegation of Authority, Finance #4.  For the Office of the Director, authority to enter into an Agency Agreement has been delegated to OD Program Directors (see memorandum signed by Dr. Ruth Kirschstein dated 10/3/95). The responsibility for the agreement rests primarily with the ICs; however, IC staff may wish to seek OFM and/or legal advice before entering into an agreement.

F. Responsibilities:

1. Project Officers will:

a) Provide the scientific and technical direction of the project,

b) Coordinate the broad framework of gathering and preparing all materials and documentation,

c) Serve as primary Point of Contact, and

d) Ensure that all aspects of the agreement are executed.

2. IC Budget Officers will:

a) Certify that funds are available by assigning an identification number to each agreement entered into by their organization,

b) Insure that the appropriate statutory authority is cited on each agreement,

c) Verify that all billing and accounting data are in accordance with approved agreement,

d) Maintain a central file of the numbers assigned to each agreement by fiscal year,

e) Assign an administrative contact for each agreement,

f) Insure that any funds not obligated by the receiving agency by the end of the current fiscal year will be deobligated before the end of the fiscal year, taking into consideration 4.d. above,

g) Notify the appropriate IC personnel of all FTE ceiling transfers,

h) Insure that the appropriate IC personnel have received copies of signed agreements,

i) Maintain constant awareness of the agreement in process, and

j) Retain the original signed agreement in an official file for at least 6 years and three months. (NIH Manual 1743, Part I, Section 1900-A-1-b)

3. IC Executive Officers have overall responsibility for agency agreements within their ICs, and they, or their designees, have the responsibility for signing or insuring that an authorized official signs all agreements, i.e., new, renewal, and modification.

4. Office of Financial Management will:

a) Review, after execution, all agency agreements and any modifications thereto,

b) Maintain a copy of all agency agreements and modifications, for a minimum of two years, ( NIH Manual 1743, Part I, Section 1900-A-7)

c) Submit such reports as may be required by the Office of Management and Budget (OMB), or the Office of the Secretary (OS), DHHS,

d) Clear all FTE transfers with the Deputy Director for Management,

e) Enter agreements into the Central Accounting System to obligate funds and set up reimbursable authority, and

f) Record the correct EIN for all trading partners into the CAS.

5. Office of Budget will review all FTE ceiling transfers.

6. Office of Extramural Research, Office of Reports and Analysis will:

a) Receive a copy of all obligating documents for interagency and intra-agency agreements using a Common Accounting Number beginning with 842 (extramural agreements),

b) Add a digit to the agreement number (in the first/second position) to make the number conform to Information for Management, Planning, Analysis and Coordination (IMPAC) II system requirements, and

c) Enter information from the agreement into the IMPAC II system.

G. Source of Authority:

1. Funds must be used for appropriate/authorized agency purposes.

2. Any statutory or regulatory conditions must be observed. This does not require the contributing NIH component to have its Council review this funding. However, any other internal IC policies and procedures should be followed.

3. The IAA must be available for public access and oversight.

4. The IAA must show that HHS funds are being committed for specific agency-appropriate purposes.

H. Payments:

1. Fund Transfer Requirements

Agencies establishing agreements with the National Institutes of Health are required by the Department of the Treasury to transfer funds in accordance with prescribed Treasury policies and procedures. A brief description of each fund transfer system is contained in this section. A more detailed description can be found in the Treasury Financial Manual (TFM), Parts II and VI. (http://WWW.fms.treas.gov/tfm/index.html)

2. Advance Payments

The Economy Act, 31 U.S.C. 1535, expressly authorizes advance payments for transactions such as interagency/intra-agency agreements. Thus, advance payments for these type of agreements are permitted, if so specified in the agreement. In addition, the finance offices of both parties to the agreement must be notified of the intent to advance bill/collect, prior to inception of the agreement.

3. NIH as the Customer Agency

Services, supplies, etc., acquired by ICs through an interagency or intra-agency agreement, are paid for by one of the payment systems described below:

a) On-Line Payment and Collection (OPAC) System - TFS Form 7306, "Paid Billing Statement for OPAC Transactions" - Used as a combined billing and payment document for interagency payment transactions by agencies within the Treasury disbursing area.

b) SF 1080, "Voucher for Transfers Between Appropriations and/or Funds" - Used when the paying or receiving agency is not in the Treasury disbursing area (e.g., Department of Defense), requiring that payment be made by check.

Note:  The OPAC system "charge back" method allows a customer agency to charge an OPAC agency to remedy an erroneous or incorrect billing. Many billing agencies are billing through OPAC to avoid delays previously associated with the outdated SF 1081 "Voucher and Schedule of Withdrawals and Credits" transfers. The use of OPAC requires the identification of the Agency Location Code (ALC) in the agreement. The NIH intramural ALC is 75080031 and the extramural ALC is 75080040.

4. NIH as the Billing Agency

NIH billings for services under a reimbursable agreement (interagency and intra-agency) require the submission of SF 1080 or TFS Form 7306 (OPAC).

Funds generated on a reimbursable agreement must be obligated using reimbursable CANs (CANs within reimbursable allowances).

A signed reimbursable agreement, submitted to the Government Accounting Section, OFM, sets in motion an automatic billing process (quarterly) that does not require additional paper work through the life of the agreement.

I. Numbering System:

1. Agreement numbers will be 10 characters in length; the first eight characters are considered to be the official document number and the last two digits are for internal IC tracking and are not part of the official document number.

_ _ - _ _ - _ _ _ _ -_ _

2. Y will appear in the first position of the agreement/document number in all cases.

3. The number in the second position is determined by the type of agreement:

1 - if the agreement is one where the IC is paying for services from an entity outside NIH.

2 - if the agreement is one where the IC is paying for services from another IC within NIH.

3 - if the agreement is one where the IC is providing services to be paid for from any other appropriation.

4. The third and fourth positions will be alpha designators unique to the organizational component, and should generally be the same designators that appear on grants issued from the IC. (See Appendix 4 for list.)

5. Position 5 will be the fiscal year designator. For new agreements, position 5 will be the fiscal year designator for the year of the agreements. For continuation agreements position 5 will remain the same as the original agreement.

6. For new agreements, Position 6 through 8 will be sequentially assigned, beginning with 001, as the agreements are made. For continuation agreements, position 6 through 8 will remain the same as the original agreement.

7. The final two positions (agreement suffix) will begin with 01 for the original agreement and will continue sequentially for each modification to the original agreement. These numbers provide for internal IC tracking and are not a part of the official document number.

As an example, if an agreement entered in FY 1999 were between two ICs where one is providing services and the other receiving the services,

(Provider) document number is: Y3-RR-9001
(Receiver) document number is: Y2-DA-9001 (if it was also their first agreement)

(Provider) agreement number is: Y3-RR-9001-01
(Receiver) agreement number is: Y2-DA-9001-01 (if it was also their first agreement)

In this and every other instance, Y1s and Y2s are obligating documents and will appear in the accounting records as any other contract obligation; Y3s are documentation of the receipt of reimbursable budget authority, which will only be seen in the reports from the Central Accounting System (CAS) when collections are made against the authority established by the Y3 agreements.

J. Form NIH 1742 (See Appendix 3):

1. Intra-agency/ Interagency Agreement - Check appropriate box.

2. Paying Agency’s Agreement No. (if NIH, must include Modification Number {Mod. No.}):- For NIH, enter Y1 or Y2 number, including Mod. No. The original Y1 or Y2 Mod. No. will be 01. For agencies outside of NIH, enter agreement number assigned by outside agency.

3. Receiving Agency’s Agreement No. (if NIH, must include Mod. No.) - For NIH, enter Y3 number, including Mod. No. The original Y3 Mod. No. will be 01. For agencies outside of NIH, enter agreement number assigned by outside agency.

4. Title of Agreement - Enter the short title of the agreement.

5. Summary of Substance of the Agreement - Provide a short description of the project objectives or work scope. Enter funds, personnel, equipment, facilities, etc. Specify for each NIH component involved.

6. Period of Agreement - Enter the effective date and expiration date of the new agreement, renewal or modification.

7. Authority for Agreement - Cite authority for agreement (e.g., Economy Act, Appropriations Act, PHS Act Section 301, etc.)

8. Agency Location Code (ALC) - must be entered for both parties. The NIH intramural ALC is 75080031 and the extramural ALC is 75080040. The trading partner’s ALC should be obtained from them, as part of the agreement.

9. Entity Identification Number (EIN) - must be entered for both parties. The NIH EIN is 152085811501. EINs for partner agencies may be found at the following web address:  http://www4.od.nih.gov/ofm/ein_nos.htm.    In addition, each party to the agreement should confirm the other’s EIN with their trading partner.

10. Address - Enter the paying agency address. If NIH, use the following address:

Government Accounting Section
Office of Financial Management, NIH
31 Center Drive, MSC 2045
Bethesda, MD 20892-2045

11. Agency Location Code (ALC) - see Item 8 above.

12. Entity Identification Number (EIN) - see Item 9 above.

13. Address - Enter the receiving agency address. If NIH, use address in 10. above.

14. Paying Federal Agency - Enter the acronyms (i.e., NIH/OD, NSF, etc.) of the paying agency entering into the agreement.

15. Document Number - Enter the 8-digit number assigned to the agreement. See Section I.

16. Appropriation Number - Refer to Appendix 4.

17. CAN - The Common Accounting Numbers to be used to obligate the agreement for the funding IC and to establish reimbursable authority for the recipient IC.

18. Amount - Specify dollar amount of agreement.

19. Signatories Name and Title - Self explanatory.

20. Date - Date of signature.

21. Receiving Federal Agency - Enter the acronyms (i.e., NIH/OD, NSF, etc.) of the receiving agency entering into the agreement.

22. Document Number - See Item 15 above.

23. Appropriation Number - Refer to Appendix 4.

24. CAN - See Item 17 above.

25. Amount - Specify dollar amount of agreement.

26. Signatories Name and Title - Self explanatory.

27. Date - Date of signature;

28. NIH Project Officer’s Name - Enter name as assigned by IC, with telephone number and e-mail address.

29. through 31. - Self explanatory.

32. Administrative/Budget Officer - Enter name as assigned by IC with telephone number and e-mail address.

33. through 35 - self explanatory.

36. Clearances - Follow internal IC procedures.

K. Distribution Process:

L. Reference Table of Agreements:

M. Records Retention and Disposal:

N. Management Controls:

1. Office Responsible for Reviewing Management Controls Relative to this Chapter (Issuing Office): Through this manual issuance, the Government Accounting Section, Office of Financial Management, is responsible for the method used to ensure that management controls are implemented and working.

2. Frequency of Review: Ongoing review.

3. Method of Review: The General Ledger, Report and Reconciliation Branch, OFM, will maintain oversight and ensure effective implementation and compliance with this policy through review of a myriad of resources, e.g., review of various system-generated reports, review of agreements, reports of outside auditors, etc.

4. Review Reports are sent to: Director, Office of Financial Management, and Deputy Director for Management, NIH. Issues of special concern will be brought immediately to the attention of the Director, Office of Financial Management.

5. An agreement log is kept by OFM of ALL NIH interagency and intra-agency agreements for tracking and control purposes. In addition, OFM will conduct an ongoing review of the agreements to ensure the issuance is being followed and provide feedback to all ICs when problems are detected.

Appendix 1 - Direct Citation Form

Appendix 2 - Sample Memorandum to the Secretary, DHHS

(Director’s full name), M.D.

Appendix 3 - Form NIH 1742

Appendix 4 - IC Appropriation Numbers and Alpha Designators

NIH